We need a seismic shift in thinking on finance to tackle disaster risk
By Charlene Watson and Jan Kellett

Wednesday, 18 March 2015

In Sendai, the Disaster Risk Reduction (DRR) community are the first to take centre-stage in 2015 – a year of summits that will shape finance for development for at least the next decade and a half. The Post-2015 Framework is a crucial opportunity to send a strong signal to this community that it is time to shift from a narrow focus on risk to long-term development progress.

Helen Clark, the head of UNDP, recently tweetedIf it isn’t risk informed, it isn’t sustainable development’ and – of course – she is right (UNDP also have a neat little video here). Disasters disproportionately affect the poorest and most marginalised communities. They exacerbate vulnerabilities and social inequalities, destroy livelihoods and harm well-being. Placing what can be a massive financial burden on the state, disasters undermine both development and economic growth

So, the question is, if sustainable development must be disaster resilient, what does this mean for financing DRR?

  1. We must stop making huge financial investments that create and lock in risk, while seeking to reduce risk with narrow DRR projects  

It is critical that, for example, the estimated $6 trillion a year that will be invested in infrastructure – vital for competitive economies everywhere – is disaster resilient. Be it public or private, concessional or non-concessional finance, national or international, it must all be disaster resilient to seriously reduce the growing costs of disasters both in lives lost and financial loss. 

  1. We must focus on investment before disasters strike and on long-term, sustainable approaches to DRR.

Short-term project based finance has been the norm, with the bulk of funding going to disaster response and to an extent preparedness, rather than the resilience of people and property. While focused projects will continue to serve an important role – particularly in the poorest countries – dedicated assistance must support overall risk management and work to integrate ‘risk’ throughout development spending. 

  1. We need to change the perception that DRR spending is only worthwhile if disaster strikes.

The integration of disaster risk reduction into development spending is not about asking for more money per se, it’s about smarter investment to deliver broader benefits. There is increasing evidence that DRR boosts innovation and economic activity, regardless of disaster events. The discourse, therefore, needs to shift towards the additional benefits of risk-informed investment, rather than solely focusing on preventing losses.

 The UN World Conference on Disaster Risk Reduction (WCDRR) was never going to be a pledging event. However, outcome text must deliver a strong message that all financial flows should be disaster resilient. Practically speaking, this means ensuring that all investments are risk-informed. This is the message that needs to be taken forward in this year’s discussions on Financing for Development, the Sustainable Development Goals and under the new agreement for the UN Framework Convention on Climate Change, and through to the World Humanitarian Summit in 2016.

The final message to negotiators at Sendai is this: sustainable development means risk-informed development, and risk-informed development means a whole new approach; this demands a change not only in policy but also in financing.

Charlene Watson is Senior Research Advisor at the Overseas Development Institute. Jan Kellet is Disaster and Climate Partnerships Advisor at UNDP.