Thursday, April 30, 2015

Expert bats for disaster risk finance as a tool versus adverse impact of climate change

Economies must focus more on building stronger disaster risk financing to shield their people and communities from the adverse impact of more destructive and frequent natural calamities, an expert said during the opening of the APEC conference on disaster risk finance here.

"Whatever we will be discussing here today is very real for millions around the world. Our cost tag with the disaster victims and our best possible tribute will be to make this conference a great success because disaster can strike anywhere, at any time, in any part of the world," Arup Chatterjee, the Principal Financial Sector Specialist of the Asian Development Bank, said in his opening remarks referring to the quake victims in Nepal.

He said now is the time to respond to the world's growing needs by empowering individuals supporting communities and backing promises with resources.

Climate change is intensifying risks for hundreds of people especially in landlocked and small islands as well as developing economies with vast coastal areas and authorities must confront this reality.

The Philippines, a disaster-prone country, can provide a lot of successful initiatives that can be emulated by other economies, he added.

As globalization makes the world even smaller, Chatterjee said an earthquake in one country can shake up the financial market of another, and tropical cyclones in one region can cause economic turbulence in another.

"And therefore disaster risk financing offers a tool box of armaments or instruments to defend against the adverse impact of climate change," he explained.

"It is a smart option for governments and the wise investment for business and households to strengthen resilience and offset the impact of natural disasters."

Nine out of ten disaster fatalities come from low and middle income economies and governments must help the poor and the most vulnerable by providing people with micro-insurance innovative tools, Chatterjee said.

The global annual price tag of damage exceeds more than $300 billion, he noted, adding nations can either watch the number grow as people suffer or they can dramatically lower that figure and invest savings in development.

Disaster risk financing must be considered in future decision making and also in the financing process, Chatterjee said.

He also cited a 2012 study of five select countries which shows that a one-percent increase in insurance penetration can result in a 13-percent reduction in uninsured losses and an increase investment of two percent of GDP and a 22 percent reduction of the tax burden.

He noted that those are the benefits provided by disaster risk financing and insurance.

As countries build stronger infrastructures and financing tools, he noted that true resiliency comes from strong bonds between countries and communities -- something that is always demonstrated after a disaster strikes.

In the two and a half day meeting in Bacolod City, participants must translate crisis into opportunity, he said adding that ADB is committed to strengthening this bonds. He also asked conference participants to act in the global spirit of solidarity and to make the world safer and prosperous for all.

The Bacolod City meeting has a theme: "Disaster Risk Finance-APEC Roadmap for Resilient Economies." (PCOO News Release)

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