Publication: Evaluating Sovereign Disaster Risk Finance Strategies: Case Studies and Guidance
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2016-10-01
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2016-11-18
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Disaster risk finance is an important component of the disaster risk management and climate change adaptation agenda. It aims to increase the financial resilience of countries against natural hazards by strengthening public financial management and promoting market-based disaster risk finance solutions (such as, sovereign catastrophe risk transfer solutions for governments or domestic catastrophe risk insurance markets for public and private assets). This report complements the more theoretical framework paper with a demonstration of how the framework can be applied in practice. Five case studies illustrate a range of questions that policy makers might ask, potential instruments to be considered, and economic conditions, and a Guidance Note presents principles for such analyses. The structure of the report is as follows: the proposed framework is presented, outlining the approach of the opportunity-cost framework and its limitations. The five case studies are introduced and the contingent liability and finance strategies considered in each are outlined. Subsequently, the five case studies are presented in five chapters, each standalone with relevant annexes (including at the back of the report). Finally, a Guidance Note outlines how the framework may be applied in a practical manner to another country’s plans for the disaster risk financing of a contingent liability. Lastly, a Glossary is provided. The purpose of the entire report is to illustrate how to apply the framework to a country-specific question. All formulae and calculations applied in these case studies follow those in the technical framework paper. It does not aim to make any generalized conclusion about which finance mechanisms are cheapest or how disaster risk finance should be structured.
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“World Bank Group. 2016. Evaluating Sovereign Disaster Risk Finance Strategies: Case Studies and Guidance. © World Bank. http://hdl.handle.net/10986/25381 License: CC BY 3.0 IGO.”
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Because of the growing frequency and severity of disasters, the government has faced the rising costs of responding to disasters as well as the challenges of financing emergency response and reconstruction costs. Having sufficient access to financial instruments and resources in order to respond to disasters is crucial for building the financial resilience of the country and minimizing the negative impact of natural disasters on Serbia’s economic growth. In this report, chapter one gives introduction. Chapter two provides the background and country context, including the recent economic impacts of disasters. Chapter three reviews the current institutional and legal framework for disaster risk management and financing. Chapter four is a review of the public financial management of disasters in Serbia, including ex ante and ex post disaster risk financing and insurance (DRFI) instruments currently in use for budget mobilization, and it looks at the 2014 floods in more detail. 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