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Agenda: Financial Strategies for Managing the Economic Impacts of Natural Disasters

Agenda (selected) 

Course Overview

The course offers financing strategies for risk management. It focuses on financial, economic and development impacts of disasters, and trade-offs (costs and benefits) involved in disaster risk financing. The course provides policy makers and disaster managers with tools and institutional designs for improved planning and budgeting processes, and national macroeconomic projections. This specialization course targets officials from finance ministries, planning organizations, and public works agencies. It consists three sessions and an end of course exercise.

Session 1: The Economic Impacts of Natural Disasters on Developing Countries

This introductory presentation examines the economic losses from natural disasters to households, businesses, and public infrastructure. It provides an overview of the human and economic losses at the global scale and presents the uneven distribution of these losses in developing and developed countries. The session reviews the typical pattern of disaster risk as it relates to economic development. It also examines the question of how disaster losses are financed in different national political contexts. Finally, important implications for the management of disaster risks for households, businesses and the public sector are discussed

Session 2: Financing Mechanisms for Pro-active Disaster Risk Management for the Public Sector

This session presents tools for developing and evaluating national strategies to ensure that governments have sufficient resources for financing disaster relief and recovery. It examines options available for national governments to finance losses to critical public infrastructure, including traditional measures, such as post-disaster borrowing, and new tools, such as insurance or contingent credit. It introduces the concept of "financing gap" and demonstrates that governments should only insure public assets if they can not raise sufficient capital for reconstruction from traditional, post-disaster financing instruments. Using specific country examples the session demonstrates how models can be useful for estimating the financial gap

Session 3: The Government's Role in Financing Disaster Risks to Households and Businesses

This session reviews ex-ante and ex-post risk-financing arrangements in developed and developing countries. A dilemma facing many governments is how much to spend for assisting households and businesses after a disaster. Generous post-disaster support wreaks havoc with national budgets and does not provide incentives for ex-ante risk reduction measures. Yet equity considerations arise since poor households and small businesses - especially in developing countries - cannot afford extensive pre-disaster risk reduction and insurance. This session will present policy options for combining public responsibility with that of private individuals, and will give additional policy options for countries that do not have an affordable insurance infrastructure

End of Course Project

To meet the course completion requirement the participants are required to submit an end-of course case study/project. The objective of the course project is to enable participants to apply the newly acquired knowledge and own experience in preparing a financial disaster risk management plan for their country, considering financing mitigation measures, relief and post-disaster reconstruction. Participants can use the figures given in the exercise or substitute them with actual figures from their country, if they are available. The project should be prepared in a case study format.


Joanne Bayer and Reinhard Mechler from International Institute of Applied System Analysis

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