Disaster Risk Financing in Bangladesh

ADB South Asia Working Paper Series No. 46, September 2016

35 Pages Posted: 28 Mar 2017

Date Written: September 2016

Abstract

Disasters pose considerable challenges not only to livelihoods but also to economy. Financial protection from disasters, i.e., disaster risk financing, has increasingly been applied in developed countries. However, the application of ex ante disaster risk financing is very scarce in developing countries including Bangladesh. Bangladesh is disaster-prone, with floods and cyclones being the most frequent and severe danger. Based on historical data, natural hazard events in Bangladesh cost more than $10 billion economic losses from 2000 to 2013, but the total funding available for relief, rehabilitation, and reconstruction for the same period was $2 billion only. It is estimated that Bangladesh will incur a financial impact of about $3.2 billion on average per year due to cyclone and flood, or about 2.2% of gross domestic product. Bangladesh urgently needs to develop ex ante disaster risk financing solutions to minimize economic impacts of catastrophes. Currently, three disaster risk finance solutions are considered effective in Bangladesh: sovereign disaster risk contingent credit, parametric sovereign risk insurance, and disaster risk microfinance portfolio insurance.

Keywords: Bangladesh, disaster risk financing, South Asia

Suggested Citation

Ozaki, Mayumi, Disaster Risk Financing in Bangladesh (September 2016). ADB South Asia Working Paper Series No. 46, September 2016, Available at SSRN: https://ssrn.com/abstract=2941319 or http://dx.doi.org/10.2139/ssrn.2941319

Mayumi Ozaki (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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