How Planning Ahead Will Make a Difference

154 Pages·2016·1.26 MB·English

OUPCORRECTEDPROOF–FINAL,1/4/2016,SPi
DULL DISASTERS?
OUPCORRECTEDPROOF–FINAL,1/4/2016,SPi
‘Withinnovationsinscienceandfinance,makingdisasters‘dull’mustbeouraim.Shocks
don’tneedtobecomefullblowndisasters,ifwebetteranticipateandpre-planforshocks,
andreinforcelocalresponsecapacity.TheWorldHumanitarianSummitandwhatflows
fromitprovideakeyopportunitytomakethishappen.’
StephenO’Brien,UnitedNationsUnder-Secretary-GeneralforHumanitarian
AffairsandEmergencyReliefCoordinator,UnitedNations
OfficeforCoordinationofHumanitarianAffairs
‘Athought-provokingbookwithaselectionofexcellentideasformanagingrisks.Fora
countrylikeEthiopiasubjecttofrequentdroughttheideasonplanningforandmanaging
shocks in advance makes sense. Climate change makes it even more likely that the
frequencyoftheseshockswillincreaseinthefuture,andweneedtoplanforthis.This
kindofapproach,linkingthepublicandprivatesectorininsuringandfinancingdisasters,
givesusmuchtotakeawayandconsider.’
SufianAhmed,AdvisertothePrimeMinisterofEthiopia;
FormerMinisterofFinance,Ethiopia
‘This book is a timely and valuable contribution to an important global conversation on
addressing risk and vulnerability. Disasters are becoming more severe and the impact of
climate change—the ultimate threat multiplier—is exacerbating food insecurity, water
scarcity, conflict and migration. In Dull Disasters?, the authors offer a persuasive message:
today’sdisastersneedleaderswhodonotjustrespondemotionallyandenergeticallytocrises,
butleaderswhousepolitical,legal,andfinancialmechanismsthatresultinbetterpreparedness.’
GloriaGrandolini,Sr.DirectorFinanceandMarkets
GlobalPractice,TheWorldBankGroup
‘Countrieshaveagreatdealtogainfromanticipatingtheuseofaportfoliooffinancial
instrumentsto improvetheir capacity to copewith disastersand managecatastrophic
risks.Doingsorequirescarefuldiagnostics,design,experimentation,andevaluation.Yet,
this is a vastly under-researched topic. In that perspective, the book makes a unique
contributiontotheliteraturebycriticallysummarizingthecurrentstateofresearchon
thisissueandconstructingaresearchagenda.Thiswillbemostusefulinguidingfuture
researchonthemanagementofdisasterriskandrecovery.’
AlaindeJanvry,ProfessorofAgricultural&Resource
Economics,UniversityofCaliforniaatBerkeley
‘Natural catastrophes are increasing in frequency and severity. What is more, the gap
betweeneconomicandinsuredlosseshasremainedstubbornlylarge.Theconsequences
areespeciallysevereinemerginganddevelopingcountries,whichareboththeworsthit
andtheleastprepared.Toolsexisttonarrowthatgapusinginnovativesolutionsthatcan
helpcountries,citiesandindividualspreservehard-wondevelopmentgains—eveninthe
faceoffloods,earthquakes,adverseweatherandothersetbacks.Thisbookhighlightsa
sensiblewayforwardtomaketheworldmoreresilient.’
MartynParker,ChairmanGlobalPartnership,SwissRe
‘Given theincreasing frequency and severityof natural disasters broughtonbyclimate
changeandthestressofmassivenumbersofdisplacedpeopleplacedonallofsocietydueto
man-made disasters, planning for disastersis increasinglycrucialforsociety.This book
bringstheneeds,principlesandprocessestogetherinahighlyreadablefashion.Itisamust
readforallpolicymakersandstudentsofpublic,private,andnon-governmentinstitutions.’
JerrySkees,H.B.PriceProfessorofAgriculturalPolicyandRisk,
UniversityofKentucky
OUPCORRECTEDPROOF–FINAL,1/4/2016,SPi
DANIEL J. CLARKE
STEFAN DERCON
D U L L
D I S A S T E R S ?
How Planning Ahead Will
Make a Difference
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OUPCORRECTEDPROOF–FINAL,1/4/2016,SPi
For Pramila, Quentin, Katie, and Emily
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OUPCORRECTEDPROOF–FINAL,1/4/2016,SPi
PREFACE
This book stems from our urge to communicate that there is a
better way of protecting people from the dire effects of natural
disasters,particularlyindevelopingcountries.Asacademicsandpro-
fessionals, we have worked on risk and insurance for much of our
careers. In the pages that follow, we want to share what we have
learned, and, in doing so, contribute to better thought and action on
howtoshieldpeopleandpropertyfromtheconsequencesofextreme
natural events suchasfloods, droughts,earthquakes, and pandemics.
Inshort,wewilllookathowto‘dull’disasters,makingsurethatsuch
eventsdonotleadtoenduringlevelsofhardship.
Oneofus,Stefan,hasstudiedfordecadeshowriskaffectspeoplein
some of the poorest settings in the world, such as in Ethiopia and
Tanzania,butalsohowthepoorhavedevisedingeniouswaystolimit
theconsequencesofshockstotheirincomesandlivelihoods.Andyet,
despite their valiant attempts, they continue to struggle to handle
extreme events such as droughts or floods, which have bleak short-
and long-term consequences for children and adults. They end up
losing their meagre possessions, risk dying too young, or become
disabled from poor nutrition. One of the reasons for writing this
book is to promote better ways of helping people avoid these
outcomes.
Daniel was first a trained actuary, before studying to become an
economist. He brings the world of finance and insurance to these
problems, asking what can finance do (and what it cannot do) to
improve riskmanagement?Asresearchers, wecollaborated in think-
ing through improving systems for financing risks at the household
level.Caninsuranceevermakesense?Arethecurrentpilotinitiatives
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PREFACE
really offering solutions? Can we find ways of designing insurance
systems to complement and strengthen the risk-coping mechanisms
poorpeoplealreadyuse?
In recent years, we both have become strongly immersed in the
world of development policy and practice. Daniel joined the
Disaster Risk Financing and Insurance Program, a partnership
between the World Bank and the Global Facility for Disaster Reduc-
tionandRecovery(GFDRR),designedtohelpgovernmentsandtheir
partnersimprovehowtheymanagedisasterrisk.Hehasworkedwith
some forty developing countries towards implementing the sort of
solutions described in this book, and he has seen first-hand the
commitment of professionals and the importance of them working
together towards politically sellable solutions. Unfortunately, quite a
few countries are continuing to find the job of disaster risk manage-
ment challenging. But there are clearly positive lessons to be learned
fromothercountries,andwesharesomeoftheseinthisbook.
Stefan is Chief Economist at the Department for International
Development (DFID), the government department responsible for
the UK’s development aid and policy. At DFID, he advises on more
orlessanythingandeverything.AnyoneworkingatDFID,oneofthe
world’s largest humanitarian and development donors, cannot help
but be struck by the state of the global humanitarian system. It is
under pressure—even broke, it is said—drained financially by large
andcostlyconflict-relatedhumanitariancrises.Findingbetterfunding
models, at least for problems that are more tractable, such as for
naturaldisasters,ismoreimportantthanever.
Bothofusareconvincedthatatboththecountryandgloballevels
people can be better protected against the dire consequences of
extreme natural events. Although what we have learned about risk
and insurance is important, we have realized from our work that
things poor people themselves have found to work well could serve
as models for application nationally and globally. Across the world
and throughout history, people have set up what are essentially
mutualinsurancearrangementsinwhichgroupssupporteachother,
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PREFACE
abiding by clear and credible rules that make the arrangements sus-
tainable.Thesewerethetypesofarrangementswehavestudiedatthe
locallevelinEthiopia.
Clearly, the national and global challenges in dealing with natural
disasters are tougher than the problems these groups can solve.
Nevertheless, in this book we will show that the rules and systems
thesegroupsuseareessentiallysoundprotectionprinciplesthatcould
inspirenationalgovernmentsandinternationalagenciesaswell.Itwill
nodoubt notbeeasytomovetowardsthenewapproachlaidoutin
thisbook.Thatwillrequire carefultechnicalworkaswellascourage
and commitment by political leaders. Some have risen to this chal-
lenge with more credible disaster planning and financing.It is hoped
thatthisbookwillinspireotherstofollow.
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