Chapter 5 - Using financial instruments and PPP schemes for building resilience to natural disasters

Abstract

The emergence of climate change issues and the impact they have on increasing the frequency and intensity of natural disasters require an approach that integrates resilience concerns into the economy. Thus, there is a need to identify the use of dedicated financial instruments that can help the society to efficiently and effectively recover in the aftermath of disasters. This research aims to identify the concept of Disaster Risk Financing (DRF) and identify different types of financial instruments, both traditional and innovative, that can be used to improve resilience of a society against natural disasters. The above aim is fulfilled by systematically reviewing available literature on the area. Findings of the systematic review presents conceptual definitions for DRF and a list of financial instruments that can be used to cover losses and economic damages at the aftermath of a disaster. Herein, the identification of actors, responsibilities of the actors, funding, initiatives following the Sendai Framework for Disaster Risk Reduction (DRR), and innovative solutions to engage the public and private sector are essential. Latter should be done in an integrated form in order to combine the strengths and omit the weaknesses of the two parties. Exploring the diverse forms of partnerships between the public sector and the private sector is also important to better illustrate DRF mechanisms.