82648 v1 Building Resilience Integrating Climate and Disaster Risk into Development The World Bank Group Experience Integrating Climate and Disaster Risk into Development The World Bank Group Experience To access the executive summaries in other languages, please visit worldbank.org/climatechange © 2013 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is joint product of World Bank and GFDRR staff. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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Ta b l e o f Co n t en ts i Table of Contents Acknowledgments iv Foreword v Executive Summary vi Abbreviations x I. Introduction 1  ising Disasters in a Changing World II. R 5 III. Climate and the Poor 7 Resilience is Effective… But it Has a Cost IV.  10  owards Climate and Disaster Resilient Development V. T 13 VI. T  he World Bank Group Experience 17 Overview of the World Bank’s Engagement 17 Mainstreaming 17 Risk Identification 20 Risk Reduction 21 Preparedness 25 Financial and Social Protection 28 Resilient Reconstruction 34 How Much Does It Cost? 36 VII. Conclusions 39 References 41 ii Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Boxes Box 1: The Doha decision on loss and damage 2 Box 2: Glossary of terms and concepts used 3 Box 3: The costs of building back better after disasters 12 Box 4: Major considerations for managing risks to development 15 Box 5: Making decisions under deep uncertainty 16 Box 6: The Global Facility for Disaster Risk Reduction and Recovery (GFDRR) 18 Box 7: The Pilot Program for Climate Resilience (PPCR) 19 Box 8: Engaging the private sector in addressing climate and disaster risks to development 19 Box 9: Mainstreaming across administrative levels to enable national resilience in the Philippines 20 Box 10: Decision support through open risk assessment and information platforms—CAPRA and InaSAFE 24 Box 11: Investing in improved safety standards and building codes in Madagascar 26 Box 12: Integrating climate resilience into spatial planning in small islands 27 Box 13: The proven benefits of early warning and preparedness against disasters 30 Box 14: Tools, capacity and investment support to Eastern Caribbean countries 31 Box 15: Mexico’s Fund for Natural Disasters (FONDEN) 32 Box 16: The World Bank Green Bonds—catalyzing climate action 33 Box 17: Ethiopia’s Productive Safety Nets Programme 34 Box 18: Addressing drought risk across a range of timescales in the Horn of Africa 35 Ta b l e o f Co n t en ts iii Figures Figure A: Global disaster losses from 1980–2012 vi Figure B: The role of natural hazards, exposure and vulnerability in disaster risk vii Figure 1: Total number of disasters and losses from 1980–2012 5 Figure 2: Total loss and damage from hydro-meteorological disasters, by affected sector (1972–2013) 6 Figure 3: Comparison of current Index of Risk Preparation with projected poverty risk by 2030 8 Figure 4: The role of natural hazards, exposure and vulnerability in disaster risk 10 Figure 5: Process of integrating climate resilience into development 13 Figure 6: An operational framework for managing climate and disaster risk 14 Figure 7: Hands-On Energy Adaptation Toolkit (HEAT) 21 Figure 8: Examples of risk information platforms for decision making 22 Figure 9: Open data resources for a wide range of uses and users 23 Figure 10: Inputs of climate information services to various stages of the climate resilient framework 28 Figure 11: Financial protection instruments for climate and disaster resilience 29 Figure 12: Comparative data and financial resource requirements of risk assessments 36 Tables Table 1: Comparative costs of risk assessment 37 Table 2: Comparative costs of different financial protection options 38 iv Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Acknowledgments This report was a collaborative effort between the World Bank’s Concepcion Otin, Hector Pando, Ayaz Parvez, Prashant, Douglas Climate Finance and Policy team and the Global Facility for Disaster M. Proctor, Raja Rehan Arshad, Fernando Ramirez, Heike Reichelt, Reduction and Recovery (GFDRR). Natalia Rodriguez, Zuzana Stanton-Geddes, Asmita Tiwari, Anna This report was prepared by a core team comprised of Habiba Wellenstein and Doekle Wielinga. The team is appreciative of the sup- Gitay, Sofia Bettencourt, Daniel Kull, Robert Reid, Kevin McCall, port from Samrawit Beyene, Robert Bisset, Venkat Gopalakrishnan, Alanna Simpson, and Jarl Krausing under the guidance of Jane Mamy Razakanaivo, Karin Rives, Arlindo de Ceita Carvalho, Carlos Ebinger, Francis Ghesquiere and Marianne Fay. Extensive inputs and Mendes Dias, and David Kaluba. Editorial and graphics support was suggestions were received from: Philippe Ambrosi, Margaret Arnold, provided by Sarah Antos, Andrew Berghauser, Will Kemp, Diane Todor Arsovski, Laura Bonzanigo, Ana Bucher, Rachel Cipryk, Kim, Leila Mead, Ruth Kyla Wethli and Gregory Wlosinski. The Nancy Chaarani Meza, Samantha Cook, Christophe Crepin, Saurabh team thanks the members of the World Bank Environment Sector Dani, Christopher Delgado, Marc Forni, Stephane Hallegatte, Niels Board for their suggestions and guidance and is grateful to Maarten Holm-Nielsen, Nidhi Karla, Justin Locke, Alan Lee, Bradley Lyon, van Aalst and Thomas Wilbanks for their insights and guidance. Alan Miller, Roshin Mathai Joseph, Olivier Mahul, Akiko Nakagawa, For ewo r d v Foreword Weather-related events hurt rich and poor countries alike. They developed over decades, are already helping nations prepare for a can slam the brakes on economic growth and cripple markets. But more changeable world. how we fare after disaster strikes depends very much on where in However, let us not fool ourselves that doing this will be easy. the world we live, and how. The more vulnerable and less prepared Resilience is effective, but it often requires a higher initial investment. our nations, communities and households are, the more we suffer. Our experience shows it costs up to 50 percent more to design and If we live in coastal or water scarce areas, on steep slopes, the more build safer buildings and infrastructure after a disaster. State-of-the-art we are at risk. If our house is made of sturdy materials, the less we weather warning systems require new technology and highly trained are likely to be affected. However, if we are poor or we live in a poor staff. Relocating people from unsafe areas is expensive and can bring country, the more likely we are to lose our lives. cultural and social disruptions, which can create new risks. We know As the global climate continues to change, developing countries that communities with strong social bonds are more resilient when face mounting losses from severe floods, droughts and storms. By disaster strikes as neighbors are the first responders and can help 2030, there could be 325 million people trapped in poverty and each other in the process of reconstruction. vulnerable to weather-related events in sub-Saharan Africa and South At the World Bank Group, we believe that climate-related disasters Asia. Large coastal cities, many of them in growing, middle-income can be reduced and investment costs curtailed. But this requires us nations, could face combined annual losses of US$1 trillion from to work across disciplines with different partners to make climate such events by mid-century. and disaster resilience part of our day-to-day development work. This report shows why building climate resilience is critical for the The good news is, many of these interventions make sense for World Bank Group’s goals to end extreme poverty and build shared development and they help all of us—developing and developed prosperity—and why it should be front and center of the development nations alike—prepare for a warmer and more unpredictable world. agenda. Unless we help vulnerable and poor nations, regions and cities We know what to do. Our job now is to ramp up efforts to get prepare and adapt to current and future climate and disaster risks, we ahead of disasters to save lives and protect livelihoods. We need to could see decades of development progress rolled back. By focusing on get beyond disasters and help countries and communities build the Bank’s experience in climate and disaster resilient development, resilience in the face of a rapidly warming world. we hope that this report will also contribute to international discus- sions related to understanding loss and damage from climate change. This report calls for the international development community to work across disciplines and sectors to build long-term resilience, reduce risk and avoid climbing future costs. It emphasizes the neces- Rachel Kyte sity of building and empowering institutions for the sustained effort Vice President needed for making development climate and disaster resilient. And Sustainable Development Network by highlighting best practices, it shows how financial instruments The World Bank Group and intervention programs, along with disaster preparedness expertise November, 2013 vi Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Executive Summary This report presents the World Bank’s experience in climate and closer collaboration between the climate resilience and disaster risk disaster resilient development, and contends that such develop- management communities, and the incorporation of climate and ment is essential to eliminating extreme poverty and achieving disaster resilience into broader development processes. Selected shared prosperity by 2030. The report recognizes, however, that case studies are used throughout this report to illustrate promising such development requires additional start-up costs, which pay off approaches, lessons learned and remaining challenges. in the long run if done correctly. Given this, the report argues for Figure A: Global disaster losses from 1980–2012 (US$billion) 400 350 300 250 200 150 100 50 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Overall losses (in 2012 values) The bars indicate annual disaster losses. The line indicates the trend. Source: © 2013 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE (as of January 2013) E x ec u t i v e S u mma ry vii The report aims to contribute to the loss and damage discus- (e.g., flash floods) and sea storms (IPCC 2013). For example, land sions under the United Nations Framework Convention on Climate areas affected by heat waves are expected to double by 2020 (World Change, and is targeted at development practitioners and national Bank 2013a). policy makers who face the challenge of addressing a potential Attributing causality of disasters to climate change remains increase in disasters caused by gradual changes in climatic means intrinsically difficult due to the uncertainties, and complex and and extremes. dynamic interactions between development patterns, the environ- From 1980 to 2012, disaster-related losses amounted to US$3,800 ment and the climate (all of which contribute to disaster risk). While billion worldwide (Figure A). Some 87% of these reported disasters attribution of specific weather events to climate change is highly (18,200 events), 74% of losses (US$2,800 billion) and 61% of challenging, attributing disasters (the resulting impact) to a specific lives lost (1.4 million in total) were caused by weather extremes driver—climate, development or environmental change—is even (Munich Re 2013). more difficult, given the complexity of these interactions (Figure B). Development patterns, particularly population growth in high- Weather-related disasters affect both developed and developing risk areas and environmental degradation, continue to be the most countries, with particularly high disaster impacts in rapidly growing important drivers of disaster risk (IPCC 2012). However, since the middle-income countries, due to growing asset values in at-risk areas. 1960s, human-induced climate change has been increasingly con- The largest coastal cities, for example, could experience combined tributing to extreme events in the form of rising temperatures (such losses of US$1 trillion by mid-century (Hallegatte et al. 2013). as warmer spells and heat waves), changing precipitation patterns Figure B: The role of natural hazards, exposure and vulnerability in disaster risk Poverty and environmental degradation Vulnerability Vulnerability Disaster Disaster Risk Risk Natural Hazard Exposure Natural Hazard Exposure Climate Poorly planned Change development Disaster risk is determined by the occurrence of a natural hazard (e.g., a cyclone), which may impact exposed populations and assets (e.g., houses located in the cyclone path). Vulnerability is the characteristic of the population or asset making it particularly susceptible to damaging effects (e.g., fragility of housing construction). Poorly planned development, poverty, environmental degradation and climate change are all drivers that can increase the magnitude of this interaction, leading to larger disasters. Source: Adapted from IPCC, 2012. viii Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t However, low-income and lower middle-income countries have The common goal should be climate and disaster the least capacity to cope and, in general, suffer the highest human resilient development, while recognizing that it toll, accounting for 85% of all disaster fatalities (Munich Re 2010). comes at a cost Building climate resilience is essential to the Risk reduction and better preparedness to deal with climate and disaster impacts can substantially decrease the cost of disasters. global goals of ending extreme poverty and From India to Bangladesh to Madagascar, early warning systems, promoting shared prosperity better preparedness and improved safety codes have proven to be cost effective, save human lives, and protect public and private While many uncertainties persist, one thing is clear: climate- investments. Climate and disaster resilient development, therefore, related impacts will continue to grow due to both development and makes sense both from a poverty alleviation, as well as from an climate drivers (IPCC 2013), and impacts will be felt most acutely by economic, perspective. the poor. Unless measures are taken to reduce risks, climate change Yet despite its cost effectiveness over the long term, climate is likely to undermine poverty goals and exacerbate inequality for and disaster resilient development can require substantial start-up decades to come. costs. Safer structures require design changes that typically cost 10 Climate change will have the greatest impact on the poorest to 50% more to build—and even more if transport or water net- and most marginalized populations, who commonly live in the works need to be relocated (GFDRR 2010). In addition, improved highest-risk areas (for example, 72% of the African urban population hydro-meteorological systems require new technology and training, live in informal settlements). They are also the ones with the least risk assessments may require geospatial, scientific and engineering ability to recover from recurrent, low-intensity events, which can information often at high resolution, and even after risk reduction have crippling and cumulative effects on livelihoods. The impacts plans have been implemented, disasters can cause residual costs, of climate change on poverty are expected to be regressive and making it imperative to reinforce coping strategies. differential, affecting most significantly the urban poor (net food This report maintains that both developed and developing consumers) and highly vulnerable countries in sub-Saharan Africa countries have a common interest in promoting climate and disas- and South Asia, where the number of exposed poor may reach 325 ter resilient development. While interventions are needed that million by 2030 (Shepherd et al. 2013). Many of these countries already make sense under sustainable development, they are now are also those with the least capacity to prepare for, and absorb, the more urgent than ever due to climate change. As such, climate and effects of climate events. disaster resilience should form an integral part of national strategies Climate change is already exacerbating inequality; at the subna- and development assistance, particularly in the most vulnerable and tional level, impacts tend to be most severe in already impoverished least developed countries. areas. As climate effects can undermine hard-earned development Given the close interactions between climate change and local gains, potentially trapping the most vulnerable into poverty, their drivers of vulnerability, it is important to ultimately strengthen all impacts need to be minimized by reducing the magnitude of the aspects of climate and disaster resilient development, including hazard (which requires a global solution, namely reducing greenhouse coordinating institutions, risk identification and reduction, prepared- gas emissions), diminishing exposure (by protecting and/or assisting ness, financial and social protection, and resilient reconstruction. the poor to live in safer areas) or decreasing the vulnerability of the Addressing only selected aspects of this framework risks leaving poor to climate shocks. Social protection programs are an important others exposed, and even creating perverse incentives, such as what part of such a strategy, but must be complemented by policies that happens when funding is allocated primarily to disaster response, directly help the poor become more resilient. leaving proactive risk management underfunded. E x ec u t i v e S u mma ry ix Much is already known regarding how to build In climate and disaster resilient development, the process of resilience to weather-related disasters, but strengthening risk management—through better information, timely financing, contingency funds, and enabling policies and planning— better integration between climate resilience can sometimes be more important than the actual achievement of approaches and disaster risk management discrete activities (such as building a protection dyke). Often, the is required activities—and in some cases the actual disaster—serve as a forum to catalyze better climate and disaster resilience decisions. The presence Although the approaches used for climate resilience and disas- of uncertainties also requires a robust feedback system to determine ter risk management originated from different disciplines, the two which approaches succeed, which ones fail and why. The paucity of communities of practice are increasingly converging. Much of this short-term results, together with slow initial disbursements, may at convergence is happening on the ground; yet institutional resistance first deter some donors accustomed to more conventional and risk towards integration at national and international levels continues. To averse investments; however, it is important that they recognize prevent fragmentation of scarce local capacity and global resources, that this is how climate and disaster resilient development works. the two disciplines must be progressively harmonized into a com- An increasing number of countries, such as Colombia, the Philip- mon agenda. pines, India, Mexico and Samoa, have piloted climate and disaster The World Bank and many other development partners have resilient planning, and evidence shows this has helped them curb accumulated a wealth of global expertise in climate and disaster climate-related impacts. These countries’ experiences are documented resilient development. Good practices are emerging in both pro- in case studies in this report. cesses, such as institutional frameworks and iterative feedback, as Despite progress made, many challenges remain. Long-term well as instruments and tools, including climate and disaster risk projections of climate and development scenarios continue to be assessment, risk reduction, strengthened preparedness, social and highly uncertain, which is often cited as a cause for policy inaction. A financial protection, and resilient reconstruction. Many of these robust, iterative decision-making framework is a potential course of are described through case studies in this report. action, but data for informed decision making continue to be limited, In order to deal with climate and development uncertainties, as are opportunities for engagement with countries at key develop- national stakeholders need sustained and flexible programs, which ment planning stages (for example, when national development require clear institutional frameworks and predictable, long-term plans are being prepared). The most important challenges, however, financing (over at least a decade). The fact that climate affects most continue to be institutional. The international community should sectors introduces an added complexity in many countries where lead by example by further promoting approaches that progressively governance systems are structured along sectoral lines. Emerging link climate and disaster resilience to broader development paths, experience suggests that to be effective, institutional coordination and funding them appropriately. across various ministries should be set at the highest possible level. x Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Abbreviations CDD Community-driven development IFC International Finance Corporation CAPRA Central America Probabilistic Risk Assessment IMF International Monetary Fund CARICOM Caribbean Community and Common Market IRM Immediate Response Mechanism CAT-DDO Catastrophe Deferred Drawdown Option LEAP Livelihoods, Early Assessment and Protection CCKP Climate Change Knowledge Portal Moz-Adapt Open climate and disaster data platform CCRIF Caribbean Catastrophe Risk and Insurance MDB Multilateral development bank Facility NGO Non-Governmental Organizations CIF Climate Investment Funds ODI Overseas Development Institute CERC Contingent emergency response components PDNA Post Disaster Needs Assessment COP Conference of the Parties PPCR Pilot Program for Climate Resilience CRW Crisis Response Window PSNP Productive Safety Nets Programme DaLA Damage and Loss Assessment RDM Robust decision making DPL Development Policy Loan RDVRP Regional Disaster Vulnerability Reduction DRM Disaster risk management Project ECLAC Economic Commission for Latin America and SCF Strategic Climate Fund the Caribbean SVG Saint Vincent and the Grenadines FONDEN Natural Disaster Fund (Mexico) UNDP United Nations Development Programme FOPREDEN Fund for Disaster Prevention (Mexico) UNFCCC United Nations Framework Convention on GEF Global Environment Facility Climate Change GFDRR Global Facility for Disaster Reduction and UNISDR United Nations International Strategy for Recovery Disaster Reduction HEAT Hands-On Energy Adaptation Toolkit US$ United States Dollar IBRD International Bank for Reconstruction and WB World Bank Development WBG World Bank Group IDA International Development Association WDR World Development Report IEG Independent Evaluation Group WMO World Meteorological Organization I . I ntr o d u ct i o n 1 I. Introduction Over the last few decades, the World Bank has been proactively • Section II on “Rising Disasters in a Changing World” describes supporting partner countries to manage the increasing risk from the impacts of globally increasing weather-related disasters in extreme weather events1 as part of their disaster risk management recent decades. (DRM) programs. As the impacts of climate change become more • Section III on “Climate and the Poor” summarizes how World evident and add to development pressures, the World Bank has also Bank’s goals to end extreme poverty and boost shared prosperity increased its efforts to support partner countries in climate resilient are expected to be affected by rising disaster losses in a chang- development by addressing gradual2 as well as extreme changes in the ing climate. climate. This report addresses these two increasingly interconnected • Section IV titled “Resilience Is Effective…but it Has a Cost” fields as “climate and disaster resilient development.” discusses the issue of attribution in weather-related disasters, The report aims to contribute to the loss and damage work and the additional start-up costs involved in climate and disaster program, established by the Conference of the Parties (COP) to resilient development. the United Nations Framework Convention on Climate Change (UNFCCC) under the 2011 Cancún Adaptation Framework. The • Section V titled “Towards Climate and Disaster Resilient work program states that “approaches should be considered to address Development” builds upon the processes and instruments loss and damage associated with climate change impacts in developing developed by the climate resilience and the disaster risk man- countries that are particularly vulnerable to (its) adverse effects…” This agement communities of practice to provide some early lessons was further elaborated under a decision agreed to at the COP18 learned in this increasingly merging field. in Doha (Box 1). The loss and damage work program seeks to go • Section VI on “The World Bank Experience” highlights case beyond adaptation to address residual disaster impacts in the poorest studies and emerging good practices in climate and disaster and most vulnerable countries affected by climate change. resilient development. By focusing on the World Bank’s experience in climate and disaster • Section VII focuses on “Conclusions” and summarizes key les- resilient development, this report aims to contribute to the specific sons learned, and implications for the loss and damage agenda. Doha decisions related to the understanding of loss and damage, It also identifies potential gaps and avenues for future work and strengthening institutions and coordination among partners and to help countries move towards climate and disaster resilient stakeholders (see Box 1). The report’s structure is outlined below. development. • The remainder of the “Introduction” provides an overview of the UNFCCC’s loss and damage work program, and the rel- 1 These are also known as hydro-meteorological events, and include floods, droughts, evance of the World Bank’s experience to it. It also introduces storm surges and cyclones. key concepts and definitions relevant to climate and disaster 2 Specific examples include: gradual changes in rainfall patterns affecting agriculture resilient development. and water supply, sea level rise and salt-water intrusion in coastal areas; accelerating glacial melt; changes in mean temperatures and rainfall affecting land degradation and ecosystems; and increasing water scarcity. 2 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Some differences in terminology exist between the UNFCCC Climate-related loss and damage are assumed to derive from and the work highlighted in this report. Under the UNFCCC, no the interaction of climate and weather events with local drivers of specific definition exists for loss and damage. In this report, these exposure and vulnerability. The events can arise from longer-term terms are defined as per Post Disaster Needs Assessment (PDNA) changes in climate (such as changing temperatures, rising sea level methodology, which is the international standard adopted by the or glacial melt), as well as from changing frequency and intensity of World Bank, the United Nations and the European Commission hydro-meteorological (or weather-related) hazards, such as floods, (see Box 2 and ECLAC 2003). The terms loss and damage are also storms and droughts. They may be rapid or slow in onset, lasting not considered interchangeable; in economic terms, damage refers for a few hours or leading to longer-term changes. Other terms used to disaster impacts on physical stocks and assets, while loss refers in this report are defined in the Glossary below. to impacts on economic flows. Box 1: The Doha decision on loss and damage COP18 agreed to establish specific outcomes on loss and damage by December 2013. The decision text is summarized below. 1. The range of options for loss and damage should be informed by: a. Promoting an enabling environment to encourage investment and the involvement of relevant stakeholders in climate risk management; b. Involving vulnerable communities and populations, civil society, the private sector and other relevant stakeholders in the assessment of and response to loss and damage; and c. Enhancing access to, and sharing and use of, data, such as hydro-meteorological data and metadata, on a voluntary basis, to facilitate the assessment and management of climate-related risk. 2. The decision also acknowledges that further work is needed to advance the understanding of: a. The risk of slow onset events and approaches to address them; b. Non-economic loss and damage; c. How loss and damage associated with the adverse effects of climate change affects vulnerable populations and how approaches to address them can benefit those population segments; d. Appropriate approaches to address loss and damage, such as risk reduction, risk sharing, risk transfer and rehabilitation; e. Integration into climate-resilient development processes; and f. Impacts of climate change on patterns of migration, displacement and human mobility. 3. Strengthening the collection and management of relevant data to assess the risk of loss and damage. 4. Enhancing coordination, synergies and linkages among various organizations, institutions and frameworks. 5. Strengthening and promoting regional collaboration, centers and networks. 6. Enhancing capacity building at the national and regional levels. 7. Strengthening institutional arrangements at the national, regional and international levels. 8. Requesting developed country Parties to provide developing countries with finance, technology and capacity building. 9. Establishing institutional arrangements, such as an international mechanism, to address loss and damage associated with the impacts of climate change in developing countries that are particularly vulnerable. Source: UNFCCC, Doha Decisions on Loss and Damage (2012). I . I ntr o d u ct i o n 3 Box 2: Glossary of terms and concepts used Hazard, exposure, vulnerability and resilience are terms commonly used among practitioners in the disaster and risk management and climate resilience communities; however, they can have different interpretations. This report uses definitions provided by the Intergovernmental Panel on Climate Change (IPCC) and, when applicable, the United Nations International Strategy for Disaster Reduction (UNISDR). The terms “loss” and “damage” are as defined by the PDNA methodology adopted jointly by the World Bank, the United Nations and the European Commission. Adaptation: In human systems, the process of adjustment to actual or expected climate and its effects, in order to moderate harm or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate and its effects; human intervention may facilitate adjustment to expected climate (IPCC 2007, 2012). Adaptive capacity: The ability of a system to adjust to climate change (including climate variability and extremes) to moderate potential damages, take advantage of opportunities, or cope with the consequences (IPCC 2007, 2012). Climate and disaster resilient development: A set of institutional arrangements, processes and instruments that help identify the risks from disasters, climate extremes, gradual and long-term climatic changes, and their associated impacts, and the design of measures to reduce, transfer and prepare for such risks. Climate and disaster resilient development combines development benefits with reductions in vulnerability over the short and longer term, using a development planning, multi-sectoral and multi- stakeholder approach (report authors). Damage: The total or partial destruction of physical assets existing in an affected area. Damages are measured first in physical units (such as numbers or square meters of housing destroyed, or kilometers of roads), and then in monetary terms, expressed as replacement costs according to prices prevailing just before the event (GFDRR 2010b). Disaster: A serious disruption in the functioning of a community or society involving widespread human, material, economic or environmental losses and impacts, which exceeds the ability of the affected community or society to cope using its own resources. Disaster impacts may include loss of life, injury, disease and other negative effects on human physical, mental and social wellbeing, together with damage to property, destruction of assets, loss of services, social and economic disruption, and environmental degradation (UNISDR 2009a). Disaster risk: The potential occurrence of a hazard—hydro-meteorological or geophysical—that may cause loss of life, injury or other health impacts, damage to exposed assets (property, infrastructure, environmental resources), and loss of livelihoods and service provision. The characteristics and circumstances of a community, system or asset that make it susceptible to the damaging effects of a hazard are related to its vulnerability (IPCC 2012). UNISDR (2009a) defines disaster risk as potential disaster losses in lives, health status, livelihoods, assets and services, which could occur in a particular community or society over some specified future time period. Disaster risk management: Processes for designing, implementing and evaluating strategies, policies and measures to improve the understanding of disaster risk, foster risk reduction and transfer, and promote continuous improvement in disaster preparedness, response and recovery practices, with the explicit purpose of increasing human security, wellbeing, quality of life and sustainable development (IPCC 2012). Exposure: The presence of people, livelihoods, environmental services and resources, infrastructure, or economic, social or cultural assets in places that could be adversely affected (IPCC 2012). Hazard: The potential occurrence of a natural or human-induced physical event that may cause loss of life, injury or other health impacts, as well as damage and loss to property, infrastructure, livelihoods, service provision and environmental resources (IPCC 2007, 2012). Loss: Changes in economic flows arising from a disaster which continue until the achievement of full economic recovery (for example, decline in agriculture output, lower revenues and higher operational costs in health services provision, or losses in trade from damaged commercial facilities). Losses are expressed in current monetary values (GFDRR 2010, ECLAC 2003). 4 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Box 2: Glossary of terms and concepts used (continued) Resilience: The ability of a system and its component parts to anticipate, absorb, accommodate or recover from the effects of a hazardous event in a timely and efficient manner, including through ensuring the preservation, restoration or improvement of its essential basic structures and functions (IPCC 2012). Risk transfer: The process of formally or informally shifting the financial consequences of particular risks from one party to another, whereby a household, community, enterprise or state authority will obtain resources from the other party after a disaster occurs, in exchange for ongoing or compensatory social or financial benefits provided to that other party. Examples include gifts or credit amongst communities/families, insurance and reinsurance contracts, catastrophe bonds, contingent credit facilities and reserve funds as part of risk transfer from governments to financial markets (UNISDR 2009a). Vulnerability: The degree to which a system is susceptible to, or unable to cope with, the adverse effects of climate change, including climate variability. Vulnerability is a function of the character, magnitude and rate of climate variation to which a system is exposed, its sensitivity and its adaptive capacity (IPCC 2007). The IPCC (2012) has since changed the definition of vulnerability to the propensity or predisposition to be adversely affected. II . Ri s i n g D i saste r s i n a C h a n g i n g Wo r l d 5 II. Rising Disasters in a Changing World Since the 1980s, there has been an upward trend in disaster losses. Damage and loss trends are difficult to monitor over time, due During the 1980–2012 period, estimated total reported losses in part to inconsistent methodologies, and the fact that only a few due to disasters amounted to US$3.8 trillion. Weather-related or countries (about 50) keep national disaster databases. Even among hydro-meteorological disasters accounted for 74% (US$2.6 tril- those, a recent United Nations Development Programme (UNDP) lion) of total reported losses, 87% (18,200) of total disasters, and study found that as many as 81% of countries did not consistently 61% (1.4 million) of total lives lost (see Figure 1 and Munich Re record economic losses, and only 18% maintained quality control 2013a,b). Recent disasters provide a grim reminder of this human and validation (UNDP 2013). Increasingly, however, major disasters and economic toll. In Thailand, the 2011 floods resulted in losses are being assessed based on standard Damage and Loss Assessments of approximately US$45 billion, equivalent to 13% of the country’s (DaLAs) (ECLAC 2003), and (since 2007), the PDNA methodology. gross domestic product (GDP) (World Bank 2012a). In the Horn of Among the 72 hydro-meteorological disasters assessed, economic Africa, the extended 2008–2011 drought, which at its peak left 13.3 losses occurred primarily in productive sectors (such as agriculture and million people facing food shortages, caused estimated total losses commerce), while physical damages were almost equally distributed of US$12.1 billion in Kenya alone (Government of Kenya 2012). between infrastructure, and social and productive sectors, reflecting Figure 1: Total number of disasters and losses from 1980–2012 Number of disasters worldwide Losses due to disasters worldwide (1980–2012) (1980–2012) No. of Disasters US$ billion 1200 Weather-related disasters averaged 450 Weather-related losses averaged 87% of all disasters 400 74% of all disasters losses 1000 350 800 300 No. of natural disasters 250 600 200 400 No. of weather-related disasters 150 All Disasters Losses 200 100 50 0 Weather Related Disaster Losses 00 06 04 08 02 0 10 0 0 6 94 6 8 84 12 8 2 2 9 9 9 9 8 8 8 8 20 20 20 20 20 20 20 19 19 19 19 19 19 19 19 19 19 00 06 08 02 04 10 90 80 96 86 98 12 88 92 94 82 84 20 20 20 20 20 20 20 19 19 19 19 19 19 19 19 19 19 Source: Adapted from © 2013 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE (as of January 2013). 6 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Figure 2: Total loss and damage from hydro- Bank 2012c). However, the impact can be particularly crippling on meteorological disasters, by affected sector (1972–2013) smaller and poorer countries, such as small island developing states and land-locked developing countries. Hurricane Tomas, for example, Economic Losses Physical Damages devastated Saint Lucia in 2010 and wiped out the equivalent of 43% of its GDP. In terms of human lives lost, low- and low-to-middle 7% 5% 5% income countries suffered 85% of total global disaster fatalities 17% 32% (Munich Re 2013a,b). 32% Over time, cumulative impacts from small, recurrent disasters can equal or even exceed those from larger catastrophes (Campos 71% et al. 2010). Often escaping national or international awareness, 31% these smaller events reinforce poverty and compound the hardships endured by poor communities. In Colombia, for example, cumula- tive total small-scale losses between 1972 and 2012 were 2.5 times Social sectors Infrastructure sectors Productive sectors Cross-cutting sectors greater than those resulting from large-scale disasters. Recent research concluded that if the impacts associated with smaller disasters were included in global databases, reported impacts would likely be at Source: GFDRR Global Disaster Damage and Loss Database for 72 hydro- least 50% higher (UNISDR 2013). These figures refer primarily to meteorological disasters. Currency in constant 2010 value. damages and, for the most part, exclude the cost of indirect and non-quantifiable losses. the destruction of physical structures, such as roads, bridges, houses, Losses are normally more difficult to quantify than damages, schools, hospitals and irrigation infrastructure. This pattern is fairly particularly when they involve non-market values, such as human standard across all types of disasters (tropical cyclones, floods, El fatalities, or environmental damage, or when they result from indirect Niño/La Niña events and droughts). In some case, droughts can impacts. Yet in many countries, disaster losses can be significant and result in more economic losses to infrastructure sectors: during the last over long periods of time. For example, the 2011 drought in the 1998–2000 drought in Kenya, for example, more than 80% of the Horn of Africa led to an extremely high rate of malnutrition and losses were in the hydropower sector (Government of Kenya 2012). infectious diseases, especially among children (World Bank 2013a). The private sector, particularly in climate-sensitive areas such as The 2013 floods in Mozambique led to the temporary displace- commerce, industry, agriculture, power, shipping and tourism, is ment of about 250,000 people. While methodological refinements often the first to be affected by changes in the climate3. Flooding, in DaLAs have allowed for the quantification of these losses (see wind and other weather events are also often fatal to smaller, unin- ECLAC 2003), most countries have not applied them systematically sured businesses, particularly in the informal sector (IFC 2010a). to allow comparisons over time. The economic impact of disasters is concentrated in rapidly- Among the most insidious effects of weather-related disasters growing middle-income economies due to increasingly exposed (and are their impact on the poor. Unless measures are taken to reduce valuable) assets. In these countries, the average impact of disasters these risks, climate change is likely to undermine poverty goals equaled 1% of GDP between 2001 and 2006, ten times higher than and exacerbate inequality worldwide for decades to come. This is the average in high-income economies for the same period (World examined in further detail in the next section. 3 See: www.ifc.org/climaterisks III . C l i mat e a n d t h e Po o r 7 III. Climate and the Poor Disasters trap people into poverty, as indicated by the evidence from population lives in informal settlements, where investment in drainage many countries. For example, following the 2011 drought, poverty infrastructure that can reduce flood risk is often lacking, and existing levels in Djibouti returned to levels above those in 2002, indicating infrastructure is inadequately maintained (UNISDR 2009b). As a a loss of almost 10 years of development gains. Studies from rural consequence, poor households must not only rebuild their assets Ethiopia and Andhra Pradesh, India, indicate that drought is the after a disaster, but often bear the costs of reconstruction of public most important factor in keeping people poor. China lists natural and social infrastructure, such as community schools, health clinics disasters among the eight key pressures undermining its progress in or local roads damaged by recurrent events. An example of this is poverty reduction. And in Afghanistan, drought in the 1990s was in eastern and western Madagascar, where a single cyclone season identified as contributing to worsening food security and poverty a can cause losses and damages to individual households equivalent decade later (République de Djibouti 2011; Shepherd et al. 2013; to 10–30% of the average annual GDP per capita (Government of White 2004). Madagascar 2008). Poor and marginalized households tend to be less resilient and Among the poor, disabled, elderly, orphans, widows and other face greater difficulties in absorbing and recovering from disaster vulnerable and marginalized groups are more likely to be affected impacts. Recurrent events also lead to compounding losses for many by weather-related events. In many cases, women are more affected households, leading them to organize livelihoods in such a way that than men due to their lower mobility and cultural sensitivities that their overall risks are reduced in the face of uncertainty, even if it may prevent them from seeking livelihood opportunities away from means a reduction in income and an increase in poverty (UNISDR high-risk areas, or to use shelters during extreme events. As a result, 2009b). This is typically the case for farmers who hedge their risks for example, some 91% of fatalities in Bangladesh after Cyclone against uncertain weather by planting well after the early rains, or by Gorky were women (World Bank 2012c). using less productive but more resilient varieties. To maintain basic Climate change food consumption, poor households may sell their limited remaining could affect poverty Building climate resilience productive assets after disasters, often their only source of savings; targets directly, as well others, however, may lower their food consumption. Both coping as indirectly, by curb- is essential to the global mechanisms can have long-term implications for human develop- ing economic growth. goals of ending extreme ment, by affecting nutrition and children’s access to education and Recent modeling poverty and promoting health (World Bank and GFDRR 2013). studies indicate rela- shared prosperity by 2030 Due to limited opportunities and resources, the poor frequently tively modest impacts accept higher levels of risk relative to their income, and live and/or on global poverty— work in informal settlements located in high-risk areas. In Dar es about 10 million additional poor under climate change scenarios Salaam, Jakarta, Mexico City and São Paulo, those living in informal by 2055, assuming steady annual economic growth of 2.2 percent settlements are the most vulnerable to climate and disaster risks (Skoufias 2012). However, Dell et al. (2009) suggest that economic (World Bank 2011a). Overall, approximately 72% of Africa’s urban growth is also sensitive to temperature rises, which could, therefore, 8 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Figure 3: Comparison of current Index of Risk Preparation with projected poverty risk by 2030 This figure suggests that investments in risk preparation today could help reduce poverty risks in the future. The Index of Risk Preparation, developed for the 2014 World Development Report (World Bank 2013b), measures assets and services across four categories (human capital, physical and financial assets, social support, and state support). Poverty risk, developed by ODI (Shepherd 2013), reflects the proportion of the population that is projected to be living below US$1.25/day by 2030. However, if numbers, rather than the proportion of the poor, are taken into account, several large low-to-medium income countries, such as India, Nigeria and Pakistan, will also score highly. Sources: World Bank 2013b and Shepherd et al. 2013. III . C l i mat e a n d t h e Po o r 9 significantly increase the number of poor. Data from 134 countries, many vulnerable fishing communities face rapidly shrinking coasts, for example, indicated that temperature rises of 1°C were associated with few alternative places to go (as surrounding land is already with a statistically significant reduction of about 9 percentage points occupied). Under extreme dry events, a highly vulnerable country in per capita GDP. A more recent study by the Overseas Develop- like Zambia could see an additional 4.6% of its population impov- ment Institute (ODI) also indicates significant numbers of poor erished by the end of the century (Ahmed et al. 2009). Given the living in hazard-prone countries by 2030 (Shepherd et al. 2013). risks to the near poor, targeted programs may need to consider a These global studies also suggest that an immediate reduction of higher threshold than the standard US$1.25/capita, to cover both greenhouse gases would only have a significant impact on poverty the poorest, as well as those at risk of falling into climate-induced beyond 2100. This is due to the longevity of many greenhouse gases poverty (Shepherd et al. 2013). in the atmosphere and inertia in the climate system (IPCC 2013, Another key challenge relates to the fact that many countries World Bank 2012d), underscoring the urgent need to implement with the highest projected future poverty risk are also the ones resilience—or adaptation—measures targeted towards the poor. with the lowest level of current risk preparedness (World Bank The impacts of climate change are expected to be both regres- 2013b; Shepherd et al. 2013). Figure 3 illustrates this problem in sive and heterogeneous, and, thus, contribute to higher inequality. simplified terms; countries with the lowest risk preparation capacity In Brazil, for example, climate change is expected to affect poorer generally have the highest poverty risk, in terms of the proportion regions more than richer ones; poorer municipalities are expected to of their population projected to be living below US$1.25/day by suffer a decline of up to 40% in agricultural output by 2040, while 2030. The picture changes if one considers the sheer number of richer ones may actually benefit (Assunção and Chein Feres 2009). projected poor, as in that case several low-to-medium income A study from Ahmed et al. (2009) of 16 countries also suggests that countries—such as India and Pakistan—would also take promi- while rural areas are expected to have the greatest numbers of poor, nence. Regardless, the recent ODI report concludes that, without poor populations in urban areas are expected to suffer proportionally concerted action, some 325 million people could be living in the more under projected extreme dry events due to their vulnerability 45 countries most exposed to hazards by 2030, highlighting the to food price increases. An estimated 16% increase in poverty is close links between poverty, hazards and risk governance, and the expected in urban areas compared to a 12% increase amongst rural need to integrate social protection into development strategies populations. This introduces an added concern given the rapid pace (Shepherd et al. 2013). of urbanization in the developing world. The poor are already resilient, both by nature as well as by neces- Differences in impacts at subnational and even inter-community sity; however, they need further funding, information and support to levels also illustrate the need to carefully target pockets of poverty, escape poverty traps and to better cope with weather-related disasters. as well as the near poor. Already, prolonged droughts, land degra- Because poverty and vulnerability are so closely intertwined, climate dation, development patterns and conflict in the Sahel and Horn and disaster resilient development must be central to the global of Africa have displaced pastoral populations into more marginal goal of ending poverty and promoting shared prosperity. The next land. Similar trends are seen in coastal areas of West Africa, where section examines the costs and benefits of making this happen and implications for development. 10 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t  esilience is Effective… IV. R But it Has a Cost The rising concentration of population and assets in naturally at-risk could be facing annual flood losses of US$1 trillion by 2050 (Hal- areas remains the most important driver of growing disaster risk legatte et al. 2013). (IPCC 2012). This includes rapidly expanded settlements in low- At the same time, evidence is growing that extreme weather lying coastal areas and floodplains, inadequate spatial planning and events associated with temperature, precipitation and sea level rise regulation enforcement, and lack of compliance or weak building has intensified since the 1960s and the latest IPCC report (IPCC standards. In addition, ecosystem degradation lowers the capacity 2013) attributes this to an increase in greenhouse gas emissions. to buffer for the effects of climate extremes and provide for basic The extreme weather events include warmer spells and heat waves, needs, such as food and shelter, before, during and after disasters increased heavy rainfall events (often leading to flash floods) and (Renaud et al. 2013). Consequently, the world’s 136 largest cities higher sea levels (IPCC 2013). Areas of the world hit by heat waves Figure 4: The role of natural hazards, exposure and vulnerability in disaster risk Poverty and environmental degradation Vulnerability Vulnerability Disaster Disaster Risk Risk Natural Hazard Exposure Natural Hazard Exposure Climate Poorly planned Change development Source: Adapted from IPCC 2012. IV. Res i l i en c e i s E f f ecti v e… B u t i t H as a Cost 11 are set to double in size by 2020 (World Bank 2013a, Coumou and and disaster resilient development is consistent with the Doha deci- Robinson 2013). Intense tropical cyclones and droughts are also sion on loss and damage, which promotes the integration of climate likely to increase, although these projections vary by region and are risk management into development planning. At the same time, it subject to low confidence levels (IPCC 2013). recognizes that despite the best adaptation efforts, a residual risk of Figure 4 illustrates how weather-related hazards, exacerbated by disasters must also be managed. A study in India, for example, sug- climate change, can interact with local drivers of exposure (such as gested that gradual adaptation in crop production and consumption location of settlements in high-risk areas) and vulnerability (such patterns could reduce long-term losses in per capita consumption by as poverty or environmental degradation) to increase disaster risk. half. In Brazil, modeled population mobility across municipalities The three factors are closely inter-connected. reduced climate change impacts on poverty by 63% (Skuofias 2012). Under the current state of knowledge, clearly attributing disaster Climate and disaster resilient development are clearly effective costs to climate change remains extremely difficult, as does separating over the long term. Early warning systems have been proven to climate change from local drivers of rising loss and damage. Current save countless lives worldwide, and typically yield benefits that are scientific efforts have focused on trying to quantify the contribution 4–36 times higher than initial costs (Hallegatte 2012, Rogers and of climate change to particular hazard intensities, but they remain Tsirkunov, 2013). Examples from Bangladesh and India also clearly limited (Peterson et al. 2013). For example, in Madagascar, simu- show the benefits of prevention in terms of lives saved; for example, lated changes in the probability of Category 3–5 cyclones making Cyclone Phailin, which hit Odisha and Andrah Pradesh in October landfall under future climate change scenarios indicated a moderate 2013, resulted in 40 deaths, compared to the 10,000 who perished expected increase in landfall of the most intense cyclones (Direction during a similar event in 1999 (see Box 13). Générale de la Météorologie 2008). Studies of this type, however, At the same time, climate and disaster resilient development are subject to high uncertainties associated with climate modeling involves additional upfront costs which cannot be neglected. These and cannot address attribution of disaster impacts to climate change. include the cost of: “building back better” (building or retrofitting This attribution remains extremely difficult, if not impossible, as the with safer standards) during disaster reconstruction; upgrading relationship between intensity of hazard and impacts of disasters is hydro-meteorological systems; risk assessments; and establishing and not proportional, and disaster drivers are dynamic and subject to maintaining risk financing instruments (see Section VI). Another complex uncertainties. This is further complicated by the scarcity important upfront investment is institutional strengthening and of historical information on weather-related disaster impacts, and improved coordination, which can take time to develop. Finally, the fact that recorded disasters are relatively rare events, making it some areas may face long-term social and economic repercussions inherently difficult to produce statistically significant trends (Hug- of population relocation. gel et al. 2013). Indicative estimates of the costs of “building back better” are What is clear is that all key drivers—climate change, poorly provided in Box 3. These costs greatly depend on the choices and planned development, poverty and environmental degradation— resources available. Recent disaster assessment experience suggests influence the risk of a climate event becoming a disaster. In order that this typically costs between 10–50% more than the replacement to address loss and damage appropriately, these factors need to be cost of the original structures (Box 3). For example, the low-cost managed collectively. option would be to simply rebuild or retrofit structures, using similar Climate and disaster resilient development provides an oppor- materials; alternatively, upgrading to better construction standards, tunity to do just that by combining elements of adaptation (which moving assets to another (safer) location or redesigning the system help to reduce disaster risk) with DRM, thus also addressing risk outright, will cost more. These choices account for the wide range transfer, disaster preparedness and resilient reconstruction. It of factors used in past disaster assessments, particularly in sectors, also recognizes that addressing climate and disaster risks without such as transport, or water and sanitation. In Namibia, for example, addressing the development deficit could be an ineffective response estimated road rehabilitation needs following the 2008 floods included fragmenting an already complicated climate, disaster and develop- elevating roads and improving drainage in flood-prone areas (thus, ment finance landscape. costs were 5.5 times the replacement value of damaged structures). Achieving climate and disaster resilient development requires In Pakistan, after the 2010 floods, housing reconstruction options the international community and national governments to promote varied between 0% (no safety improvements) to 50% more, using approaches that progressively link climate and disaster resilience to multi-hazard resistant standards—which became the recommended broader development paths, and fund them appropriately. Climate option (GFDRR 2010 and various PDNAs). 12 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Box 3: The costs of building back better after disasters The experience of past Damage and Loss Assessments and, more recently, PDNAs, suggests the following approximate mark- ups for “building back better.” Building Back Sector Better Factor Housing 1.10–1.35 Schools 1.10–1.50 Hospitals 1.10–1.50 Agriculture/Livestock and Fisheries Infrastructure 1.10–1.40 Industrial Facilities 1.10–1.40 Commerce and Trade 1.10–1.35 Water and Sanitation >1.00* Transport >1.00* Electricity >1.00* Communications >1.00* Where: Costs of building back better = Replacement Costs x Building Back Better Factor and Building Back Better Factor = Costs of Quality Improvements + Technological Modernization + Relocation to Safer Areas (if needed) + Disaster Risk Reduction Standards + Multiannual Inflation * Factors for infrastructure sectors vary highly depending on the choice of reconstruction. Source: GFDRR (2010). The fact that reconstruction needs, following a disaster, have so Previous sections highlighted the increasing losses caused by greatly depended on the existing development deficit, as well as on the weather-related disasters from 1980–2010, arguing that attribution adaptation choices made, suggests that financing decisions for climate of disasters to climate change, as opposed to the more likely local and disaster resilient development may need to follow simple guide- drivers of vulnerability, remains a very difficult challenge. They lines, such as the indicative sliding scale previously used by the Global also suggest focusing on promoting climate and disaster resilient Environment Facility (GEF).4 This could take into consideration development, while recognizing that it has a higher initial cost. the country’s level of The next section focuses on how climate resilient development can The common goal should development and the be implemented, based on the extensive experience of the World financing needed. Bank and its partners. be climate and disaster Such an approach resilient development… was recently used in while recognizing that it Zambia to justify a 30% level of top-up comes at a cost financing for local development plans that incorporated climate resilience (World Bank 2013c). Incentives 4 The sliding scale was used in the initial period of the GEF’s Least Developed may also need to be built in to progressively reward countries and Country Fund and Special Climate Change Fund, as a simplified way to determine communities that take positive action towards climate and disaster the degree of additional financing required for climate resilient projects. Financing resilient development. varied based on the amount requested. This approach has since been discontinued. V. Towar ds C l i mat e a n d D i sast e r Res i l i en t D ev elo p men t 13 V. Towards Climate and Disaster Resilient Development The multi-sectoral nature of climate change impacts, and the close Figure 5: Process of integrating climate resilience into interlinkages with local drivers of vulnerability and exposure remains development a complex but unavoidable challenge. Over the last decade or so, many countries have taken steps to integrate risks from climate change into the development planning process (World Bank 2008, 2010, 2012a, 2012d). This process is often referred to as climate resilient development, the elements of which are presented in Figure 5. The Measure and Strengthen evaluate results coordinating process draws largely on early lessons from the Pilot Program for institutional mechanisms Climate Resilience (PPCR), which is supporting 18 countries inte- grate climate risk and resilience into core development and initiates Facilitate access to Mainstream transformational change (see Box 7). The elements outlined in Figure predictable and across multiple sustained financing sectors within 5 often occur in parallel and in interactive ways. Most countries have development started the process by strengthening institutions, identifying and process assessing risks, and enhancing capacity and knowledge. Enhance capacity and knowledge A similar approach was developed by the disaster risk manage- Identify and assess risks ment community, building on experience accumulated since the 1970s (Figure 6). This operational framework is organized around Change decisions towards climate five well-known risk management action pillars, approaching the resilience problem from an action-oriented perspective. Risk identification provides the base for all other actions: to reduce risk (by putting policies and plans in place that will help avoid the creation of new risk or by addressing existing risks); to prepare for the residual risk Source: Report authors either physically (preparedness) or financially (financial protection); and to inform improved resilient reconstruction design. The DRM of recent disasters are weather related. Yet, institutional resistance community also recognizes that reconstruction programs provide towards integration at the national and international levels persists. opportunities to change the status quo and behaviors that contribute The closer the problems and solutions are to affected popula- to underlying vulnerabilities. tions—particularly the poor—the more indistinguishable the Although the approaches used for climate resilience and disas- approaches become. Communities and households consider primarily ter risk management originated from different disciplines, the two short-term weather extremes in their decisions; increasingly, however, communities of practice are increasingly converging and both often they are also feeling the impacts from gradually changing average use the approaches and operational framework described above. conditions, particularly as they affect crop production, flowering The convergence may also be due to the fact that a high proportion and fruiting of plants, and trees and livestock diseases. 14 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Figure 6: An operational framework for managing climate and disaster risk PILLAR 2 PILLAR 3 PILLAR 4 PILLAR 5 Risk Reduction Preparedness Financial Protection Resilient Avoided creation of new risks Improved capacity to manage Increased financial resilience Reconstruction and reduced risks in society crises through developing of governments, private sector Quicker, more resilient through greater disaster and forecasting, early warning and and households through recovery through support for climate risk consideration in contingency plans. financial protection strategies reconstruction planning policy and investment PILLAR 1 Risk identification Improved identification and understanding of disaster and climate risks through building capacity for assessments and analysis Source: The Sendai Report (World Bank 2012c) Many of the tools and instruments that support actions developed The roles of institutions in climate and disaster resilient devel- predominantly by the disaster risk management community—such opment is arguably the single most important—yet the most dif- as risk identification, preparedness and financial protection—are also ficult—part of the process. As climate change and disasters affect key to climate resilient development. At the technical level, the exper- multiple sectors, countries where governance systems are divided tise of disaster management agencies (such as engineering, building across sectoral lines face a particularly complex challenge, since the codes, livelihood enhancement and early warning) complements that institutions that have historically driven climate change and disaster of climate resilient risk management agendas are typically newer and weaker than the experts (such as agri- more established sectoral Ministries, such as Agriculture, Transport Much is already known culture production, and Energy. Yet the lead agency needs to be able to convene decision regarding how to build livestock and ecosys- makers from multiple agencies and levels of government, as well as tem management). the private sector and civil society. It must also be able to: mobilize resilience to weather- Bringing the and coordinate development partners; promote information sharing related disasters—but it disaster risk manage- and knowledge management; and influence development planning requires sustained, long- ment and climate and the budget in the short and long term. term and flexible programs, resilience communi- Emerging experience indicates that in order to have effective ties together is helping convening power, this agency should be located at the highest possible and better coordination to draw on comple- level of government. While the choice varies, several countries, such between the adaptation mentary disciplines. as Kiribati, Mexico, Mozambique, Morocco, Samoa and Zambia and disaster risk manage- At the national level, have established coordinating agencies under Finance and Planning this means that adap- Ministries, or Offices of the President or Prime Minister. ment agendas tation and climate In addition to assisting partner countries with emerging institu- resilience work, which tional arrangements, the World Bank and many other development has traditionally involved Ministries of Environment, and disaster risk partners have been drawing on the complementary experience in management work managed by civil protection agencies (often under climate resilience and disaster risk management to derive emerging Ministries of Interior) need to be progressively brought together, and lessons and good practices. Section VI outlines the main instruments given sufficient strength to influence climate and disaster resilient and tools used, while some of the most important emerging principles planning decisions across other line ministries. and lessons are summarized below. These lessons are not intended to be exhaustive, but rather aim to capture a few of the most important V. Towar ds C l i mat e a n d D i sast e r Res i l i en t D ev elo p men t 15 successful. The PPCR has developed a set of core indicators that can Box 4: Major considerations for managing risks to development help track progress at the national level (see Box 7). Long-term programs can benefit from an initial phase, focused on planning, institutional coordination and capacity building. Often, The World Development Report 2014 provides five insights this process takes time—typically at least 18–24 months in PPCR on managing global risks (including climate and disaster risks) to development. countries—and entails slow initial disbursements. This may at first deter some agencies and prospective donors, but experience has 1. Taking on risks is necessary to pursue opportunities shown that this gradual consensus builds momentum and political for development. The risk of inaction may well be the will to scale up climate resilient development over the long term. worst option of all. Predictable, long-term financing, over a decade or more (and 2. To confront risk successfully, it is essential to shift from often from a range of sources), also helps to drive the above process unplanned and ad hoc responses when crises occur to to implementation and sustain the initial efforts. Finance sources proactive, systematic and integrated risk management. can include grants, credits or other instruments, and a mixture of 3. Identifying risks is not enough: the trade-offs and national and international funds, some of which are highlighted obstacles to risk management must also be identified, in case studies in Section VI. Long-term financing is also critical prioritized and addressed through private and public to counteract the perverse incentives that favor short-term disaster action. financing over long-term risk reduction (see example in Box 13). At the same time, longer timeframes also help optimize opportuni- 4. For risks beyond the means of individuals to handle alone, risk management requires shared action and ties to incorporate climate resilience and improved safety standards responsibility at different levels of society, from the immediately after disasters, when public support for risk manage- household to the international community. ment is at its highest. 5. Governments have a critical role to play in managing (b)  Risk identification needs to be effectively linked to systemic risks, providing an enabling environment for shared action and responsibility, and channeling direct decision making, taking future uncertainties into support to vulnerable people. consideration By quantifying risks and anticipating the potential negative impacts of Source: World Bank 2013b. “WDR 2014: Risks and Opportunities. Managing Risk climate hazards and disasters, risk assessments can help governments, for Development”. communities and individuals make better-informed decisions. Sys- tematic screening of risks can also help determine the level of risks to considerations in climate and disaster resilient development (see also people and assets and guide options for risk management. Decisions World Bank 2013c and IEG 2006 and 2012). could include avoiding the creation of new risks, for example through improved territorial planning or enforcement of building standards. Climate and disaster resilient development requires (a)  They can also include investments to reduce existing risks, such as the long-term, flexible programs, based on predictable retrofitting of critical infrastructure, gradual population relocation to financing safer areas (retreat), or the construction of coastal (protection) systems. Our experience shows that climate and disaster resilient develop- Regardless of the option, early lessons indicate that individual invest- ment requires long-term programs with predictable financing ments can be less important than their role in catalyzing community (spanning at least a decade). This is required to allow institutional and national stakeholders and changing their risk behaviors. mechanisms to mature and transcend political cycles, and promote Currently, the most effective actions appear to be those that a learning-by-doing, iterative and flexible approach to identify risks combine development benefits in the near term with reductions in and incorporate resilience into development planning. The latter vulnerability over the longer term. However, concerted efforts need is particularly important in the face of uncertainties in climate to be made to ensure that the short-term solutions do not increase change and development scenarios, which may require frequent future risks. This is typically the case with protection dykes, which, adjustments. For this reason, robust monitoring and evaluation is over the long term, can create a false sense of security and inadver- of critical importance, to allow programs to scale up approaches that tently expand settlements in high-risk areas. Robust decision making have been proven to work, and to adjust those that have been less where decisions are “stress-tested” for future climates by considering 16 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t a broad range of climate and socioeconomic conditions are proving (e) In their urgency to protect assets, climate and disaster to be useful in this regard (see Box 5). resilient development programs should not lose sight of the people Risk management requires complementary actions (c)  The complexity of most climate and disaster resilient development at various levels of responsibility—household, programs often requires multiple stakeholder meetings and consensus- community, national and international based decisions, which consume time and resources. By the time Local disaster risks, such as storms or moderate drought, can often decisions are translated into action on the ground, programs may be managed by individuals or communities at the local level but as lose sight of their most important objective—to diminish the risk to risks increase—for example, with major cyclones—national govern- people and assets, in particular for the poorest and most vulnerable. ments and the international community will have to play larger roles. Continuously reemphasizing this focus will be critical to achieving While individuals are able to deal with many risks, they are inherently the global goals of ending extreme poverty and increasing shared ill-equipped to manage large or systemic shocks, such as those that prosperity by 2030. arise from climate change, since the past can no longer be considered This section highlighted how climate resilience and disaster a reliable predictor of the future (World Bank 2013d). As a result, risk management are increasingly converging. In order to prevent climate and disaster resilient development needs to occur at different fragmentation of scarce local capacity and global resources, the two scales—individual, household, community, enterprise, national and disciplines need to be progressively harmonized, which can bring international. These different actors have the potential to support about the best of complementary expertise and help optimize the climate risk management in different yet complementary ways. use of scarce financing. The next section presents practical examples of instruments and (d) Institution building and mainstreaming need to take tools used in the different stages of climate and disaster resilient incentives into account development. Many of these are already widely employed by specific Capacity building for climate and disaster resilient development needs disciplines (such as social protection), but require further integration to be broad based and invest in professionals, especially in early to into national programs to optimize their use in resilient development. mid-career, to shield programs from political changes or high staff turnover. In addition, appropriate incentives are required to promote inter-sectoral planning: many multi-stakeholder committees have Box 5: Making decisions under deep uncertainty failed because line agency participants perceive climate and disaster resilience to be an added responsibility to their already full agenda. Many approaches to decision making focus attention on For this to be adequately addressed, stakeholders must feel that the reducing uncertainty, for example by making predictions programs are part of their own area of responsibility. This helps explain of factors and model parameters that affect decisions. But why many stand-alone adaptation and disaster risk management plans when uncertainty is difficult, if not impossible, to characterize have not been successful in the past. If, by contrast, they are effectively (e.g., the likely climate and land use in specific locations in mainstreamed into line Ministries’ own programs and budgets, staff a century from now), focusing on predictions can lead to are more motivated to perform. For example in Zambia, the Sixth gridlock. Approaches like robust decision making (RDM) are different in that they seek to acknowledge and manage deep National Development Plan led to the creation of a specific program uncertainties by identifying decisions that are robust across within the public works sector that considered climate resilience in a wide range of potential futures. Analysts run models over infrastructure planning, allowing public works staff to participate more hundreds or thousands of different sets of assumptions to actively in the activities of the multi-sectoral Secretariat for Climate understand how strategies and plans perform in a wide range Change (under the Ministry of Finance). of conditions. They use statistical analysis and visualizations In many emerging climate and disaster resilience programs, to identify the specific conditions that would lead to selecting stakeholder champions frequently emerge to lead and facilitate the one decision over another. This information is shared in an iterative process with decision makers in an effort to identify process. The result has been the genesis of multi-sectoral and multi- and build consensus around robust strategies. The World Bank stakeholder processes, which facilitate decisions on incorporating is presently using RDM in flood risk management studies in climate risk as part of development planning. Ho Chi Minh City and in infrastructure investments in Africa. Source: Lempert et al. 2013a and b; Hallegatte et al. 2012. VI . T h e Wo r l d Ba n k Gr o up E xp e r i en c e 17  he World Bank Group VI. T Experience Overview of the World Bank’s Engagement part of the multi-donor Climate Investment Funds (CIF), has a first phase dedicated for such support and, often combined with IDA Demand is growing for the World Bank’s support in climate and funding, is helping 18 countries to moving towards transformational disaster resilient development. Building on experience and lessons climate resilient development (see Box 7). learned, and collaboration with multiple partners, the World Bank The World Bank helps countries access funds from GEF’s Least has developed a range of expertise, tools and instruments to help Developed Country Fund and the Special Climate Change Fund. At countries manage climate and disaster risks. the country level, support from these funds is aligned with activities The World Bank Group provides investment financing in financed through other sources, such as the Adaptation Fund, bilateral the form of grants and credits to low-income countries through donors, and regional and multilateral development banks (MDBs). the International Development Association (IDA), and as loans By strengthening the capacity to understand and prioritize actions to middle-income countries through the International Bank for for climate and disaster resilient development, countries are able to Reconstruction and Development (IBRD). Some lower-middle draw together and leverage different sources of finance and expertise. income countries qualify for a blend of the two. Investments in The WBG’s private sector investment arm, the International climate resilient development as a share of the total project port- Finance Corporation (IFC), has also been actively engaging with folio are steadily growing; the share of IDA projects with climate the private sector on climate and disaster resilience. IFC is increas- change co-benefits were 9% in fiscal year 2011, 16% in fiscal year ing awareness of climate risks and has begun incorporating climate 2012 and 13% in fiscal year 2013. The IDA disaster risk manage- change into its policies and investments (see Box 8). Working with ment portfolio demonstrates similar trends. This upward trend is other MDBs, IFC is also supporting public-private collaboration occurring across all regions and country income groups. All 12 of for climate resilient development (IFC 2011). the country partnership frameworks prepared in fiscal year 2012 The rest of this section outlines examples of good practices, tools for IDA countries, which lay out the agreed World Bank support and instruments used by the World Bank and its partners to meet to client countries, address country vulnerability to climate change the increasing demand from countries in this rapidly growing field. and 10 (or 83%) also address disaster risk management. It is structured around the main elements of climate and disaster In addition to IDA and IBRD financing, the World Bank lever- resilient development that have been outlined in the previous sections. ages, packages and combines a number of lending instruments to assist countries in addressing climate and disaster risks. For example, the GFDRR is a multi-donor partnership and grant-making facility Mainstreaming housed within the World Bank. GFDRR’s technical assistance and capacity support for mainstreaming disaster and climate resilience In the past decade or so, many countries have recognized the into country development strategies is often instrumental in ensuring importance of mainstreaming climate and disaster resilience into that the design of larger IDA and IBRD investment projects integrate key investments and broader development planning. Mainstream- disaster and climate resilient measures (see Box 6). The PPCR, as ing—compared to stand-alone projects—can influence broader 18 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Box 6: The Global Facility for Disaster Risk Reduction and Recovery (GFDRR) Launched in 2006, GFDRR is a multi-donor partnership and grant-making facility designed to protect lives and livelihoods from disasters by: (i) expanding and strengthening global and regional partnerships to coordinate and scale up technical and financial support for national disaster risk management and climate change adaptation; (ii) contributing towards mainstreaming disaster risk reduction and climate change adaptation as key elements of sustainable development; and (iii) assisting post- disaster countries in achieving efficient, effective and resilient disaster recovery. GFDRR is hosted by the World Bank on behalf of the 21 participating donors and other partnering stakeholders. It offers a unique business model for advancing disaster risk management based on ex-ante support to high-risk countries and ex-post assistance for accelerated recovery and risk reduction following a disaster. This partnership has been successful in raising the profile of disaster risk reduction for sustainable development. GFDRR’s position in the World Bank provides an opportunity to leverage the financial, political and human resources the institution holds. The Secretariat also acts as the support hub for a decentralized network of DRM expert focal points in priority countries. These specialists play a leading role in locally managing the GFDRR program and in developing relationships with governments and other partners at the country level. As of December 2012, GFDRR has provided support to over 80 countries and received US$342 million in pledges and contributions to implement its multi-annual work program. Grant making has increased from US$6.4 million in FY07 to US$46.7 million in FY12, and demand for GFDRR support continues to grow six years into the program. Financial resources are administered as grants (typically one to three years in duration) to government agencies, their development partners, technical bodies, NGOs and others. The Secretariat judges all grant proposals on their potential to leverage investment or institutional reform, and behavior change for improved management of disaster risks. GFDRR is responsible for allocating funds entrusted to it in line with geographic and thematic priorities set by its donors and partners. development paths and potentially much larger multi-sectoral financ- and the Climate Change Commission has identified many institu- ing, and ensure that climate resilience initiatives are not undermined tional challenges and are being supported with technical assistance. by contrary policies. As part of its support for a systematic assessment of climate At the country level, examples are emerging where disaster and change risk to development, the World Bank has developed a set of climate risks have been integrated into development; for example, screening tools. These tools are designed to help government officials the Philippines is integrating disaster risk management and climate and development practitioners identify whether climate and disaster change resilience into multiple levels of government planning (see risks could have an impact at the national level, or as part of key Box 9). Other examples include Samoa, where climate and disaster sectoral investments, and whether to carry out a risk assessment in risks are considered an intrinsic part of coastal and infrastructure order to design appropriate resilience measures. management plans and embedded into a “‘ridge-to-reef ” approach. At the strategic level, the National Climate Impact Screen- Mainstreaming efforts are, in some cases, monitored through ing tool allows for the identification of climate vulnerabilities, budget tracking. For example, in Zambia, the Climate Change including vulnerable locations and sectors hotspots. This draws Network (an umbrella civil society organization) and the Ministry on climate data available from the Climate Change Knowl- of Finance have started monitoring funding allocations to climate edge Portal (CCKP) and other key resources. This analysis is resilient programs in the national budget, both in real terms (annual complemented by an Institutional Readiness Scorecard, which allocations in constant US$ equivalent terms), as well as in rela- provides a rapid indication of the institutional and adaptive tive terms (proportion of allocations that goes to climate resilient capacity gaps and needs. programs). The PPCR in Zambia aims to increase real term budget At the project and sectoral levels, a number of screening tools are allocations for climate resilience by 25% by 2019. The Government also being developed. The most advanced is the Hands-on Energy of the Philippines, in its efforts to mainstream climate change, is Adaptation Toolkit (HEAT) to assess climate risks to the energy sec- also monitoring climate activities and budget allocations through the tor (http://esmap.org/node/312, Figure 7). The toolkit also suggests Climate Public Expenditure and Institutional Review. This recently measures to reduce risks and vulnerability. completed review by the Department of Budget and Management VI . T h e Wo r l d Ba n k Gr o up E xp e r i en c e 19 Box 7: The Pilot Program for Climate Resilience (PPCR) The PPCR is a targeted program of the Strategic Climate Fund (SCF), which is one of two funds within the Climate Investment Funds (CIF). It is implemented through a partnership of five MDBs: African Development Bank, Asian Development Bank, Inter- American Development Bank, the European Bank for Reconstruction and Development and the World Bank Group (WBG). The World Bank is the Trustee for the CIF and hosts the CIF Administrative Unit. The PPCR supports technical assistance and investments to support countries’ efforts to integrate climate risk and resilience into core development planning and implementation. It provides incentives for scaled-up action and initiates transformational change by catalyzing a shift from “business as usual” to broad-based strategies for supporting a climate resilient development path at the country level. The PPCR fosters a programmatic approach and builds on National Adaptation Programmes of Action and other national development programs and plans. The country-led strategic programs for climate resilience supported through the PPCR help prioritize and implement large-scale investments in support of national development goals. The PPCR complements existing development efforts and supports actions based on comprehensive planning consistent with countries’ poverty reduction and development goals. The process for developing a strategic program involves broad and inclusive stakeholder consultations to identify and prioritize key interventions. With about US$1.3 billion pledged since its establishment in 2008, the PPCR supports pilot programs in nine countries and two sub-regions (the Pacific and Caribbean), which involve nine additional countries. The PPCR provides phased funding: grant financing of up to US$1.5 million to undertake analytical studies and capacity building to support the preparation of country- specific strategic programs (Phase I), generally lasting 18–24 months; and near-zero interest credit for the implementation of key climate resilience measures (Phase II). The design of these measures aims to be transformative, be multi-sectoral, and integrate multiple stakeholders into the development process. Phase II is generally implemented in partnership with representatives of civil society, local communities and the private sector. In addition to financial support, the PPCR also provides a platform to share lessons and experiences, with the aim of replicating effective strategies and activities at scale. The requirement for broad- based stakeholder consultations ensures that the views of key stakeholders inform the strategic programs from the conceptual phase to implementation. In an effort to enhance private sector involvement, the PPCR has also established a competitive fund to provide support for private sector-oriented operations across the five MDBs, and, in particular, to create opportunities to overcome barriers to private sector adaptation investments in challenging business environments. The PPCR results framework was developed as a collaborative effort among PPCR countries, donors and development partners, and includes core indicators designed to measure PPCR program outcomes at the national level, aggregated from individual PPCR components. Source: PPCR 2009. PPCR Design Document; PPCR 2012. PPCR program overview page; PPCR undated. PPCR Fact Sheet; PPCR 2013a. PPCR Measuring Results; SCF 2009. SCF Governance Framework. Box 8: Engaging the private sector in addressing climate and disaster risks to development As part of engaging the private sector, IFC has published a series of reports that assess private sector risk from climate change (IFC 2013; www.ifc.org/climaterisks). The reports highlight the complex factors that determine the financial vulnerability of a business in a specific location and sector; for example, a food processor in Ghana may have to deal with changing disease vectors and not just rising temperatures (IFC 2010b). In some cases, the simple provision of information has proven to be sufficient to motivate a client to take action; for example, a port in Colombia took action to include climate risks in its operations (IFC 2011). IFC has also begun to incorporate climate resilience into its investments, through a policy that requires the inclusion of climate change risks in the review of environmental, health and safety risks during the appraisal. This policy is applied to all investments in the most climate-sensitive sectors, including agriculture and infrastructure. In 2013, IFC announced its first officially defined adaptation project, with Modern Karton—a large paper company installing equipment to enable recovery and reuse of water in Turkey, thereby avoiding the need for tapping limited groundwater resources (IFC 2013). IFC also participates in the PPCR and other donor-supported programs; for example in Nepal, it is supporting efforts to promote more climate resilient seed varieties for the most widely grown agricultural commodities. Source: IFC staff 20 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Box 9: Mainstreaming across administrative levels to enable national resilience in the Philippines The Philippines is one of the most disaster-prone countries in the world: weather-related disasters account for 90% of annual damages and cause on average 0.7% of losses to GDP growth. At least 60% of the country’s total land area is exposed to multiple hazards, and 74% of its population is considered at risk. Rapid urbanization has led to urban squalor and the proliferation of unplanned, informal and overcrowded settlements, often situated in high-risk areas. Poor urban practices have also aggravated flooding risk over the past years and are expected to worsen in the future. Furthermore, 70% of the 1,500 municipalities located along the coast are vulnerable to sea level rise. The country is already witnessing longer episodes of drought and El Niño events, causing a large drop in the volume of agricultural production and sharp declines in GDP. In October 2009, the Philippines was hit by the devastating Tropical Storm Ondoy (Ketsana) and Typhoon Pepeng (Parma), resulting in recovery and reconstruction requirements totaling US$4.4 billion, including US$2.4 billion in public spending needs. In the aftermath of the typhoons, the Government of the Philippines, with support from the World Bank, GFDRR and partners (Asian Development Bank, the Australian Agency for International Development and the Japanese International Cooperation Agency), undertook a PDNA resulting in a series of recommendations to strengthen the country’s resilience to natural disasters. The PDNA was followed by a flood management master plan for metropolitan Manila to build the resilience of surrounding areas to future flood events. In 2010, the Government of the Philippines signaled a policy shift from post-disaster response to prevention and risk reduction. It enacted the Disaster Risk Reduction and Management Act and adopted a Strategic National Action Plan for Disaster Risk Reduction, effectively institutionalizing a comprehensive and integrated approach to risk reduction. The Government recognized that reforming the policy and action framework on disaster risk management must be a national priority, requiring a cross-sectoral national strategy that applied a unified approach across administrative levels. In addition, a March 2013 National Summit for Local Chief Executives agreed to a comprehensive understanding of their role in disaster risk management, as well as mechanisms for the transparent and accountable use of resources. Prioritizing the strengthening of local level governance, the Philippines is now pursuing the integration of climate resilience into local ordinances, policies and plans. Targeted actions include the operationalization of laws, policies, plans and other legal documents highlighting the Local Chief Executive’s responsibilities in disaster risk management, standardization of a local disaster risk management plan template, optimizing trade-offs, employment and tourism priorities, and enhanced coordination and communication in times of disasters. The Philippines is planning to continue focusing on mainstreaming with specific emphasis on integrating disaster risk management and climate resilience into the Comprehensive Land Use Plan and other local laws, policies and plans. Local communities and stakeholder coordination and communication will be strengthened through a common platform, and a whole-of-nation approach to DRM decisions pursued. The World Bank’s engagement helped to strengthen the DRM Risk Identification policy dialogue. The 2010 disaster act formed the basis for a World Bank DRM Development Loan with a Catastrophe Deferred Risk assessments serve multiple purposes for various stakeholders, Drawdown Option (CAT-DDO), which will be activated in case of ranging from urban risk assessments for disaster preparedness, a major disaster. This operation forms the foundation for the World to multi-country financial risk assessments, and to the design Bank’s ongoing policy dialogue on DRM. The World Bank has also of financial transfer mechanisms. The World Bank has been conducted a Climate Public Expenditure and Institutional Review, supporting climate and disaster risk assessments through open and is helping address the identified challenges through a technical geospatial data tools, and the establishment of the Understand- assistance program. The technical assistance provides targeted sup- ing Risk Community of Practice (now with 2,850 members port for the Government’s planning, budgeting, execution, tracking worldwide). The focus has been on promoting open data and and reporting efforts. information sharing between in-country agencies, the scientific community and decision makers in the field, and in supporting VI . T h e Wo r l d Ba n k Gr o up E xp e r i en c e 21 Figure 7: Hands-On Energy Adaptation Toolkit (HEAT) Matrix Indicating the Adaption Imperative for the Country’s Energy Sector High Greatest adaptation imperative High adaptation imperative Large number of physical climate Large number of physical climate Physical Vulnerability change vulnerability challenges change vulnerability challenges and strong need for assistance and need to accompany because of low country adaptive country’s climate change capacity adaptation e orts Low Adaptive Capacity High Low adaptation imperative Lowest adaptation imperative Limited number of physical Limited number of physical climate change vulnerability climate change vulnerability challenges, through individual challenges, through individual risks could be high, and large risks could be high, and limited opportunity to reduce overall opportunity to reduce overall vulnerability by building vulerability because of high adaptive capacity country adaptive capacity Low This tool, developed by the Energy Sector Management Assistance Program (ESMAP), uses a simple set of multiple-choice questions to determine vulnerability, adaptive capacity and adaptation urgency. The sector’s vulnerability (e.g., whether it is water intensive) is assessed against climate hazards (e.g., decreasing annual rainfall) to determine a simple, color-coded score signaling the level of risk (white, green, orange, red). This is then assessed against coping capacity to yield an overall score for the sector (the adaptation imperative). Available at http://www.esmap.org/node/312 informed decision making for climate and disaster resilient resilience. Complimenting this initiative is the CCKP, an online development. As a consequence, access to risk information has platform that draws together various international open sources improved for the more than 40 million people in 24 countries of climate information (see Figure 9). that have access to the Internet, and some 1,300 datasets related to natural hazard risks have been shared. In an effort to make as much of this risk data and analysis Risk Reduction open and available as possible to potential users around the world, the World Bank has been implementing an Access to With better information on disaster and climate risk, informed Information Program since 2010. Building on this, GFDRR decisions can be made to reduce that risk. Since the main driver established the Open Data for Resilience Initiative (OpenDRI), of growing disaster losses is increasing exposure, reducing new risk in partnership with governments, international organizations and through anticipatory action is critical, for example through improved civil society groups, to develop open systems for disaster risk and territorial planning or building practices. Existing risks can also be climate change information. OpenDRI also promotes innovative addressed by retrofitting critical infrastructure or constructing flood approaches to transparency and accountability, ensuring that a protection systems. wide range of actors can participate in the challenge of building 22 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Figure 8: Examples of risk information platforms for decision making InaSAFE 1 2 3 Legend Estimated buildings a ected Not Flooded Flooded The examples of InaSAFE, developed originally for Indonesia, and the Sri Lanka Disaster Risk Information Platform Source: http://inasafe.org/en/ VI . T h e Wo r l d Ba n k Gr o up E xp e r i en c e 23 Figure 9: Open data resources for a wide range of uses and users Open Data for Resilience Initiative (Open DRI) Open Climate Data OpenDRI can be accessed here: https://www.gfdrr.org/opendri ; Open Data Resources for Climate Change can be accessed here: http://data.worldbank.org/climate-change . It includes links to the Climate Change Knowledge Portal (http://sdwebx.worldbank.org/ climateportal/index.cfm), Climate for Development (http://climate4development.worldbank.org), Open Climate Data (http://data. worldbank.org/data-catalog/climate-change), and a range of other relevant open data links. When considering a disaster risk, be it new or existing, there In addition, many other countries, such as island nations and are three major ways to deal with it. drought-affected countries in the Horn of Africa, have started discussing retreat options. a) ‘Retreat’ by reducing exposure to the hazard ‘Retreat’ refers to moving an existing development which is b) ‘Protect’ by reducing the hazard risk exposed to a given hazard to a new, safer location—or to plan ‘Protecting’ people and assets from a hazard can be done through a new development in the safer area. The latter is often a very ‘hard’ infrastructure-based options (e.g., sea walls) and ‘soft’ effective and low-cost option, if appropriate alternative loca- ecosystem-based approaches, such as ensuring that there is sufficient tions exist. However, when considering existing assets and wetland and coastal vegetation to act as buffers. Ecosystem-based communities that are already established in an exposed area, solutions are proving to be extremely cost effective and provide retreat is not easy as it normally involves resettling people and a level of flexibility that can adapt to changing hazard patterns assets, with all its associated socioeconomic challenges. In over time. Often, however, a combination of hard and soft solu- addition, the most exposed people are often the poorest, and tions are required. surrounding (safer) land tends to already be occupied. Good practices in managing population retreat are still emerging, c) ‘Accommodate’ by reducing vulnerability although initial work has begun in Latin America and in ‘Accommodating’ implies an active decision to live with the hazard, large urban areas in East Asia (see for example Correa 2011). but reduce vulnerability to it, for example by retrofitting existing 24 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Box 10: Decision support through open risk assessment and information platforms—CAPRA and InaSAFE Since 2006, more than 20 countries have produced national risk information. World Bank and GFDRR support for risk assessment has occurred through specific country-level studies, development of guidelines for methodologies, support of spatial datasets, and setting up of risk analysis tools for decision makers. Specific examples include: the Central America Probabilistic Risk Assessment (CAPRA) and InaSAFE, which are now well-established tools that exemplify decision support through open data sources; the Disaster Risk Information Platform of Sri Lanka (see Figure 8); and Moz-Adapt, an open data platform maintained by the National Institute for Disaster Management in Mozambique to support data sharing between government, academic stakeholders and the general public. Extensive aerial imagery over the Limpopo River Basin is complementing Moz-Adapt to establish an exposure baseline from which to simulate the impact of different flood return periods. Understanding hazards, exposure and vulnerability is the first step towards managing climate and disaster risk. People living in disaster-prone areas have been assessing the risks they face in various ways for centuries. Today, a range of new methods can help governments, communities and private sector actors quantify and anticipate the potential impacts of natural hazards, make more informed decisions on how to manage risk and facilitate climate resilient development. CAPRA is a free and modular platform for risk analysis and decision making, which applies probabilistic techniques to hazard and loss assessment. Initiated with seed funding from GFDRR in Nicaragua, CAPRA has grown into a partnership between the World Bank, the Inter-American Development Bank, UNISDR, the Coordination Center for the Prevention of Natural Disasters in Central America, and governmental institutions in Belize, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. The platform was designed to be modular and extensible. Hazard information is combined with exposure and physical vulnerability data, allowing the user to determine risk from multiple hazards, thus distinguishing it from previous single hazard analyses. The CAPRA suite of software includes hazard mapping tools or add-ons to connect with existing hazard tools, risk assessment and cost-benefit analysis. CAPRA can also be used to design risk-financing strategies. Colombia, El Salvador, Dominica, Panama, Ecuador, Costa Rica and Peru are currently preparing major public investment plans, based on risk assessments conducted through the CAPRA program. CAPRA is also assisting governments in creating new analytical products to inform land use planning and public investments. For example, in Colombia, risk modeling undertaken in three cities resulted in quantitative risk information on buildings in the education, health and housing sectors. InaSAFE is a free software tool that produces realistic natural hazard impact scenarios for better planning, preparedness and response. The software allows users to combine data from many sources and explore the impacts a single hazard would have on specific sectors, e.g., location of primary schools and estimated number of students affected by a possible flood. This open source tool enables users to download a free Geographical Information System editor (QuantumGIS), install the InaSAFE plugin, and pull in hazards and exposure data layers either with manual offline sources or via Internet web services. Afterwards, users can run a risk impact analysis to show the vulnerability of certain infrastructure or populations to a specific hazard. The software was developed in a partnership with the World Bank/GFDRR, the Australia-Indonesia Facility for Disaster Reduction and the Government of Indonesia. Prototype questions addressed by the tool include: how many schools might be closed and/ or damaged by a flood; how many buildings might be damaged by a 50-year compared to a 100-year flood; and what might be the fatalities/injuries from such an event? structures to more resistant standards or at higher elevation. This A portfolio of cost-effective measures can be combined to reduce approach is common, especially amongst the poor. Because of a large part of climate and disaster risk. Under high-emission climate uncertainties and cost-benefit considerations, many infrastructure change scenarios, one World Bank study found that economically investments use a gradual approach to safety standards (e.g., elevate efficient adaptation measures could reduce expected losses by 40–68% bridge decks or increase drainage when risk becomes greater than in 2030, with even greater reductions in specific locations (World previously envisaged). For sectors, such as agriculture, typical Bank 2009). This assessment considered a number of adaptation strategies include livelihood diversification or adoption of more measures, for example infrastructure improvements, structural hazard climate resilient crops or livestock. management, technological measures, and systemic or behavioral VI . T h e Wo r l d Ba n k Gr o up E xp e r i en c e 25 initiatives. A range of analyses have also shown a strong economic in their national plans, depending on needs. These form integral case for disaster risk reduction, with the benefits of avoided and components of national strategic approaches, helping link disaster reduced losses outweighing investment costs on average by about response with resilience building for a holistic approach. GFDRR four to one (Mechler 2012)—although the time horizon of the support generally targets strengthening national and local coordina- expected benefits influences investments’ cost effectiveness. In tion, capacitating response and civil protection structures, providing order to avoid the creation of potential new risks, using a low or real-time impact analysis and enhancing financial preparedness. For no-regret approach is often suggested. This would mean that there example, World Bank and GFDRR are supporting the Senegalese are development benefits with or without the projected climate Civil Protection Agency to strengthen its risk management capacity change (Government of the UK 2013). by setting up coordination mechanisms for early warning, prepared- To underpin the reduction of both future and existing risk, the ness and response. In Burkina Faso, support is going to the National World Bank has been supporting improvements in safety standards Council for Disaster Management and Recovery to develop local and building codes, and participatory spatial planning taking resilience contingency and emergency preparedness plans, link the plans to into account (see Box 11 for Madagascar, and Box 12 for Samoa and the existing early warning system, and strengthen community-based São Tomé Island). In Vietnam, where typhoons can affect up to 90 preparedness planning, including drills and simulation exercises. In percent of the population, GFDRR supported the creation of new Haiti, where preparedness for evacuation and shelter is a priority, disaster resilient policies in infrastructure and land use. An assess- support is being provided to the Directorate of Civil Protection to ment of Vietnam’s rural roads and national highways led to climate modernize the country’s evacuation shelter network and engage local resilient road designs applied in a nationwide IBRD rural transport communities in mapping and emergency planning. project. Additionally, the Ministry of Agriculture is using studies of Weather, climate and hydrologic monitoring and forecasting are damaged irrigation systems to develop an irrigation improvement essential to inform decision making for climate resilience and provide project. These concrete actions by government in response to exist- critical inputs to early warning systems. The World Bank’s portfolio ing climate risk are occurring in a country where sea level rise could of projects supporting hydro-meteorological investments is currently flood up to five percent of its arable land. close to US$500 million, including integrated support in Central Following Tropical Storms Ondoy and Pepeng in 2009, the Asia, Mozambique, Nepal and Yemen. In 2011, GFDRR launched World Bank and GFDRR supported the Philippines Department a hydro-metrological initiative to support and leverage World Bank for Public Works and Highways to develop the Metro Manila Flood investments to strengthen weather, climate and hydrological services, Risk Management Master Plan, which prioritizes policy reform and and ensure that World Bank investments support and contribute structural risk reduction investments costing approximately US$8.6 to international norms, standards, systems and efforts under the billion. Studies have begun on a plan that proposes alterations for auspices of the World Meteorological Organization (WMO) and the upstream catchment area and the Laguna Lakeshore, and the the Global Framework for Climate Services. government is in discussions with affected communities on new Hydro-meteorological support emphasizes the role of the ultimate housing and resettlement options. Similarly, GFDRR supported information users as demand drivers and ultimate beneficiaries of the city authorities in the Senegalese capital Dakar with designing quality weather, climate and hydrologic services. Investments are, a large-scale IDA investment program to protect communities from therefore, context and country specific. In Nepal, for example, a recurrent floods and storm surges. The US$55.5 million project core component of the PPCR support for “Building Resilience to targets municipalities located in flood-prone, peri-urban catchment Climate Related Hazards” is the creation of an agriculture manage- areas, home to 1.2 million people. The project will improve drainage ment information system to provide timely agro-climate and weather systems and develop an integrated urban flood risk and storm water information to farmers, so they can anticipate major changes in management program. weather patterns and take appropriate action. Regional approaches are often employed to support national capacity by linking with neighboring regional and global centers Preparedness of excellence for data, forecast and expertise sharing, for example through a system of “cascading forecasts” for snowmelt runoff and Considering the context of increasing uncertainty, “planning for severe weather in Central Asia, supported by IDA and the PPCR. the worst” must assume a central role in development. All 31 Building capacity of the agencies involved across the service GFDRR priority countries include some aspect of preparedness delivery chain improves early warning and preparedness, as well as 26 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Box 11: Investing in improved safety standards and building codes in Madagascar Madagascar is one of the most exposed countries in the world to cyclone risks, averaging 3–4 cyclones a year. The 2008 cyclone season, for example, damaged some 6% of existing health centers and 4% of primary schools, in addition to causing extensive damage to irrigation and transport infrastructure (Government of Madagascar 2008). Many of the structures were weakened by poor maintenance and past cyclone damage. Despite an international call for funds, less than half of the public reconstruction needs were eventually met. This left many poor communities in high-risk areas with the burden of having to rebuild not only their own damaged assets, but also essential public infrastructure (such as schools and access roads), further compounding the cycle of vulnerability. To address this, the National Unit for the Prevention and Management of Disasters gave the highest priority to the development of weather-resistant building and infrastructure codes, using a GFDRR Track II Grant and relying mostly on local experts. Madagascar’s new building codes were adopted by a Government decree signed by all 31 Ministries on April 20, 2010. They were based on the codes of Réunion and the Kingdom of Tonga, following extensive discussions with builders and communities. The codes are strictest in Zone 1 (see map below), where they are set to resist wind speeds of 266 km/ha (74 m/s). They are mandatory for public buildings (schools and health centers), recommended for traditional houses in high-risk areas, and have been integrated into urban and habitat regulations. In case a public building fails to meet the codes, the Decree provides for a public hearing by local collectivities. Most importantly, the decree allows for the possibility of civil penalties for both constructors and inspectors. By also making inspectors liable, the new regulation aims to encourage certification of inspecting firms and discourage the proliferation of corrupt practices that contribute to building failure. Post-disaster assessments are starting to show that the codes are effective, with only one in 1000 improved public buildings constructed by a social fund suffering damages. Transport and irrigation infrastructure safety codes were developed next. Similar to the construction codes, the country was divided into risk zones based on hydro-geological characteristics, existing assets, river morphology and projected climate change scenarios. Safety return periods and improvement in designs were then developed for the different risk zones and types of infrastructure (see figure below). Minimum return periods for transport infrastructure (in years) Zone Roads Drainage Bridges Dykes Surface Embankment Longitudinal Transversal Decks Pillars High plateau, high 150 150 50 150 300 150 150 rainfall High plateau, low rainfall, 50 50 50 50 300 100 100 occasional flooding Watersheds in extreme 75 75 50 75 300 150 150 south The experience of Madagascar yields several important lessons: first, the codes were developed at a very low cost (as Madagascar’s aid was interrupted following a military coup), and relied heavily on local knowledge and dedicated national champions; and, second, the codes were extensively field tested and discussed with industry and communities. Awareness, training and regulatory incentives were perceived to be as important as the codes themselves. The decree on building codes, for example, was discussed at length with legal experts and experienced implementers, to ensure that potential loopholes would be addressed, and was kept very simple to help ensure compliance. The codes were spearheaded by a unit located within the Office of the Prime Minister—with sufficient leverage to bring together all relevant stakeholders. This was a top priority for three years, which helped focus attention towards the common goal of minimizing the recurrent damage from cyclones and floods. Sources: Adapted from Razakanaivo et al., 2010; Cellule pour la Prévention et Gestion des Urgences (2013a and b). VI . T h e Wo r l d Ba n k Gr o up E xp e r i en c e 27 Box 12: Integrating climate resilience into spatial planning in small islands Samoa presents an example where risks were considered part of integrated development (infrastructure) plans. These “Coastal Infrastructure Management” plans were developed in 1999 for all districts and villages. They assess the resilience of infrastructure to flooding, erosion and landslides; identify potential solutions; and assign responsibility for implementation amongst different stakeholders. They also take a ridge-to-reef or landscape approach that involves managing climate and disaster risks from the coastal zone to upper water catchment areas. Implementation of the plans, using a participatory approach, is being supported by the PPCR, through the World Bank, and the Adaptation Fund, through UNDP. Interestingly, not all options identified by local stakeholders involve climate resilience. Many involve simple development needs, such as electrification and water supply, which can have indirect resilience benefits. However, the process of incorporating resilience into spatial planning allows local communities to use the plans to access funding for both everyday development needs, as well as for adaptation to climate change. A similar approach to climate resilient planning is being followed in other countries, including the Barotse sub-basin of the Zambezi, Zambia, which is supported by the PPCR. The map below illustrates how simple planning can be done with the right information and risk mapping available in São Tomé Island. Areas at risk are marked in red (coastal erosion), purple (river flooding), cream (sea storms) and yellow (stagnant water). Simple adaptation measures selected include reinforcement of embankments combined with mangrove replantation along the coast. At the same time, risk mapping has allowed the community to plan the future expansion of the settlement to safer areas. Source: Enhancing Climate Resilience of Coastal Resources and Communities Project, Samoa; and São Tomé and Principe Adaptation Project coordination and information exchange. As an example, in Mozam- meteorological service, national water directorate, regional water bique, the PPCR on “Strengthening Hydrological and Meteorological authorities, national disaster management agency and local NGOs to Information Services for Climate Resilience” supports the national develop and deliver early warning from producers to last-mile users. 28 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Figure 10: Inputs of climate information services to various stages of the climate resilient framework 1 century Climate Prediction and Projection Climate Change 1 decade El Niño Characteristic Lifetime of Event 1 year Seasonal to Interannual Climate Prediction 1 month Monsoon Mid-latitude Weather System 1 day Tropical Cyclone Cold Front 1 hour Thunderstorm Tornado Weather Forecasting 1 minute 10 m 100 m 1 10 100 1,000 10,000 100,000 Characteristic Size of Event (kilometers) Source: Adapted from Figure 2 in Zillman, J.W. (1999). The National Meteorological Service. WMO Bulletin 48(2): 129–159 pp, World Meteorological Organization, Geneva, Switzerland) Financial and Social Protection The World Bank uses a series of instruments (Figure 11) to sup- port financial protection, which are tailored for national and often Financial Protection regional needs and varying disaster risk profiles. This means that Financial protection allows for accelerated resource mobilization for low-severity, high-frequency events, risk retention, in the form in an emergency or pre-emergency situation, through contingency of budget reserves and contingent credit, is the most appropriate funds and credit, and a set of risk transfer and insurance instru- solution. However, for more severe disasters, risk retention will not ments, which include disaster micro-insurance, agriculture insurance, be sufficient; therefore, more expensive risk transfer options may private property insurance and public asset insurance. The World be considered (see Figure 11). Bank’s Disaster Risk Financing and Insurance Team, supported The World Bank has also supported regional initiatives in by GFDRR, the Bank’s Treasury and Finance and Private Sector the Caribbean and the Pacific. For example, in 2007, it helped Development Departments, and IFC, provides advisory services to the Caribbean Community and Common Market (CARICOM) countries to increase their financial resilience to natural disasters. establish the Caribbean Catastrophe Risk Insurance Facility VI . T h e Wo r l d Ba n k Gr o up E xp e r i en c e 29 Figure 11: Financial protection instruments for climate and disaster resilience High Severity International assistance for recovery and reconstruction Securities (including TRANSFER catastrophe bonds and swaps) RISK Insurance (including property, agriculture and micro-insurance) Contingent loans/credits RETENTION RISK Government reserves/ contingency funds Low Severity Low Frequency High Frequency Source: Disaster Risk Financing and Insurance Program, Non-Bank Financial Institutions Capital Markets Practice and GFDRR, The World Bank. (CCRIF—http://www.ccrif.org), a Caribbean-owned “parametric” Financial instruments not only help reduce the impacts of risk insurance pool, which offers fast payout to its 16 Caribbean member from household to government levels, but many utilize innovative countries upon occurrence of pre-defined hurricane strengths and approaches to transfer risk off government balance sheets to the capi- earthquake magnitudes within defined geographical locations. The tal markets. This helps governments manage and reduce contingent CCRIF offers participating countries an efficient and transparent expenditures, for example by insuring safety nets or traditionally vehicle to access international reinsurance and capital markets, and uninsurable concepts, like low-income housing. is a self-sustaining entity, relying on its own reserves and reinsurance The World Bank is providing a combination of technical assistance for its financing. Building on the Caribbean experience, a similar and investment support to facilitate a shift from ex-post response to effort is underway in the Pacific. ex-ante DRM under the Regional Disaster Vulnerability Reduction The World Bank also supports efforts to improve risk transfer Project (RDVRP) (see Box 14). At the core of this approach is an for households and individuals, recognizing the limitations to insur- attempt to change the culture of decision making to incorporate ing the poorest sustainably and at scale (World Bank 2013e). For climate and disaster risk information on where and how to build. example, the team assisted: Romania and Turkey in establishing This, in turn, aims to reduce the base physical risk to external national catastrophe risk insurance pools to protect homeowners hazard shocks (i.e., more resilient transport systems, water supply against natural disasters; Mongolia to create a livestock insurance pool infrastructure, public and private buildings), and develop the appro- to protect herders against harsh winters; and the Indian government priate instruments, capacity and financial protection mechanisms to to move towards market-based crop insurance. Continued technical smooth out the impact of disasters on public finances. support to reform the National Agricultural Insurance Scheme in To encourage greater use of market-based solutions and to India, together with its successor schemes, constitutes the largest crop respond to the diversity of demand, the World Bank also provides insurance program in the world with more than 25 million farmers intermediation services for disaster-related transactions. IBRD began insured. This project reduces delays in claims payments provided providing treasury services to the CCRIF in 2007, intermediating to farmers, provides improved coverage and highlights the need for catastrophe swaps. In 2008, IBRD and IDA introduced intermediate strong public-private partnerships. weather derivatives. Both initiatives represent the broader options of 30 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t customized financial solutions to help protect government invest- financial solutions, particularly in middle-income countries. Over ments and development resources. US$40 billion in CAT bonds have been issued in the last decade, The World Bank has also supported the development of catas- mostly in high-income countries, and after Superstorm Sandy, the trophe bonds (CAT bonds) in Mexico, covering hurricanes and New York Metropolitan Transit Authority attracted US$200 million earthquakes at the sovereign level (see Box 15). By providing an in investments to cover flooding risk in the subway through a CAT investable security (rather than an insurance or derivative contract), bond (Economist 2013). CAT bonds can help broaden the scope of potential investors, Since 2008, the World Bank, through IBRD, has been issuing which increases the chances of achieving the scale needed for DRM Green Bonds to raise funds from investors in the capital markets Box 13: The proven benefits of early warning and preparedness against disasters Improving weather forecasts and early warning systems must be effectively linked to action on the ground, to save both lives and property. Preparedness activities, therefore, must include strengthening the capacity of local organizations to plan for and respond to the effects of disasters. In the case of approaching cyclones, for example, local authorities use early warnings to evacuate large numbers of people to safer locations or to protect them in situ. Long lead times enable people to protect property and infrastructure; reservoir operators, for example, can reduce water gradually to accommodate incoming floodwaters. Early warning can also provide information on the occurrence of a public health hazard and enable a more efficient response to seasonal drought and food insecurity. Effective systems, therefore, require a combination of government leadership, multiagency coordination to ensure effective responses based on pre-agreed operating procedures, and community participation (Rogers and Tsirkunov 2013). India—a case in point In October 1999, a Category 5 cyclone devastated the eastern coastline of India. The strongest cyclone on record in the North Indian Ocean left 10,000 people dead and about 1.7 million homeless, and caused disaster losses estimated at US$4.5 billion. Fourteen years later in October 2013, Category 4 Cyclone Phailin hit the same stretch of coastline around Andhra Pradesh and Odisha (formerly known as Orissa). This time, a different story unfolded: fewer than 40 people died (0.4% of the 1999 casualties) and initial estimates of economic losses stood at US$700 million. What changed? Essentially, years of disaster risk prevention and preparedness paid off. After 1999, the Odisha State Disaster Management Authority (OSDMA) invested heavily in improving capacity to manage disaster risk through early warning systems and preparedness simulations, including annual storm drills and the involvement of local community and volunteer organizations. OSDMA also invested in new cyclone shelters, evacuation routes and strengthening coastal embankments. With improved forecasting, the Indian Meteorological Department was able to provide accurate advance warning (72+ hours) and tracking forecasts before Phailin made landfall, allowing about a million people to evacuate. Improvements in communication technology also played a central role in enabling the network of community and volunteer organizations to mobilize the larger population; currently, 60% of the population in Odisha own mobile phones, compared to just 2 million handsets in all of India in 1999. Continued and increased support is necessary to ensure that Andhra Pradesh, Odisha and other similar jurisdictions with well- developed disaster management structures do not become victims of their own success, due to the perverse incentives surrounding disaster response. The widespread devastation in 1999 captured global media attention and catalyzed a humanitarian relief effort that extended well into the 2000s. This financial assistance is equally important in 2013 to ensure that the fragile success is not undone. The Government of India and the World Bank continue to support climate and disaster resilience in Odisha and Andhra Pradesh through Phase 1 of the National Cyclone Risk Mitigation Project. The project, totaling US$255 million, has been under implementation since March 2011, and aims to extend the early warning system to the community level, build multi-purpose cyclone shelters and evacuation roads, and strengthen existing coastal embankments. Early indications reveal that project investments are contributing to India’s larger efforts to help communities become more resilient to the impacts of natural disasters and the changing climate. Source: World Bank Project staff, World Bank’s blog and NPR blog. http://blogs.worldbank.org/endpovertyinsouthasia/never-again-story-cyclone-phailin; http://www.npr.org/blogs/parallels/2013/10/15/234679285/how-india-has-learned-to-deal-with-major-cyclones?utm_medium=Email&utm_source=share&utm_campaign VI . T h e Wo r l d Ba n k Gr o up E xp e r i en c e 31 Box 14: Tools, capacity and investment support to Eastern Caribbean countries Grenada and Saint Vincent and the Grenadines (SVG) are exposed to high levels of risk from climate extremes. According to the World Bank and UN ECLAC’s Damage and Loss Assessment (DaLA), poor infrastructure is the single largest driver of risk for Eastern Caribbean economies. Due to their small population and geographical size, a single hazard event can impact the entire population and economy at once—significantly impacting public welfare, national economic activities, property and natural resources. Hurricane Ivan (2004), for example, resulted in losses amounting to 200 percent of annual GDP in Grenada, damaging or destroying 97 percent of the country’s schools and 67 percent of its housing stock. Over the past 50 years, approximately US$3 billion has been lost as a consequence of natural hazards in the Eastern Caribbean alone, averaging 3% of GDP per year in the same period. The resulting fiscal losses from these disasters and the costs associated with the reconstruction of damaged infrastructure have greatly contributed to unsustainable budgetary deficits and have had a negative impact on economic growth. As a result, SVG’s debt-to-GDP ratio currently stands at 68% (IMF 2012). The total RDVRP funding envelope, including grants and concessional financing from the PPCR, supports activities currently being implemented to reduce the vulnerability of existing infrastructure through retrofitting and rehabilitation of critical structures (international airport, water supply infrastructure, schools and bridges in Grenada; and hospitals, schools, riverine defense, coastal defense and bridges in SVG). These projects also aim to build capacity for improved territorial planning and better building practices in both the public and private sectors, which over time will help reduce both physical and fiscal vulnerability. Complementing these investments is active support to shift to ex-ante risk reduction through an iterative process to identify and prioritize reduced risk investments through: 1) geospatial data consolidation; 2) the application of disaster risk analysis for decision making; 3) the establishment of risk baselines; and 4) quantitative risk reduction. Building on the RDVRP experience, a recently completed analysis on risk of riverine flooding (illustrated in the map) is informing decisions in Belize. To improve macroeconomic stability, the RDVRP includes a Contingency Emergency Response Component (CERC) that can provide quick disbursements either to meet immediate post-disaster liquidity needs to finance critical emergency goods or to finance emergency recovery and reconstruction works and associated services. Monitoring and evaluation is critical to support emergency recovery and reconstruction needs, both as a management information tool and as a longer-term learning process for prioritizing and managing post-disaster recovery and reconstruction efforts. Monitoring indicators include improved post-disaster damage assessment practices and procedures and strengthened physical resilience to future adverse events, as reflected in appropriate hazard proofing of reconstruction works. Source: Report team with material from Justin Locke and Bradley Lyon. IMF 2012. Debt Statistics from the IMF, World Economic Outlook report, October 2012. Germanwatch 2012. Global Climate Risk Index 2013, Germanwatch, November 2012. http://germanwatch.org/en/download/7170.pdf. Regional partnership strategy 2010. IBRD, IDA and IFC Regional Partnership Strategy for the OECS, 2010–2014, May 3, 2010, p. 17. (World Bank 2012f ), in an effort to develop innovative solutions The World Bank has also expanded the use of its CAT-DDOs, and attract private sector financing for climate action in IBRD which are Development Policy Loans (DPLs) that provide client borrowing countries, and raise awareness about climate change and countries with contingent credit lines that can be drawn upon in the opportunities to invest in climate solutions (see Box 16). Sup- case of disaster. They were created first and foremost to encourage port for climate resilience has included a watershed management investment in risk reduction to access a CAT-DDO, countries project in Tunisia, and flood management in the Huai River Basin must show that they have engaged in a comprehensive disaster in China. Such efforts are critical for climate resilient development, management program as part of a DPL. Countries have the option which has, thus far, not attracted much support from the private to use the revolving feature of these credit lines by repaying draw sector (PPCR 2013b). down amounts, thus preparing themselves for future events. 32 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Box 15: Mexico’s Fund for Natural Disasters (FONDEN) FONDEN, Mexico’s Fund for Natural Disasters, was established in the late 1990s as a mechanism to support the rapid rehabilitation of federal and state infrastructure affected by adverse natural events. Funds from FONDEN could be used for the rehabilitation and reconstruction of: (i) public infrastructure at the three levels of government (federal, state and municipal); (ii) low-income housing; and (iii) certain components of the natural environment (e.g., forestry, protected natural areas, rivers and lagoons). FONDEN consists of two complementary budget accounts, the original FONDEN Program for Reconstruction and the Fund for Disaster Prevention (FOPREDEN), designed in recognition of the need to promote stronger ex-ante DRM. Although resources for prevention remain significantly less than those for reconstruction, the Mexican Government is continuing its efforts to shift the focus and funding from ex-post response to ex-ante DRM. FONDEN is funded through the Federal Expenditure Budget, at a legally-required amount of no less than 0.4% of the annual federal budget or about US$800 million (available to FONDEN, FOPREDEN and the Agricultural Fund for Natural Disasters). The FONDEN Program for Reconstruction channels resources from the Federal Expenditure Budget to specific reconstruction programs and acts as the contracting authority for market-based risk transfer mechanisms, including insurance and CAT bonds. Furthermore, FONDEN strives for reconstruction activities that: do not recreate vulnerabilities; fund the reconstruction of infrastructure at higher standards (the “build back better” principle); and relocate public buildings and/or communities to safer zones. The FOPREDEN Program for Prevention supports disaster prevention by funding activities related to risk assessment, risk reduction and capacity building on disaster prevention. FOPREDEN promotes informed decision making about investment in risk reduction by requiring states to complete a risk assessment (including the development of a risk atlas) before being eligible for financing for risk mitigation projects. The process for accessing and executing reconstruction funding from FONDEN balances the need for time-efficient disbursement with accountability and transparency concerns. The Ministry of Interior is responsible for managing this process. FONDEN uses innovative information technology, such as geocoding and digital imagery, to ensure efficiency and accuracy of the damage assessment process. FONDEN resources finance 100% of the reconstruction costs for federal assets and 50% of those for local assets. (The first time that assets are impacted by a disaster, this percentage declines thereafter if insurance is not purchased for reconstructed assets.) FONDEN resources are leveraged with market-based risk transfer instruments to transfer risk through insurance and other mechanisms, such as CAT bonds, to manage the volatility of demand on its resources. Working in close collaboration with the Ministry of Finance and Public Credit, FONDEN has established a strong link between its technical and financial arms for natural disasters. The National Centre for Disaster Prevention acts as the technical arm for disaster risk reduction and works closely with FONDEN, the financial vehicle for disaster management. The latest in the evolution of this partnership is the development and utilization of R-FONDEN, a probabilistic catastrophe risk model that calculates risk metrics for government assets and low-income housing for major perils. FONDEN is continuously evolving to integrate lessons learned over the course of years of experience, with modifications by the Mexican Government in order to enhance its efficiency and effectiveness and move toward a comprehensive DRM framework. The FONDEN story provides a compelling study of how governments can establish successful systems to support effective post-disaster interventions, while promoting disaster prevention and, importantly, how such systems should be continuously improved to integrate new understandings. Source: The World Bank 2012e: FONDEN, Mexico’s Natural Disaster Fund—A Review; May 2012. VI . T h e Wo r l d Ba n k Gr o up E xp e r i en c e 33 Box 16: The World Bank Green Bonds—catalyzing climate action Green Bonds support both mitigation projects, such as renewable energy and energy efficiency, as well as climate resilience projects, such as watershed management and flood prevention. As of 2013, the total volume of World Bank Green Bonds issued has reached US$4 billion through 60 transactions issued in 17 currencies. These were sold to investors worldwide, helping the World Bank to expand and diversify its investor base. In the case of US and European investors, many Green Bond investors were new, or new funds were created by new mandates focused on climate investing, including large pension funds, asset managers, insurance companies, foundations and religious organizations. Investors who purchase World Bank Green Bonds benefit from the Bank’s Aaa/AAA rating as a bond issuer. World Bank Green Bonds act as a catalyst for the growing climate/green bond market, and can play an important role in helping to mobilize financing from the private sector for climate activities, in addition to raising awareness about the urgency of addressing climate change and the opportunities to invest in climate solutions. Source: The World Bank Green Bonds: fourth annual investor update, 2012, and World Bank’s Capital Market Development team. Of the 16 climate and disaster-related DPLs approved by the and sustainable development strategy, promoting scalable models World Bank since 2008, seven include a CAT-DDO to enhance and approaches to empower poor communities to manage climate government capacity to manage the impacts of natural disasters: and disaster risk and to identify practical ways of getting climate Colombia, Costa Rica, El Salvador, Guatemala, Panama, Peru and disaster risk finance directly to the people. During fiscal years and the Philippines. 2001 to 2011, the World Bank invested US$12 billion in 150 CDD Costa Rica, with support from a CAT-DDO, has been proac- projects that contributed to building climate and disaster resilience tively reviewing the catastrophe risk exposure of public assets and (World Bank 2013d). Scaling up and sustaining community-based infrastructure, which has helped them develop effective and afford- resilience calls for bridging the gap between the local, subnational able catastrophe insurance programs to protect these assets. Costa and national levels, and understanding the complementary roles Rica is also working with the national insurance company to design of formal and informal institutions. Well-designed CDD projects a dedicated vehicle to insure public assets. Results of preliminary are also an effective tool for empowering women, often the most work show that the proposed vehicle would improve coverage with vulnerable to the effects of climate change and disasters. a net savings of at least US$50 million over ten years. Recognizing that social protection programs, in particular, play an important role in protecting poor and vulnerable people from Social Protection climate-related loss and damage and helping them reduce their expo- Social protection programs and policies help buffer individuals sure and vulnerability (World Bank 2011b), the World Bank and from shocks and equip them to be able to improve their livelihoods. GFDRR developed a “Building Resilience to Disaster and Climate National safety net systems, while in regular times can help mini- Change through Social Protection Toolkit.” Providing guidance on mize the negative impact of economic shocks on individuals and how to prepare social protection programs to respond to disasters families, can also be designed and funded to scale up in response to and climate change, the toolkit focuses on: building flexible and scal- a disaster to prevent households from falling into poverty (World able social protection programs to respond to larger-scale disasters; Bank 2013e). The Ethiopia Productive Safety Nets Program (Box adapting beneficiary targeting mechanisms to disaster response and 17) provides a case in point. In addition to a diverse range of risk climate change; communicating in a post-disaster context; inte- management options, empowerment and poverty reduction also help grating disaster- and climate-sensitive monitoring and evaluation reduce underlying causes of vulnerability. However, with increasing into social protection programming; and adapting benefit transfer climate-related shocks, social protection measures may also need to mechanisms to strengthen disaster and climate resilience (World be complemented by other resilience measures. Bank and GFDRR 2013). Community driven development (CDD) approaches and actions are important elements of an effective poverty reduction 34 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Box 17: Ethiopia’s Productive Safety Nets Programme The Productive Safety Nets Programme (PSNP) is a large national social safety net program that responds to both chronic food insecurity and shorter-term shocks (mainly droughts) among Ethiopia’s poor. It targets a highly climate-vulnerable population, offering a practical model of how social safety nets can be designed to meet the social protection needs of the most vulnerable, while simultaneously reducing risks from disaster- and climate-related impacts. The PSNP incorporates a number of interesting features, including: public works activities geared toward improving climate resiliency; a risk financing facility to help poor households and communities, including households outside of the core program, better cope with transitory shocks; and targeting methods that help the most climate-vulnerable households obtain the full benefits of consumption smoothing and asset protection. The program works through and strengthens existing government institutional systems at all levels rather than creating separate systems. The PSNP entitles poor households to a secure, regular, predictable government transfer, protects them against the impacts of natural disasters, and significantly improves management of the natural environment that contributes to these risks. It has enabled core beneficiaries to meet consumption needs, mitigate risks and avoid selling productive assets during crises. Evidence shows that livelihoods are stabilizing and food insecurity is decreasing among these households. A related pilot program associated with the PSNP allows poor beneficiaries to work in lieu of paying premiums for crop insurance. The PSNP is expected to cover 8.3 million people by 2015, and is supported by the Livelihoods, Early Assessment and Protection (LEAP) program. LEAP is a food security early warning system that calculates expected crop yields early in the country’s dry season. The information helps humanitarian organizations forecast community needs in drought-prone areas, and can be used to scale up the PSNP if a severe drought is anticipated. Source: Building Resilience to Disaster and Climate Change through Social Protection, World Bank, May 2013. Resilient Reconstruction part of the World Bank’s Horn of Africa Drought Response Plan (see Box 18). Disasters often provide unique opportunities to promote climate The IRM initiative encourages the introduction of Contingent resilient development. Politicians and donors alike are attuned to Emergency Response Components (CERC) in all IDA operations. the issue, and the general public may be more amenable to the A CERC is a zero-dollar component within a project that allows often-difficult trade-offs necessary for risk reduction. for existing funds to be quickly reallocated to emergency recovery A major challenge for post-disaster and climate resilient activities in the event of a disaster, thereby averting the need for recovery support is timely and sufficient access to resources. time-consuming project restructuring (as the budget line, albeit Since 2007, the World Bank has developed procedures that empty, is already there). The IRM augments the resources that can enable faster preparation and approval of emergency projects be quickly mobilized for emergency response by allowing up to and recognize upfront the inherent risks involved in emergency 5% of an undisbursed IDA portfolio in an affected country to be situations, including the risks and lost opportunities associated channeled through the CERC. with a delayed response. Two such key instruments are the In order to inform the design of resilient recovery and reconstruc- Crisis Response Window (CRW) and the Immediate Response tion measures, the GFDRR Standby Recovery Financing Facility Mechanism (IRM). supports sustainable and resilient recovery planning in countries The CRW is a specific IDA funding window for concessional that request assistance. The objective is to assist disaster-hit countries assistance for post-disaster recovery and reconstruction, which is build resilience into the recovery process through: (i) support for additional to country allocations. The window was first triggered PDNAs; (ii) technical assistance for post-disaster recovery planning in response to the Horn of Africa Drought in 2011. To alleviate the and financing; and (iii) building institutional capacities for disaster impacts of the drought, an additional IDA allocation of US$250 preparedness and response. million was pooled with other resources to support three new proj- As part of a partnership between the United Nations, the Euro- ects and provide additional financing to seven ongoing projects as pean Union and the World Bank, GFDRR has been supporting VI . T h e Wo r l d Ba n k Gr o up E xp e r i en c e 35 disaster-hit countries to carry out PDNAs. These country-led assess- Although proven to be effective to inform recovery and recon- ments provide a coordinated platform for building immediate and struction planning, full-fledged PDNAs are time consuming, and, longer-term disaster resilience. An assessment estimates damages, thus, sometimes miss important opportunities to inform funding economic losses, human impacts and forward-looking needs result- decisions, which are taken very soon after a disaster. The World Bank ing from disasters, as well as provides a coordinated and credible and GFDRR are, therefore, piloting a lighter version in several African basis for recovery and reconstruction planning that incorporates countries (Madagascar, Mozambique and Seychelles) suffering from risk-reduction measures and financing plans. This serves as a basis extensive, recurrent climate-related disasters. The approach involves for the government to reorient resources towards recovery, and for a two-week mission with highly trained experts, who conduct a development partners to direct their external assistance. rapid assessment mostly focused on damages. The main focus of the Since 2007, GFDRR has supported 32 PDNAs, which have mission is to estimate reconstruction and recovery needs within a informed at least 61 World Bank-funded recovery projects with a value predetermined budget envelope, which previous discussions with of US$3.36 billion. This translates into an average of approximately partners indicate can be realistically raised. This has the important US$105 million in World Bank recovery financing per PDNA, with advantage of managing local expectations and focusing discussions an estimated 71 million people having benefited. on the ensuing prioritized resilient recovery operation(s). In all cases Box 18: Addressing drought risk across a range of timescales in the Horn of Africa In July 2011, more than 13 million people suffered food shortages in the Horn of Africa as a result of drought combined with a number of non-climate drivers, such as land, water and ecosystem degradation, economic marginalization and conflict. Despite major domestic and international support, the event clearly showed the importance of integrating risk reduction into long-term development and ensuring effective early warning and early action mechanisms. To address both urgent needs and longer-term risks, the World Bank committed US$1.8 billion to support safety nets and food security in the Horn of Africa in 2011. Immediate relief, focusing on response-type approaches to support food and nutrition, water supply, sanitation and health, operated for 6–12 months. This transitioned into economic recovery, focusing on livelihood and employment support for 1–2 years. Under the current and final phase, climate resilience is supported through investments in preparedness (early warning and decision support systems, response and relief), risk reduction (robust agriculture, water resources management, livelihood support) and risk mitigation (safety nets, agriculture insurance, risk financing facility). The recovery phase included PDNAs to prepare regional and country projects. The assessments were conducted in three affected countries (Kenya, Uganda and Djibouti) and complemented by a brief assessment and training in Ethiopia, which helped in developing an effective, three-phased regional drought response plan. A number of projects in Kenya responded to immediate needs, while building long-term resilience, including the Kenya Health Sector Support Project, which is the first World Bank project supporting large-scale nutrition interventions targeting resident populations who are as vulnerable as the refugees in various camps. The project is still relevant today—long after the drought emergency is over—since hospital admissions of severely malnourished children remain high in Kenya. The Kenya Cash Transfer for Orphans and Vulnerable Children is another drought response project, which consists of an increase in the value of the transfer (from Ksh1,500 to Ksh 2,000 per month) to poor households to mitigate the impact of food price increases. Finally, the Kenya Agricultural Productivity and Agribusiness Project aims to increase agricultural productivity to develop long-term drought resilience. Under this project, drought-related activities were scaled up in response to the 2011 drought. A mid-term assessment showed that the timely World Bank and GFDRR support resulted in increased food security for the most vulnerable populations in Somalia and in refugee camps in countries along Somalia’s border. In Ethiopia, triggering the contingency risk financing facility enabled improved food consumption for 6.5 million chronic and 0.3 million transitory food insecure people. In Kenya, most vulnerable people were given a higher cash transfer to mitigate drought impacts. Other important achievements include the timely preparation of a drought response plan, detailed drought impact assessments in affected countries and support to regional organizations in planning, forecasting and managing for drought resilience. Source: Compiled by staff from the Africa Region of the World Bank. 36 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t where this approach was piloted, a substantial recovery operation requirements, are shown below. The cost also varies (see Figure 12 followed, in which resilient reconstruction or “build back better” and Table 1) depending on: principles were incorporated. • data availability, and whether data is already available or new data is needed; • whether underlying datasets are provided as part of the final How Much Does It Cost? risk assessment product; All climate and disaster resilient development actions have an upfront • the geographic scale of the risk assessment, which can range cost. However, if the action is well designed and proportionate to from a single building to a country or region; and the risk, then the outcome will be cost effective and save money in • the quality and level of granularity required, as some risk assess- the long run. In all cases, a cost-benefit analysis of risk management ments do not need a high level of detail to provide a rough idea is greatly influenced by value judgments on the discount rate, the of risk, while others require a higher level to influence large time horizon over which benefits and costs are accrued, and the investment decisions. inclusion or exclusion of non-monetary outcomes, such as loss of human life (Government of the UK 2013). Despite these analytical Once a risk assessment is carried out, the information gathered challenges, a range of cost-benefit analyses have been implemented, can be used to inform the design of risk management actions, and a strong economic case demonstrated for DRM, with the ben- depending on the assessment’s original purpose. Risk assessments can efits of avoided and reduced losses outweighing investment costs guide spatial planning and the design of new public infrastructure, on average by about four to one (Mechler 2012). such as schools, hospitals or power stations. They can also be used to Risk assessment costs depend heavily on the purpose, user needs, understand where the greatest benefit to cost ratio investments can scale and available data. Risk assessments can be used to: (i) build be made to reduce risk—for example, analysis to guide decisions on disaster risk awareness; (ii) develop financial applications to manage which government assets to rebuild or retrofit, or where the greatest or transfer risk; (iii) guide and inform risk reduction policies, invest- benefit of flood infrastructure is. ments and measures; and (iv) inform planning and preparedness at Preparedness and early warning systems are also considered different levels. A range of risk assessment products used in resilient to be high-value investments, with the benefits of saving lives and decision making, each with different purposes, scales and resource property far outweighing intervention costs. The budgets of National Figure 12: Comparative data and financial resource requirements of risk assessments High Catastrophic Risk Assessment for Financial Resource Commitment2 f Planning ce o ms idan e n , Avo g Syst ) ctio Warnin nalysis edu a r R isk R s/Early rtfolio s fo n e s p o t d en epare sets t o Global essm r as Assessment Ass and P dual Risk Risks indivi Report New ge from (ran Preliminary Quantitative Risk Profile Risk Profile Community Preliminary Quantitative Low Based DRM Risk Profile Risk Profile Site Specific/ Sub-national National Global Community Resolution of Assessment Source: Report authors VI . T h e Wo r l d Ba n k Gr o up E xp e r i en c e 37 Table 1: Comparative costs of risk assessment Cost $ = < $100K Product Purpose Scale Data Requirements $$ = $100–500K $$$ = >$500K Qualitative National Risk Profile Advocacy and initiation of National Low: global, regional and/ $ DRM dialogue or national datasets Community Based Disaster Engages communities, Community Low: typically based on $ Risk Assessment communicates risk and Level historical disaster events promotes local action Quantitative National Risk Advocacy and initiation of National Low-Moderate: global, $$ Profile DRM dialogue based on regional and/or national quantitative assessment datasets Asset-level Risk Assessments, Informs design of building/ Building/ Moderate-High: requires $$ including Cost-Benefit and asset level risk reduction Infra-structure high-resolution local Engineering Analysis activities and can promote Level datasets avoidance of new risk Macro-Level Risk Assessment Informs urban/regional risk Urban, Moderate-High: requires $$$ for Risk Reduction, including reduction measures Regional, moderate-high resolution Cost-Benefit Analysis National across large spatial areas Risk Identification to Identify Informs preparedness and risk Urban, Moderate-High: requires $$-$$$ Critical Infrastructure and reduction, based on under- Regional, asset-level information (broad price range Establish Early Warning standing of potential damage at National across large spatial areas depending on geo- Systems the regional/local level graphic scope) Catastrophic Risk Assessment For financial and fiscal risk National to High: requires high- $$$ for Financial Planning assessment of disasters and Multi-Country resolution, high-quality catalyst for catastrophe risk data for large spatial areas insurance market growth with clear articulation of uncertainty Meteorological and Hydrological Services are usually about 0.01–0.05 additional US$120,000 envisaged for training.5 These costs do not percent of national GDP, with total annual public funding globally include, however, the extensive time required to integrate the new of more than US$15 billion. A conservative estimate of high-priority norms into sectoral programs and ensure their effective compliance. modernization investment needs in developing countries ranges Financial protection schemes, to cover the residual risk that from US$1.5 to 2 billion. In addition, a minimum of US$400–500 remains after risk reduction activities, also range in cost depending on million per year will be needed to operate the modernized systems the layer or risk that is being addressed (see Figure 11). Key variables (staff, operating and maintenance costs)(Rogers, D., and V. Tsirkunov. that affect costs include disbursement speed and the size of funding 2013). However, the benefits of upgrading all hydro-meteorological that can be mobilized (see Table 2). The cost multiplier is the ratio information production and early warning capacity in developing between the cost of the financial product (e.g., premium of an insur- countries would save an average of 23,000 lives annually and provide ance product, expected net present value of a contingent debt facility) between US$3 billion and US$30 billion per year in additional and the expected payout over the lifetime of the financial product. So economic benefits related to disaster reduction (Hallegatte 2012). a ratio of two indicates that the overall cost of the financial product Elaboration of climate resilient construction codes is gener- is likely to be twice the amount of the expected payout made. These ally not expensive: in Madagascar and Mozambique, for example, multipliers are only indicative and aim to illustrate the cost comparison expenses have ranged from US$160,000 to US$210,000, including of financial products. The speed at which funds can be obtained also for sensitization and training (in Madagascar). Strengthening infra- structure safety standards in Madagascar cost about US$100,000 (for transport) and US$50,000 (for irrigation infrastructure), with an 5 Col. Mamy Razakanaivo, personal communication, November 4, 2013. 38 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t Table 2: Comparative costs of different financial protection options Instruments Indicative Costs Disbursement Amount of Funds (multiplier) (months) Available Donor Support (relief) 0–1 1–6 Uncertain Donor Support (recovery and reconstruction) 0–2 4–9 Uncertain Budget Contingencies 1–2 0–9 Small Reserves 1–2 0–1 Small Budget Reallocations 1–2 0–1 Small Contingent Debt Facility (e.g., CAT DDO) 1–2 0–1 Medium Domestic Credit (bond issue) 1–2 3–9 Medium External Credit (e.g., emergency loans, bond issue) 1–2 3–6 Large Parametric Insurance 2 & up 1–2 Large ART (e.g., CAT bonds, weather derivatives) 2 & up 1–2 Large Traditional (indemnity based) insurance 2 & up 2–6 Large Source: Mahul and Ghesquiere 2010 varies greatly depending on the legal and administrative processes that is already happening in some regions, insurance companies may drive their use (Ghesquiere and Mahul, 2010). completely abandon particular markets as risk becomes more difficult Regional risk pooling among groups of small countries with to price (due to climate uncertainty) or too expensive (IFC 2010a). similar risk profiles can save money, as demonstrated by the CCRIF, This potential uninsurability, particularly of highly vulnerable people where pricing for hurricane coverage runs about 54–59% less than and small and medium enterprises (SMEs), underscores the need the cost of an individual country going directly to the reinsurance for preventive measures. market. The CCRIF has made payouts totaling US$32.2 million When a disaster does strike, integrating risk reduction approaches to members affected by covered earthquakes and hurricanes within into recovery and reconstruction is a key opportunity. World Bank two weeks or less of the event. Similarly, the Pacific catastrophe risk and GFDRR support for post-disaster assessment and resilient insurance pilot program’s use of risk pooling enables an estimated reconstruction planning can range in cost from US$100,000 to 50% savings on premiums compared to buying individual policies. US$250,000, not taking into account the costs of data collection, For the pilot program’s first season, premiums were around US$0.4 government staff time, and involvement of other agencies and civil million per country, and provided coverage of US$6.8–11.3 million society. As mentioned above, post-disaster assessment experiences (3–10 percent of government annual expenditures). For CAT-DDOs, suggest that “building back better” typically costs between 10–50% loan pricing is based on standard IBRD terms with a 0.5 percentage more than the replacement cost of original structures (see Box 3). point front-end fee and a 0.25 percent renewal fee. Even though building resilience requires additional upfront costs, Risk transfer should not be treated as a standalone solution; rather, long-term benefits far outweigh costs if done in a proportionate it represents one of many components of a holistic DRM approach, way. But the most cost-effective means of building resilient societies helping to reduce the impacts of risks that cannot be avoided. This into the future is to avoid creating new risks by integrating resilient is particularly relevant for climate-related risks. Insurance costs are approaches into development planning. likely to increase as climate-related claims continue to rise, and, as VII . Co nc lu s i o n s 39 VII. Conclusions This report has shown that all key drivers—climate change, poorly engaging early-career committed professionals help develop expertise planned development, poverty and environmental degradation— and knowledge, support local solutions, and provide incentives influence the risk of a weather event becoming a disaster. Thus, these for capacity maintenance and expertise retention. Robust decision factors need to be managed collectively. In the coming decades, making is a promising approach and could help overcome the disaster losses are expected to continue to rise due to the increasing challenges of addressing uncertain long-term risks along with more exposure of populations, assets and environmental degradation, immediate priorities. compounded by climate change. Therefore, development paths An array of instruments and tools has already been developed in must take the risks of climate change and disasters into account. support of climate and disaster resilient development. While many are The poor and most vulnerable will be the most directly affected. being developed and used in specific regions (such as Latin America The close interactions between poverty, development trends and and Southeast Asia), they are being gradually expanded to cover other climate change are likely to pose significant challenges to the global groups of countries. At the same time, concerted efforts at regional objectives of ending poverty and promoting shared prosperity by and international levels are still needed to fill knowledge gaps and 2030. Targeted actions will be needed to provide the poor and near provide on-demand expertise to communities and governments in poor with the resources, information and knowledge required to lower-capacity countries. become more resilient. Support for community resilience, combined Getting the institutions and incentives right is often the single with well-designed social protection mechanisms that can be scaled- most important issue in climate and disaster resilient development. up in response to disasters, could play a major role in reducing the Although an integrated, multi-stakeholder and multi-sectoral expected poverty impacts of disasters and climate change. approach takes time and may entail slow initial disbursements, it Disaster and climate resilience requires startup costs, but if generally results in stronger buy-in from relevant stakeholders and is designed in a way that is proportionate to the risk, they will be cost likely to be more sustainable over the long term. At the same time, effective in the long run. Spatial planning that takes risk into account, lead institutions must have the necessary authority to coordinate policies to promote ecosystem buffers, safer building practices, and powerful sectoral ministries. Experience indicates this is best done strengthened early warning have all proven effective in saving lives and by an agency located at the highest possible government levels. assets. However, they will not be sufficient to completely eliminate Many countries lack the incentives to mainstream climate and disaster risk. For this reason, and to avoid splitting fragile national disaster risks into economic planning and investment decisions. Politi- capacity, the experiences of the climate resilience and disaster risk cal cycles favor short-term development decisions, and government management communities should be progressively brought together. employees often have little incentive to participate in inter-sectoral By addressing immediate and urgent disaster risks, while tak- committees to address problems not viewed as part of their mandate. ing into account the long-term effects of climate change, disaster Changing this “culture” is easier when a flexible, learning-by-doing and climate resilient development can offer immediate and longer- approach is pursued, and the process is relatively independent from term development gains. Using a learning-by-doing approach and political pressures. Effective mainstreaming, in particular, can help 40 Buil d in g R e sil ie n c e | I n teg rating C li m ate a n d Di saste r Ris k in to Dev e lo p m e n t ensure that climate and disaster resilience becomes reflected in stra- and promoting closer collaboration between the climate resilience tegic sectoral programs and budgets, thus becoming, in effect, part and disaster risk management communities, the loss and damage of the core work program of participating stakeholders. agenda could help promote closer integration of the actions needed Disasters provide opportunities to build political will to integrate to manage this risk. Better coordination between involved agencies resilience measures into recovery and development, with recent will also be fundamental to keep all stakeholders focused on the evidence showing a growing demand for sustained engagement in goal of diminishing vulnerability, particularly amongst the poor. countries following a disaster to support the implementation of Clear progress has been made, but many challenges remain, resilient recovery and reconstruction planning. the biggest of which is overcoming institutional barriers that can Adequate, predictable and long-term financing is needed to enhance coordination between climate resilience and disaster risk bring about transformative change. Some countries have been able management. Limited data and institutional and technical difficul- to identify disaster and climate risks, plan and prioritize investments, ties preventing the free flow of information constrain the ability and access and combine funding from different sources to optimize of many countries to carry out long-term climate projections and implementation. Instruments, such as Green Bonds, innovative risk development scenarios, and to provide accurate and timely early financing and strategies to engage the private sector through public- warning. Perverse incentives and vested interests favor short-term private partnerships, are providing opportunities for increasing the responses over long-term prevention. As a first step, improving the funding envelope, in addition to bringing in much needed exper- understanding of development risks from a changing climate is neces- tise. Efforts to use these instruments more widely could be further sary. A second step would then consist of deriving decision options explored. Promoting approaches that progressively link climate and based on this information and developing and accessing financing disaster resilience to broader development paths will also ensure that instruments over the long term. A better standardization of disaster funding is appropriately provided and used effectively. databases at the national level could also help collect more consis- While this Report focused on the experience of the World tent information to help distinguish between development deficits Bank in climate and disaster resilient development, many other and potential climate change impacts. 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