Keynote message by Ahmed M. Saeed, ADB Vice-President, Operations 2, at the opening plenary of the International Disaster Resilience Forum 2021 hosted by the Philippines' National Disaster Risk Reduction and Management Council through the Office of Civil Defense, 29 July 2021
Your Excellency, Rodrigo Duterte, Secretary President Delfin Lorenzana, fellow speakers, distinguished guests, ladies and gentlemen, I am honored to be speaking at the International Disaster Resilience Forum 2021.
This plenary’s theme – Building Safer, Adaptive, Disaster Resilient Communities – is of crucial importance to achieve sustainable and inclusive development across Asia and the Pacific, and indeed globally.
Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability are interconnected and urgent agendas. They are central to the achievement of the Sustainable Development Goals.
We have seen climate change increasing the frequency and severity of extreme climate events, and this will likely continue in the future. Looking ahead, further disasters will undoubtedly occur, and they will almost certainly be increasingly costly, and unfortunately, deadly. As disaster risks cannot be entirely eliminated, we must collectively increase our risk reduction efforts, financial preparedness and improve our response to these eventualities.
For many countries, fiscal space has always been a concern when it comes to disaster risk financing. The situation has worsened in 2020-2021 as fiscal deficits and debts increase as countries respond to COVID-19. For example, in the Philippines, Indonesia, and Viet Nam, fiscal deficit as a share of GDP in 2020 stood at 7.7%, 6.1%, and 5.8% respectively, a marked increase on their 2019 positions. Overall, in developing Asia, the aggregate fiscal deficit as a share of total GDP widened from 5.0% in 2019 to 9.8% in 2020. [By comparison, the region’s average fiscal deficit was 2.9% in 2009 during the global financial crisis].
The business case for resilience investments is compelling with an average $1 spent saving $4–$7 in response. Disaster risk reduction is especially relevant in Asia and the Pacific because it is anticipated that the growth in average estimated annual disaster losses will outpace gross domestic product (GDP) growth in the region.
However, significant barriers remain to financing disaster risk reduction (and related climate adaptation measures), as financing has yet to match the scale of existing (and future) disaster risks. Both public and private actors are underinvesting in disaster risk reduction. Instead, funds and budgets are often overly focused on disaster response and recovery, with only a fraction dedicated to preventing disasters in the first place.
The Asian Development Bank discusses these critical issues in a publication in December 2020 which is a guide for policy makers entitled Financing Disaster Risk Reduction in Asia and the Pacific. It seeks to support countries in addressing the financial underinvestment in disaster risk reduction.
I would like to briefly share [five] steps suggested in the publication:
1. Getting the basics right. Regardless of the financing instruments used—from traditional inter-governmental transfers to green bonds and blended finance—it is imperative that government bodies continue their efforts to strengthen fiscal management and good governance. This can ensure both the efficacy and continuity of critical disaster risk reduction efforts and the maximization of related investments. Transparency, accountability, rule of law, and the enforcement of standards and regulations remain the basis on which sustainable finance can build.
Example: In 2020, ADB provided $1 billion of contingent disaster financing to Indonesia and the Philippines which incorporates policy reforms (including those designed and implemented by the Office of Civil Defense and the National Disaster Risk Reduction and Management Council, this event’s host) in the areas of climate change adaptation, disaster risk reduction, disaster preparedness and response, and disaster risk financing.
2. Strengthening climate and disaster resilience is a cross-sector endeavor. Governments need to mainstream these topics across policies and departments, allocate dedicated budgets that are legally safeguarded from politically fluctuating support, require thorough resilience-proofing of any investments, and proactively engage and empower subnational entities through effective vertical coordination of disaster risk management.
3. What gets measured gets managed. Based on improved data collection and climate and disaster risk assessments, governments can benefit from a clearer understanding of their risk exposure and related funding needs into resilience infrastructure and nonstructural measures. These can then inform their strategies and plans—including programming with international development organizations—and allow for clearer signaling to the private sector where accelerated investments will be made.
4. Financing instruments for disaster resilience benefit from standardized terminology and metrics. Furthermore, innovative financing models require adjustments to national regulations to allow new partnerships and mechanisms. As such, governments should continue to collaborate with the finance industry and international finance institutions to develop and refine assessment, quantification, pricing, and monitoring approaches and methodologies to make resilience projects and vehicles into bankable investments with economic, environmental, and social co-benefits.
5. Collaborate with partners to devise localized technical solutions for reducing disaster risks. Multilateral development banks and UN agencies can provide grants and concessional loans—as well as their technical expertise and convening power—to assist in developing and financing location-specific resilience measures. If those are proven effective, they can be scaled-up with the support of global funds and blended finance facilities. Developing countries should also realize the role of multilateral development banks as finance intermediaries for enhanced private sector activity in disaster risk reduction 5).
Example: As countries strive to improve their disaster resilience, it is critical that we also collaborate at the regional level, particularly in knowledge sharing, technical cooperation, and financing. ADB supports the Southeast Asia Disaster Risk Insurance Facility (SEADRIF), an ASEAN+3 initiative with the World Bank, is a regional catastrophe risk facility designed to provide ex ante climate and disaster risk financing and insurance solutions. Building on this excellent initiative, we should be doing more in this space. It is important that the region strengthens its cooperation and capacity to enhance regional public goods and reduce the social and economic impacts from disasters through capacity building and increased knowledge and data exchange.
I would like to close by recognizing the urgency of getting collective action for a challenge like climate change and disaster risk reduction. There are a lot of aligned actors (financial sector, capital markets, corporates, civil society) with good intentions for social and environment causes like climate change and DRR. But there is at the same time, the challenge of coordinating, all the more since complexity and stakes gone up. One of the problems in the ecosystem is the good guy/person problem: on complex international issues, no one is looking at the outcome. No one owns the outcome. The reality is that the only thing that matters is the outcome. We all have to do our part to ensure effective outcomes from collaboration among partners, so that good intentions aggregate to a real difference on the ground.