Evaluating Sovereign Disaster Risk Finance Strategies: A Framework

19 Pages Posted: 19 Jul 2016

See all articles by Daniel Clarke

Daniel Clarke

Disaster Risk Financing and Insurance Program, World Bank,

Olivier Mahul

World Bank - Financial Sector Development

Richard Andrew Poulter

World Bank

Tse-Ling Teh

Columbia University - School of International & Public Affairs (SIPA)

Date Written: June 21, 2016

Abstract

This paper proposes a framework for ex ante evaluation of sovereign disaster risk finance instruments available to governments for funding disaster losses. The framework can be used by governments to help choose between different financial instruments, or between different combinations of instruments, to achieve appropriate and financially efficient strategies to fund disaster losses, taking into account the risk of disasters, economic conditions, and political constraints. The paper discusses the framework in the context of a hypothetical country, with parameters selected to represent a disaster-prone small island state. The paper shows how a mix of instruments can be chosen to minimize the economic opportunity cost given the underlying disaster risk faced and prevailing economic and financial conditions.

Keywords: National Urban Development Policies & Strategies, Public Finance Decentralization and Poverty Reduction, Hazard Risk Management, Non Governmental Organizations, Public Sector Management and Reform, Urban Economics, Regional Urban Development, Urban Communities, Economics and Institutions, Public Sector Economics, Social Risk Management, Disaster Management, Urban Economic Development, Adaptation to Climate Change, City to City Alliances

Suggested Citation

Clarke, Daniel and Mahul, Olivier and Poulter, Richard Andrew and Teh, Tse-Ling, Evaluating Sovereign Disaster Risk Finance Strategies: A Framework (June 21, 2016). World Bank Policy Research Working Paper No. 7721. Available at SSRN: https://ssrn.com/abstract=2811370

Daniel Clarke (Contact Author)

Disaster Risk Financing and Insurance Program, World Bank, ( email )

Washington, DC 20433
United States

Olivier Mahul

World Bank - Financial Sector Development ( email )

Washington, DC 20433
United States

Richard Andrew Poulter

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Tse-Ling Teh

Columbia University - School of International & Public Affairs (SIPA) ( email )

420 West 118th Street
New York, NY 10027
United States

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