The Roles of Government and The World Bank Rodney Lester World Bank Istanbul December 8, 2005.
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Transcript of The Roles of Government and The World Bank Rodney Lester World Bank Istanbul December 8, 2005.
The Roles of The Roles of Government and The Government and The
World BankWorld Bank
Rodney LesterRodney Lester
World BankWorld Bank
IstanbulIstanbul
December 8, 2005December 8, 2005
The frequency and economic The frequency and economic severity of losses has been severity of losses has been
increasingincreasing
Direct Losses India $US millions
Country Strategies that Should Country Strategies that Should Plan for Disasters Do NotPlan for Disasters Do Not
Number of disaster projects in a country
No. of countries with this Count
Number of their CASs with no discussion
on disasters (%)
More than 8 disaster projects 16 5 31%
4 to 7 disaster projects 24 8 33%
2 to 3 disaster projects 33 15 45%
1 disaster project 24 15 62%
Total 97 43 44%
Source: OED data.
But extremes relative to expected But extremes relative to expected losses can invalidate this approachlosses can invalidate this approach
Average annual loss summary
StateStateAll perilsAll perils$US mill.$US mill.
Andhra Andhra PradeshPradesh
82.982.9
GujaratGujarat 64.964.9
MaharasthraMaharasthra 2.82.8
OrissaOrissa 43.243.2
Probable Maximum Loss Summary (US$ Million )
StateState PerilPeril Combined Combined assets assets
Andhra Andhra PradeshPradesh
All PerilsAll Perils 921921
GujaratGujarat All PerilsAll Perils 1,0091,009
MaharasthraMaharasthra EarthquakeEarthquake 5959
OrissaOrissa All PerilsAll Perils 479479
Particularly where the loss is Particularly where the loss is large relative to the economylarge relative to the economy
South West Pacific Loss Exceedance
Maldives after the tsunami Maldives after the tsunami - ex post financing- ex post financing
Public finances (in percent of GDP)
Revenue (including grants)
35.2 38.0 42.5 37.9
Expenditure
38.0 42.0 57.6 52.1
For reconstruction
-- -- 13.3 10.5
Overall balance
-2.8 -4.0 -15.1 -14.2
Net domestic financing
-1.4 1.3 -0.0 0.0
Foreign financing
4.2 2.8 4.1 3.7
Additional external financing requirement
-- -- 11.0 10.5
2004 2005 pre tsunami
2005 post tsunami
2006
Building the ex ante funding Building the ex ante funding modelmodel
DonorsGovernment Private Reinsurance/ Cat
Bond Markets
Cat. Pool
Insurers, Property Lenders
Small business
Post-disaster Subsidized Loan and Grant Facility
Lifeline infrastructure, the poor and disadvantaged
Response Capacity, Mitigation Incentives
Risk
Management Agency
Donors
Middle class housing
Public Responsibility
Private Responsibility
$2.6 $3.2 $3.3 $4.4 $6.0 $6.2 $6.8
$15.5$19.5 $20.3
$50.0
$0
$10
$20
$30
$40
$50
$60
$ B
illi
ons
The extreme case – Florida – 5 of the ten worst US property losses in hisory
- and exposure is increasing rapidly
Outcome (to date)Outcome (to date)
►No State commitment – FHFC can call No State commitment – FHFC can call on insurerson insurers
►FHFC offers $15 billion XS of $4.5 FHFC offers $15 billion XS of $4.5 billionbillion
►Citizen’s has 34% of marketCitizen’s has 34% of market
plusplus► Increasing hurricane proofing of new Increasing hurricane proofing of new
constructionconstruction
Developing its own liquidity instrument – Developing its own liquidity instrument – Contingent Hazard Recovery & Management Loan Contingent Hazard Recovery & Management Loan
(CHaRM)(CHaRM)
► Adjustment characteristicsAdjustment characteristics► Rapidly disbursingRapidly disbursing► Conditionalities based on risk management capacity being Conditionalities based on risk management capacity being
builtbuilt► Response capacity in placeResponse capacity in place► Post disaster national accounting system in placePost disaster national accounting system in place► Risk management institution in place and activeRisk management institution in place and active► EtcEtc
► Not in CAS envelope – but post disaster adjustment Not in CAS envelope – but post disaster adjustment capacitycapacity
► Deferred front end feeDeferred front end fee► Low commitment feeLow commitment fee► Link to risk management TALink to risk management TA► Long repayment and grace periodsLong repayment and grace periods
Fostering PPPs and acting as Fostering PPPs and acting as mediatormediator
► Appropriate legal and political environment Appropriate legal and political environment – needs leadership– needs leadership
► Appropriate organization – private sector Appropriate organization – private sector needs sufficient freedom to do jobneeds sufficient freedom to do job
► Enforceable contracts and clear Enforceable contracts and clear performance metricsperformance metrics
► Revenues priced at economic levelsRevenues priced at economic levels► Support of participants, including end usersSupport of participants, including end users► The right partners – technical and financial The right partners – technical and financial
capacitycapacity
Source; Council for Public Private Partnerships
Being there when the disaster Being there when the disaster occursoccurs
► Immediate loss assessmentsImmediate loss assessments►Coordinating donorsCoordinating donors►Designing rehabilitation and Designing rehabilitation and
reconstruction program with partner reconstruction program with partner countrycountry
►RebuildingRebuilding►Trauma counsellingTrauma counselling►Building response capacityBuilding response capacity►Developing future financing planDeveloping future financing plan►Developing and implementing mitigation strategiesDeveloping and implementing mitigation strategies