Essential Three: Strengthen Financial Capacity for Resilience
"Understand the economic impact of disasters and the need for investment in resilience. Identify and develop financial mechanisms that can support resilience activities."
Only through the inclusion of specific, dedicated resources and mechanisms can actions and progress in resilience improvement be carried out and sustained. Resources can come from city revenues, national distribution and allocations to sectoral departments, public-private partnerships and technical cooperation, as well as civil society and external organizations. Financial mechanisms may include both stand-alone financing of resilience and resilience embedded into broader development planning and spending.
Recognize opportunities where building resilience contributes to a sound economic strategy
Understand and assess the significant direct and indirect costs of disasters (informed by past experience, taking into account future risk), as well as the relative impact of investment in prevention rather than incurring more significant costs during recovery;
Assess disaster risk levels and implications from all planning, permitting and capital spending decisions, and adjust those decisions as needed.
Ensure a budget for resilience
Assign a ring-fenced capital budget for any major works found to be necessary to improve resilience;
Include risk management allocations in operating budget as required to maintain the required state of resilience over time (together with supporting the actions set out in these Ten Essentials).
Disseminate risk information and apply to development decisions
Create incentives for homeowners, low-income families, communities, businesses and public sector to invest in reducing the risks they face (for example, applying local taxes for assessing, strengthening and retrofitting vulnerable housing; giving recognition to businesses incorporating risk data into their investment decisions and setting risk management standards in their supply chains, etc.);
Applying (if necessary, generating) insurance coverage for lives, livelihoods, city and private assets;
Exploring as needed innovative financing mechanisms such as specialised bonds, specialised insurance, tax efficient finance, development impact bonds, etc.
Regular Budget for Disaster Preparedness and Response
The city of Cairns, Australia has an annual operating budget to cover its Disaster Management Unit, Coordination Centre, volunteer emergency services and community awareness programs. Its annual capital budget has, in recent years, covered allocations for building construction, emergency response vehicles and equipment, new risk assessment software, upgrading flood warning network and drainage and flood mitigation investments—a clear demonstration of the city’s commitment to disaster risk reduction. This is complemented by investment and partnerships at national level, for instance, through a review of building codes following Cyclone Yasi in 2011, which also involved built environment professionals, private sector and academic institutions. Read more about their work at: http://tinyurl.com/7qm2vgg
Philippines, China and Sri Lanka Support Investments in Disaster Risk Reduction
Since 2001, cities in the Philippines are required to allocate 5% of their local government budget to a calamity relief fund (CRF). Under the Disaster Risk Reduction and Management Act of 2010, they can spend 70% of this allocation for preparedness and procurement of relief /rescue equipment and stockpiles. Sri Lanka’s Disaster Management Ministry announced in 2011 an allocation of Rs. 8 billion for a program to control floods in the capital, Colombo, while launching a secure town planning programme to minimise disasters as part of the Resilient Cities Campaign. The money will be used to clear canals, reconstruct the drainage system and for other measures to prevent floods in Colombo. Under the ‘secure towns’ programme, 15 towns have been selected as disaster-free cities. Provincial governors in two of China’s disaster-prone provinces committed additional resources to disaster reduction. Wei Hong, Executive Deputy Governor of Sichuan province, said that 2 billion Yuan will be invested to improve the local geological disaster prevention system. Gu Chaoxi, Deputy Governor of Yunnan province, which is highly at risk for geological disasters, vowed to invest at least 10 billion yuan over10 years in the local disaster prevention and assessment system. The report on Sri Lanka available at: http://tinyurl.com/7t23osr; the report on China: http://tinyurl.com/858rfyo.
The Adaptation Fund – UNFCCC Established by the parties to the Kyoto Protocol of the UN Framework Convention on Climate Change to finance adaptation projects and programmes in developing countries that are parties to the Protocol.
Climate Funds Update An independent website providing information on a growing number of international climate finance initiatives designed to help developing countries address the challenges of climate change.