IPCC_Managing Risks of Extreme Events.pdf - Climate Access

Case StudiesChapter 9reduction legislation to provide a framework for strategies to build riskreduction into development and reconstruction (Pelling and Holloway,2006).9.2.12.5. Lessons IdentifiedThe main lesson that emerges from this case study is that carefully craftedlegislation buttresses DRR activities, thus avoiding a gap between thelaw’s vision and its implementation. The experiences of South Africa andthe Philippines in implementing their DRR legislation (as described byVisser and Van Niekerk, 2009; NDMC, 2010; Van Riet and Diedericks,2010; Botha et al., 2011; Van Niekerk, 2011) and the literature on DRRlegislation (Mattingly, 2002; Britton, 2006; Pelling and Holloway, 2006;UNDP, 2007; Benson, 2009; UNISDR, 2009c) point to the followingelements of effective legislation and implementation:• The law allocates adequate funding for implementation at all levelswith clarity about the generation of funds and procedures foraccessing resources at every administrative level.• The institutional arrangements provide both access to power forfacilitating implementation and opportunities to ‘mainstream’disaster risk reduction and adaptation into development plans.• The law includes provisions that increase accountability and enablecoordination and implementation, that is, the clear identification ofroles and responsibilities and access to participate in decisionmaking.An additional element is the need for periodic assessment and revisionto ensure that legislation for disaster risk reduction and adaptation isdynamic and relevant (Llosa and Zodrow, 2011). For instance, thePhilippines’ Disaster Risk Reduction Management (DRRM) Act calls forthe development of a framework to guide disaster risk reduction andmanagement efforts to be reviewed “on a five-year interval, or as maybe deemed necessary, in order to ensure its relevance to the times”(Republic of the Philippines, 2010). The DRRM Act also calls for thedevelopment of assessments on hazards and risks brought about byclimate change (Republic of the Philippines, 2010). Likewise, thePhilippines Climate Change Act calls for the framework strategy that willguide climate change planning, research and development, extension,and monitoring of activities to be reviewed every three years or asnecessary (Republic of the Philippines, 2009). Similarly, the UnitedKingdom’s Climate Change Act establishes the preparation of a reportinforming parliament on risks of current and predicted impact of climatechange no later than five years after the previous report (UnitedKingdom, 2008). Thus an additional element for effective DRR-adaptationlegislation may be that the law be based on up-to-date risk assessmentand mandates periodic reassessment as risks evolve and knowledge ofclimate change impacts improves.Developing and enacting legislation takes considerable time and politicalcapital. It took South Africa and the Philippines about a decade to enactcomprehensive disaster risk reduction frameworks. Linking thedevelopment of disaster risk reduction legislation to the politicallyprominent climate change discussion could substantially increase thesense of urgency and thus speed of parliamentary processes (Llosa andZodrow, 2011).Another method for hastening the legislative process would be to firstassess the adequacy of existing disaster risk reduction legislation andstrengthen these laws rather than starting a wholly new drafting andnegotiations process for adaptation that may create a parallel legal andoperational system (Llosa and Zodrow, 2011). As frequently reported(e.g., UNDP, 2007; UNISDR, 2009c), an overload of laws and regulationswithout a coherent and comprehensive framework, clear competencies,and budget allocations hinders the effective implementation of disasterrisk reduction legislation.9.2.13. Risk Transfer: The Role of Insurance and OtherInstruments in Disaster Risk Management andClimate Change Adaptation in Developing Countries9.2.13.1. IntroductionThe human and economic toll from disasters can be greatly amplified bythe long-term loss in incomes, health, education, and other forms ofcapital resulting from the inability of communities to restore infrastructure,housing, sanitary conditions, and livelihoods in a timely way (Mechler,2004; Mills, 2005). By providing timely financial assistance followingextreme event shocks, insurance and other risk-transfer instrumentscontribute to DRR by reducing the medium- and long-term consequencesof disasters. These instruments are widespread in developed countries,and are gradually becoming part of disaster management in developingcountries, where novel micro-insurance programs are helping to putcash into the hands of affected poor households so they can beginrebuilding livelihoods (Bhatt et al., 2010). These mechanisms can alsocontribute to reducing vulnerability and advancing development evenbefore disasters strike by providing the requisite security for farmers andfirms to undertake higher-return, yet more risky investments in the faceof pervasive risk. Governments also engage in risk transfer. Investorscan be encouraged to invest in a country if there is evidence that thegovernment has reduced its risks (Gurenko, 2004).9.2.13.2. BackgroundThis case study focuses on instruments for risk transfer in order to managecatastrophe risk in developing countries (see also Sections 5.5.2, 6.5.3,and 7.4.4). Table 9-3 provides an overview of financial instruments andarrangements, including risk transfer, as they are employed by households,farmers, small- and medium-sized enterprises (SMEs), and governments,as well as international organizations and donors. Typically, losses arereimbursed on an ad hoc basis after disasters strike through appeals tosolidarity, for example, from neighbors, governments, and internationaldonors. Households and other agents also rely on savings and credit,and many governments set aside national or sub-national level reservefunds. Alternatively, agents can engage in risk transfer (the shaded cells522