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WFP / Giulio d'Adamo

Chapter 12.2 Financial mechanisms and services for risk reduction

Government and international finance for DRR

Photo: WFP / Giulio d'Adamo

Public investment in DRR and climate change adaptation, in the form of grants or loans provided by national, district and local governments, is likely to be the main financial support mechanism in most countries. Such funding may be specifically for risk reduction initiatives, or it may be part of broader poverty reduction or sectoral development programmes: here the ideal is to incorporate risk reduction measures into existing funding streams, rather than having stand-alone DRR budgets, and some countries are now taking steps towards this (see Case Study 12.1: Climate change risk management in public investments).+See also C. Benson and J. Twigg, with T. Rossetto, Tools for Mainstreaming Disaster Risk Reduction: Guidance Notes for Development Organisations (Geneva: ProVention Consortium, 2007), http://www.preventionweb.net/files/7511_toolsformainstreamingDRR.pdf.

Public investment: disaster risk reduction in Peru

Case Study 12.1 Climate change risk management in public investments

Climate change affects Peru in several ways: low-lying areas and ecosystems along the country’s approximately 3,000km coastline are becoming increasingly vulnerable, water availability is becoming less consistent and there are regular floods, landslides and extreme droughts. The Peruvian government is taking concerted action to reduce vulnerability to climate change. One goal is to integrate a systematic climate risk management approach into the national public investment system (Sistema Nacional de Inversión Pública, SNIP). Between November 2011 and April 2015 the €3.2m Public Investment and Adaptation to Climate Change project (Inversión Pública y Adaptación al Cambio Climático – IPACC) was implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) in cooperation with the Peruvian Ministry of Economy and Finance (MEF) and Ministry of Environment (MINAM) and the regional governments of Piura and Cusco. The project is financed by the German government through the International Climate Initiative.

The government’s aim is that public investments take future climate risks into account by ‘screening’ sector programming (i.e. agriculture, transport, health, energy, housing, sanitation and tourism – around 70% of overall public investment) with specific tools to make sure that sectors make investments with respect to climate change and DRR. The project developed a conceptual framework for integrating DRM and CCA and produced a series of interactive maps containing data on climate change, hazards, land use and ecosystems. Climate change risks were analysed and adaptive measures identified for several investment projects. Cost–benefit analysis tools were developed and tested. Official guidelines for project design were revised to ensure that heightened risks were considered at national and sectoral levels. A number of training workshops were held.

MEF, MINAM and GIZ also identified entry points and change agents for incorporating disaster risk management into the SNIP. Pilot case studies on reducing risks from climate change have been introduced into the design of public investment projects. The initiative has led to the redesign of projects and changes in programming approaches.

Information provided by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ); M. Scholze, Climate Change Risk Management in Peruvian Public Investment: Strengthening Adaptation in Development Decision Making (Lima: Public Investment and Adaptation to Climate Change Project, 2015).

In turn, national governments obtain grants from bilateral donors, or loans from international financial institutions such as the World Bank, Asian Development Bank and Inter-American Development Bank. Although it can be difficult for local governments and other organisations to get access to some of these funding streams, trained and organised community organisations have succeeded in obtaining resources from mainstream funding programmes (see Case Study 12.2: Resourcing community resilience).

Case Study 12.2 Resourcing community resilience

In 2009, UNICEF started a community-based DRR programme in the Indian state of Bihar. Under the programme, which covers more than 250 villages and over 150 schools, village and school disaster management committees raise awareness of risks and carry out local DRR activities. UNICEF and its local NGO partners act mainly as facilitators, ensuring that communities acquire the knowledge and skills for preparing and implementing projects, accessing resources and making connections with decision-makers. Through training, workshops and meetings, the programme targets disaster management committees and their volunteers, together with local leaders and officials. Meetings between committee members and duty bearers are particularly important in sensitisation, building mutual understanding and developing working relationships. The committees have learnt how to obtain funding from central government development programmes, and have developed successful proposals for projects aimed at reducing specific vulnerabilities. These projects are integrated with panchayat (village-level government) plans through community meetings and in coordination with panchayat leaders. Substantial government funds have been secured to build flood embankments and all-weather roads, raise the plinths of houses above flood levels, build toilets for safe sanitation and construct new or improved school building and boundary walls. A field study of committees in 12 villages and 11 schools in 2013 found that the ratio of UNICEF financial support (for training, capacity-building and the committees’ administration costs) to government programmes’ funding inputs was 1:191. Committee members had also become more confident in lobbying higher-level officials.

K. Lloyd et al., Leveraging Resources for Community Resilience Building: A Study of Multi Hazard Affected Villages in Bihar, Knowledge Community on Children in India Initiative, 2013, http://www.unicef.org/evaluation/files/India_2012-011_Evaluation_of_KCCI_Internship_Programme_Final_Report.pdf.

Recent research into international DRR financing from 1991–2010 shows that DRR accounts for a tiny proportion of overall international aid (0.4%), as well as a small proportion of international funding for disasters triggered by natural hazards (12.7% compared to 21.8% for reconstruction and rehabilitation and 65.5% for emergency response). Funding concentrates on a small number of middle-income countries; in high-risk countries, disaster-related aid focuses on emergency response, and there is very little money for drought-affected countries. The great majority of DRR funding has gone to relatively small projects and programmes.+J. Kellet and A. Caravani, Financing Disaster Risk Reduction: A 20 Year Story of International Aid (London/Washington DC: Overseas Development Institute and the World Bank, 2013), http://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8574.pdf.