Risk Returns

[

] 17

tions and local governments are now using to mainstream DRR into

the National Public Investment System project development and

approval cycle.

The planned Framework Law for Integrated Disaster Risk

Management will put Peru at the cutting edge of legislation

on this issue. The National Financial Management Strategy for

Disaster Risks comprises emergency reserve funds, contingency

credit lines and risk transfer instruments, including public infra-

structure insurance.

According to a recent paper by United Nations Capital

Development Fund, although there is evidence of increased inter-

national cooperation on DRR, the (relative) scarcity of national

resources allocated to DRR remains a common concern.

Some of these difficulties are alluded to in Natural Hazards

and UnNatural Disasters, a joint United Nations and World

Bank report on DRR

The report notes that disaster prevention is

possible and cost-effective and that resources for prevention are

often embedded in other budget items, such as the cost of infra-

structure design. The report concludes that despite this potential

fiscal saving, expenditures on prevention are generally lower than

those on response, which ‘rise in the aftermath of disaster and

remain high for several subsequent years’.

However

the report does not directly address the difficulty of

financing DRR in its four policy recommendations,

which are to:

• Make available information on disaster risk and

thereby enable DRR to be reflected in land, property

and insurance pricing

• Permit land and housing markets to work freely and

reduce rental subsidies, thereby improving incen-

tives for investment in DRR

• Ensure adequate infrastructure is provided and

maintained by governments

• Encourage effective oversight.

Opportunities and incentives for DRR

Public investment that is based on sound needs and

risk analysis promotes growth. If public investment

becomes a vehicle for DRR, not only is the quality and

sustainability of public spending enhanced, but disas-

ter-related losses and costs are also reduced and social

and economic development stimulated.

Information on disaster risk should inform property pricing

Mangroves in Belize protect the shoreline, saving

US$111

167 million / year

Image: Elizabeth Mansilla

Image: Emily Cooper / World Resources Institute