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Global economic losses from natural disasters continue to increase. Yet, investments in disaster risk management are not universal, as they are traditionally seen as in competition with other development and economic priorities. The multitude of benefits from disaster risk management investments are not traditionally accounted for in cost-benefit analyses. This paper contributes to this discussion by highlighting the multiple benefits from disaster risk management investments, focusing on the avoided losses when a disaster occurs, but also on the impacts on economic development even before a disaster strikes. The paper's main message is that disaster risk management investments can provide two dividends: reduced losses when a disaster strikes, and a shift of investment strategies and perhaps even an increase in investment value that would benefit the economy even before a disaster strikes. Providing evidence to policy makers and investors about the existence of both types of dividends can provide a narrative reconciling short-term and long-term objectives, thereby improving the acceptability and feasibility of disaster risk management investments.

Development --- Disaster Risk Management --- Economic Losses --- Resilience

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This paper examines the exposure, vulnerability, and ability of households in Colombo, Sri Lanka, to respond to floods, and brings out significant policy implications. The study used detailed questionnaire-based surveys to obtain data on households, to understand the vulnerability and impacts of the severe floods of November 2010 and recurrent floods since then. Households that were selected for the surveys were located in and around flooding spots in the city. The study finds that the floods have imposed a significant burden on poor households. Poor and nonpoor households have suffered damages to the structure of their houses, household assets and appliances, and vehicles. With recurrent floods, they continue to bear the cost of damages as well as short-term measures to cope with floods. For poor families, these costs are borne through very limited resources and borrowing from informal sources, compared with the nonpoor who have more savings in financial form and greater access to formal sources of credit. Poor families tend to invest all their earnings in their home, furniture, and utensils, which suffer the most during floods. In addition, households suffer indirect impacts due to non-availability of transport, power, drinking water, food, and essential supplies. They also tend to lose workdays, which leads to loss of income and productivity. Many poor families have considered relocation to flood-free areas, but they lack the financial resources for the move. If the government offers such a scheme, many would be willing to take it up, if factors like job opportunities, clean surroundings, access to medical facilities, transportation, and good social networks are ensured in the new locations.

Disaster Risk Management --- Floods --- Household Survey --- Urban Poverty

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This paper addresses the question whether and how co-benefits, through disaster resilience building, can be further promoted. Co-benefits are defined as positive externalities that arise deliberately as a result of a joint strategy that pursues several objectives synergistically at the same time, such as disaster risk management and development goals, or disaster risk management and climate change adaptation. Of particular interest is the question of how the economic and broader benefits of disaster risk management can be recognized and realized by those in charge of fiscal policy decisions. The paper considers the interplay between public disaster risk management investment and fiscal policy, and provides an overview of the current debate as well as assessment methods, tools, and policy options. In fiscal budgeting, it has been standard practice to focus on direct liabilities and recurrent spending. Costs of disasters are often dealt with after the fact only, rather than being considered as contingent liabilities. As a consequence, the full costs of disasters have often not been budgeted for, and, with a price signal missing, there is lack of clear incentives for investing in disaster risk management. Overall, the paper identifies four steps and three dividends to be harnessed: (i) understanding fiscal risk; (ii) protecting public finance through risk financing instruments, the first dividend; (iii) managing disaster risk comprehensively, the second dividend; and (iv) pursuing a synergistic, co-benefits strategy of concurrently managing disaster risks and promoting development, the third dividend.

Co-Benefits --- Disaster Risk Management --- Fiscal Policy --- Risk Financing

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In most countries, the private sector owns the vast majority of the buildings and a considerable portion of the infrastructure at risk. However, most investment in disaster risk management is made by the public sector, with the private sector lagging far behind. The situation represents missed opportunities for businesses to capture not only higher levels of the direct benefits of disaster risk management, but also a broader set of co-benefits to themselves and society as a whole. These co-benefits include ways of lowering production costs, improving the health of workers, and contributing to general economic stability. Ironically, many of these co-benefits are more tangible and immediate than ordinary disaster risk management benefits, which may not appear until a disaster has struck many years after the investment has been made. This study analyzes several important facets of private sector investment in disaster risk management, primarily from an economic perspective. It is intended as a first step toward promoting greater investment in disaster risk management by identifying potential co-benefits, explaining why they are not always pursued, and suggesting ways to integrate them into private sector decision-making. The latter includes government incentives, justified on the grounds that many private sector investments have extensive co-benefits, many of which pay dividends to society as a whole.

Co-Benefits --- Disaster Risk Management --- Market Failure --- Private Sector --- Spillover Effects

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This paper describes a modeling methodology that embeds climate damages from natural disasters and risk management strategies into a macroeconomic model for Jamaica. The modeled damages take the form of capital destruction, and the risk management strategies considered are (i) adaptation investment in hurricane resilient infrastructure, (ii) commercial disaster insurance for the government, (iii) the formation of a contingency fund, and (iv) lower debt via higher future primary balances to create fiscal space for disaster recovery. Different risk management strategies are compared to a baseline of no risk management. The model behavior is estimated empirically on country-specific data. Hurricane damage and the model results are analyzed in deterministic and probabilistic settings, using the historical distribution of damages for Jamaica.

Conflict and Development --- Disaster Management --- Disaster Risk Management --- Economic Modeling --- Environment --- Hazard Risk Management --- Hurricane Damage --- Natural Disasters --- Urban Development