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The Roles of Government and The World Bank

The Roles of Government and The World Bank. Rodney Lester World Bank Istanbul December 8, 2005. Risk is increasing. The frequency and economic severity of losses has been increasing. Direct Losses India $US millions. Country Strategies that Should Plan for Disasters Do Not.

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The Roles of Government and The World Bank

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  1. The Roles of Government and The World Bank Rodney Lester World Bank Istanbul December 8, 2005

  2. Risk is increasing

  3. The frequency and economic severity of losses has been increasing Direct Losses India $US millions

  4. Country Strategies that Should Plan for Disasters Do Not

  5. But extremes relative to expected losses can invalidate this approach Probable Maximum Loss Summary (US$ Million ) Average annual loss summary

  6. Particularly where the loss is large relative to the economy South West Pacific Loss Exceedance

  7. Maldives after the tsunami - ex post financing 2005 pre tsunami 2005 post tsunami 2006 2004

  8. Solutions

  9. Building the country risk management model

  10. Building the ex ante funding model Public Responsibility Private Responsibility Government Private Reinsurance/ Cat Bond Markets Donors RiskManagement Agency Cat. Pool Donors Response Capacity, Mitigation Incentives Post-disaster Subsidized Loan and Grant Facility Insurers, Property Lenders Lifeline infrastructure, the poor and disadvantaged Small business Middle class housing

  11. The extreme case – Florida – 5 of the ten worst US property losses in hisory - and exposure is increasing rapidly

  12. Outcome (to date) • No State commitment – FHFC can call on insurers • FHFC offers $15 billion XS of $4.5 billion • Citizen’s has 34% of market plus • Increasing hurricane proofing of new construction

  13. The World Bank Role

  14. Creating awareness Hotspots Report

  15. Developing its own liquidity instrument – Contingent Hazard Recovery & Management Loan (CHaRM) • Adjustment characteristics • Rapidly disbursing • Conditionalities based on risk management capacity being built • Response capacity in place • Post disaster national accounting system in place • Risk management institution in place and active • Etc • Not in CAS envelope – but post disaster adjustment capacity • Deferred front end fee • Low commitment fee • Link to risk management TA • Long repayment and grace periods

  16. Fostering PPPs and acting as mediator • Appropriate legal and political environment – needs leadership • Appropriate organization – private sector needs sufficient freedom to do job • Enforceable contracts and clear performance metrics • Revenues priced at economic levels • Support of participants, including end users • The right partners – technical and financial capacity Source; Council for Public Private Partnerships

  17. Being there when the disaster occurs • Immediate loss assessments • Coordinating donors • Designing rehabilitation and reconstruction program with partner country • Rebuilding • Trauma counselling • Building response capacity • Developing future financing plan • Developing and implementing mitigation strategies

  18. To do nothing is a policy decision

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