Natural Disasters Financial Risk Management : Technical and Policy Underpinnings for the Use of Disaster-Linked Financial Instruments in Latin America and the Caribbean
AbstractThe Latin American and Caribbean region is highly exposed to natural disasters. The social and economic impact of these events has been historically very significant and it is showing an increasingly growing trend. During the first quarter of 2010, this unfortunate reality was evidenced with the Haiti and Chile earthquakes. Preliminary impact assessments indicate that the powerful January 2010 Port-au-Prince earthquake killed more than 225,000 people and caused damages and losses of about US$8 billion dollars (about 120 percent of last year GDP). This technical note presents the current Inter-American Development Bank Strategic Approach to catastrophe risk financing and discusses the technical and economic underpinnings for the proposed disaster-linked financial instruments. The paper considers the accumulated stock of knowledge about disaster risk management over the past decade and discusses how it is being deployed effectively in the region by the Bank.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Inter-American Development Bank in its series IDB Publications with number 11118.
Date of creation: Apr 2010
Date of revision:
Disasters; Financial Sector; Natural Disasters; Financial Risk Management; Financial Risk; Management;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hochrainer, Stefan, 2009. "Assessing the macroeconomic impacts of natural disasters : are there any ?," Policy Research Working Paper Series 4968, The World Bank.
- Ghesquiere, Francis & Mahul, Olivier, 2007. "Sovereign natural disaster insurance for developing countries : a paradigm shift in catastrophe risk financing," Policy Research Working Paper Series 4345, The World Bank.
- Louis Kaplow, 1991.
"Incentives and Government Relief for Risk,"
NBER Working Papers
3007, National Bureau of Economic Research, Inc.
- Stuart Miller & Kari Keipi, 2005. "Strategies and Financial Instruments for Disaster Risk Management in Latin America and the Caribbean," IDB Publications 33479, Inter-American Development Bank.
- Eduardo Cavallo & Andrew Powell & Oscar Becerra, 2010.
"Estimating the Direct Economic Damages of the Earthquake in Haiti,"
Royal Economic Society, vol. 120(546), pages F298-F312, 08.
- Eduardo Cavallo & Andrew Powell & Oscar Becerra, 2010. "Estimating the Direct Economic Damage of the Earthquake in Haiti," Research Department Publications 4652, Inter-American Development Bank, Research Department.
- Tobias N. Rasmussen, 2004. "Macroeconomic Implications of Natural Disasters in the Caribbean," IMF Working Papers 04/224, International Monetary Fund.
- Torben Andersen, 2002. "Innovative Financial Instruments for Natural Disaster Risk Management," IDB Publications 30738, Inter-American Development Bank.
- David M. Cutler & Richard J. Zeckhauser, 1997.
"Reinsurance for Catastrophes and Cataclysms,"
NBER Working Papers
5913, National Bureau of Economic Research, Inc.
- Auffret, Philippe, 2003. "High consumption volatility : the impact of natural disasters?," Policy Research Working Paper Series 2962, The World Bank.
- Niehaus, Greg, 2002. "The allocation of catastrophe risk," Journal of Banking & Finance, Elsevier, vol. 26(2-3), pages 585-596, March.
- David Hofman & Patricia Brukoff, 2006. "Insuring Public Finances Against Natural Disasters--A Survey of Options and Recent Initiatives," IMF Working Papers 06/199, International Monetary Fund.
- Raddatz, Claudio, 2007.
"Are external shocks responsible for the instability of output in low-income countries?,"
Journal of Development Economics,
Elsevier, vol. 84(1), pages 155-187, September.
- Raddatz, Claudio, 2005. "Are external shocks responsible for the instability of output in low income countries?," Policy Research Working Paper Series 3680, The World Bank.
- Noy, Ilan, 2009.
"The macroeconomic consequences of disasters,"
Journal of Development Economics,
Elsevier, vol. 88(2), pages 221-231, March.
- Diego Arias & Katia Covarrubias, 2006. "Agricultural Insurance in Mesoamerica: An Opportunity to Deepen Rural Financial Markets," IDB Publications 36538, Inter-American Development Bank.
- Gurenko, Eugene & Lester, Rodney, 2004. "Rapid onset natural disasters : The role of financing in effective risk management," Policy Research Working Paper Series 3278, The World Bank.
- Mahul, Olivier & Gurenko, Eugene, 2006. "The macro financing of natural hazards in developing countries," Policy Research Working Paper Series 4075, The World Bank.
- Schwarze, Reimund & Wagner, Gert G., 2006.
"The political economy of natural disaster insurance: Lessons from the failure of a proposed compulsory insurance scheme in Germany,"
2006/10, Technische Universität Berlin, School of Economics and Management.
- Reimund Schwarze & Gert G. Wagner, 2006. "The Political Economy of Natural Disaster Insurance: Lessons from the Failure of a Proposed Compulsory Insurance Scheme in Germany," Discussion Papers of DIW Berlin 620, DIW Berlin, German Institute for Economic Research.
- Thomas Eisensee & David Strömberg, 2007. "News Droughts, News Floods, and U.S. Disaster Relief," The Quarterly Journal of Economics, MIT Press, vol. 122(2), pages 693-728, 05.
- Albala-Bertrand, J. M., 1993. "Political Economy of Large Natural Disasters: With Special Reference to Developing Countries," OUP Catalogue, Oxford University Press, number 9780198287650.
- Neil Doherty & Kent Smetters, 2005.
"Moral Hazard in Reinsurance Markets,"
Journal of Risk & Insurance,
The American Risk and Insurance Association, vol. 72(3), pages 375-391.
- Michael Keen & Paul K. Freeman & Muthukumara Mani, 2003. "Dealing with Increased Risk of Natural Disasters: Challenges and Options," IMF Working Papers 03/197, International Monetary Fund.
- J. David Cummins, 2006. "Should the government provide insurance for catastrophes?," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 337-380.
- Mary Kelly & Anne E. Kleffner, 2003. "Optimal Loss Mitigation and Contract Design," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 70(1), pages 53-72.
- Dwight M. Jaffee, 2006. "Commentary on "Should the government provide insurance for catastrophes?"," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 381-386.
- Zanjani, George, 2002. "Pricing and capital allocation in catastrophe insurance," Journal of Financial Economics, Elsevier, vol. 65(2), pages 283-305, August.
- Kari Keipi & Justin Tyson, 2002. "Planning and Financial Protection to Survive Disasters," IDB Publications 28338, Inter-American Development Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Luis Daniel Martinez).
If references are entirely missing, you can add them using this form.