final reportcdb-idb joint initiative on mainstreaming drm · directors from ministries of finance...

Caribbean Development Bank / Inter-American Development Bank Joint Initiative on Mainstreaming Disaster Risk Management

REPORT ON THE TECHNICAL WORKSHOP ON THE MANAGEMENT OF DISASTER RISK THROUGH FISCAL AND BUDGET PLANNING

JUNE 26 – 27, 2006, CARIBBEAN DEVELOPMENT BANK , BARBADOS

May 2007

This report was produced by Franklin McDonald, Workshop Facilitator, and benefited from input from the presenters at the workshop. Dougal Martin and Cassandra Rogers (of the IDB) edited the report and prepared the executive summary. Nizamuddeen Ameerally and Karen Cummings managed the production of the report on behalf of the CDB. Maria Suarez and Michael Hennessey (IDB) formatted the report.

TABLE OF CONTENTS

I. BACKGROUND AND PURPOSE.......................................................................................... 1

II. OPENING SESSION.......................................................................................................... 1

III. TECHNICAL SESSION 1: SOCIOECONOMIC IMPACT OF NATURAL HAZARDS IN THE CARIBBEAN

..................................................................................................................................... 3

IV. TECHNICAL SESSION 2: ELEMENTS OF DISASTER RISK MANAGEMENT ............................... 4

V. TECHNICAL SESSION 3: ELEMENTS OF BUDGET AND FINANCIAL PLANNING AND POLICY RELEVANT

FOR DISASTER RISK MANAGEMENT ................................................................................. 7

A. Integrating Natural Disasters into Development Planning ....................................... 7 B. Ex-Ante Financial Risk Management.................................................................... 8 C. Planning and Budgeting for Fiscal Risk................................................................. 9 D. Political Economy Obstacles to a Forward-Looking and Prudent DRM.................. 10 E. Advances in Fiscal/Budget Planning and Financial Protection Against Natural Hazards in

Colombia........................................................................................................... 11 F. Overview of CATSIM Model (Preparation for Day 2 Working Sessions)............... 11

VI. TECHNICAL SESSION 4: GROUP EXERCISE...................................................................... 13

A. Overview of Excercise....................................................................................... 13 B. Country X (Grenada) Presentation....................................................................... 13 C. Country Y (The Bahamas) Presentation............................................................... 15 D. Group Z (Jamaica) Presentation......................................................................... 16 E. Discussion....................................................................................................... 17

VII. CLOSING SESSION......................................................................................................... 18

A. Next Steps in the Caribbean................................................................................ 18 B. Donor Presentations........................................................................................... 18 C. IDB Next Steps.................................................................................................. 19 D. CDB Next Steps and Closing Remarks................................................................ 20

LIST OF ABBREVIATIONS

BMC Bank Member Countries CATSIM Catastrophe Simulation Model CDB Caribbean Development Bank CDERA Caribbean Disaster Emergency Response Agency CIDA Canadian International Development Agency DDI Disaster Deficit Index DRR Disaster Risk Reduction DRM Disaster Risk Management ECLAC European Commission for Latin America and the Caribbean IDB Inter-American Development Bank IIASA International Institute for Applied Systems Analysis IMF International Monetary Fund OECS Organization of Eastern Caribbean States PAHO Pan-American Health Organization UNDP United Nations Development Programme UWI University of the West Indies

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EXECUTIVE SUMMARY The Caribbean Development Bank (CDB) and Inter-American Development Bank (IDB) jointly organised and co-hosted a “Technical Workshop on the Management of Disaster Risk through Fiscal and Budget Planning” from June 26 to 27, 2006. The workshop was held at CDB’s Headquarters in Barbados. The Technical Workshop brought together some 73 professionals, including permanent secretaries and directors from ministries of finance and planning and national disaster coordinators from 17 member countries of CDB and IDB, development partners and CDB and IDB staff. Dr. Compton Bourne, President of the CDB, and Luis Alberto Moreno, President of the IDB, delivered opening remarks and restated their institutions commitment to mainstreaming disaster risk management (DRM), in order to address the risk of natural disasters in the region. The workshop provided an opportunity to enhance the understanding of senior public sector personnel in finance, planning and in DRM of the processes involved in the integration of DRM in national development strategies, including through the use of practical tools. Among the topics discussed were the socioeconomic impacts of natural hazards and disasters in the Caribbean; policy elements of a DRM framework; key actors in DRM with special reference to the identification of risk bearers (public and private sectors) and their role in financial management of disaster risk and fiscal contingent liabilities; and the elements of budget and financial planning and policy as it relates to DRM, including incorporating disaster losses into macroeconomic projections and the planning process, ex-ante financial risk management, and frameworks and methods for incorporating risk analysis into financial planning, budgeting and accounting. The special problems of implicit liabilities and moral hazard were addressed. Political economy barriers to prudent DRM and Colombia’s experience in fiscal and budget planning and financial protection against natural hazards were also highlighted.

Participants had the opportunity to develop integrated risk management and financing strategies and associated action plans for three stylized disaster-prone countries in the Caribbean, using an interactive tool that simulates disaster risks in a specified region and examines the ability of a government to finance relief and recovery.

Participants were in general agreement that while emergency preparedness and response had been largely mainstreamed into national development planning, there was a sense of urgency for ex-ante DRM to be similarly mainstreamed, as a prerequisite for sustained disaster risk reduction and social and economic development in member countries. It was noted that this required the involvement of all stakeholders and in particular, the inclusion of DRM in fiscal and budget planning. Strong interest was expressed in applying the Catastrophe Simulation Model (CATSIM) at the national level as a capacity building tool, to illustrate the tradeoffs and choices national authorities may confront in increasing their resilience to the risks of catastrophic disasters. In addition, participants were of the view that, while the workshop provided the opportunity for initial exploration of financial instruments, effectively incorporating DRM in fiscal and budget planning agreement required agreement on the part of political directorates. To this end, it was recommended that the interaction be continued at the sub-regional and national level and that the private sector should be included as an integral partner in the dialogue.

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Technical Workshop: Executive Summary Improving management of natural disaster risk through fiscal and budget planning:

Fiscal and Budget Planning Challenges Growing risk • Natural hazards are becoming more frequent and severe in the Caribbean. • Disaster losses are growing by 20% per annum, while GNI is growing by only

3-4%. • Disasters have negatively impacted the economic performance of Caribbean

states and their ability to improve the quality of life on a sustained basis. Existing processes are inadequate • Existing planning and budgeting processes are inadequate for preparing for

natural disasters or coping with the economic and fiscal upheavals that ensue from them.

• Governmental decisional making processes generally assume favourable future conditions.

• Much of government disaster risk liabilities are contingent and implicit. • Disasters destabilize the economies and public finances of developing

countries to a much greater degree than developed countries. Political economy unfavorable • Political incentives act against proactive DRM because activities are

invisible and occur in the future while costs are visible and up front. • Moral hazard is present both at the national and international levels. Psychological obstacles to rational assessment of probabilities and risk • Recent research in psychology and behavioural economics suggests that

people have trouble assessing probabilities and risks. • This leads to “disaster myopia”.

Managing the Challenges Using a broad framework for DRM • A useful framework for DRM considers five policy areas: risk evaluation;

mitigation and prevention; financial risk transfer; emergency preparedness and response; rehabilitation; and reconstruction.

• Earlier emphasis on “reactive” programmes focused on post-disaster relief has been replaced by “proactive” activities focusing on risk reduction and management.

Clarifying roles and responsibilities • Wide range of national and sub-national actors, regional organizations and

donors in DRM can be a strength but may also inhibit effective action. • Clear definition of who assumes what parts of the risk is needed for

effective DRM and to avoid moral hazard problems. • Private sector can contribute to DRM through prevention, employee

protection, and business continuity systems.

Changing the conceptual approach • Mainstreaming DRM requires using a probabilistic approach to

appropriately represent natural disaster risk. Probability distributions should be derived and integrated with development planning.

• As disasters are extreme events, average risk metrics, such as the mean or expected value, do not suffice for comprehensive analysis. Volatility (variance) should be accounted for as well.

Improving the incorporation of risk into budgeting • Economic planning should assess both direct risks (to assets) and indirect

risks (to macroeconomic flows). • Fiscal risk can be viewed in four categories: (i) direct and explicit; (ii) direct

and implicit; (iii) contingent and explicit; and (iv) contingent and implicit.

• Key needs are to limit the government’s fiscal risk, improve budgeting for disaster risk, insure government against disaster risk, and deal with moral hazard.

Strengthening financial risk management • There are two categories of risk financing instruments available to the

public sector: temporal risk spreading (reserve funds, contingent credit)and spatial risk spreading (insurance, reinsurance, catastrophe bonds, weather derivatives).

• The most common form of risk transfer is insurance or reinsurance. • Pre-requisites for effective risk transfer and a functioning insurance

market are: (i) acceptable quality of risks (building standards, zoning and regional physical planning); and (ii) reduced quantity of risk (incorporation of prevention and mitigation measures).

• Risk financing instruments have substantial costs (often a multiple of the average losses incurred over a number of years). Careful analysis of the costs and benefits is needed.

• Risk financing should be explicitly integrated with DRM and risk reduction measures.

Overcoming political economy problems • Rigorous risk evaluations can assess probabilities and risk in a

scientific manner and help to inform decision making. • Awareness campaigns and advertising the risks and effects of natural

disasters can increase knowledge among societies and affected sectors.

• International institutions need to be creative in devising measures of national investment in prevention in order to make countries and sectors pre-event efforts more widely known and change political incentives.

Noting the example of the Government of Colombia • Colombia, which suffers from a variety of natural hazards, is at the

forefront of DRM. • The Ministry of Finance (MOF) has a Risk Management Unit and

systematically analyzes various categories of contingent liability, of which natural disasters are one category.

• The MOF has estimated the government’s total exposure and probable maximum losses for 100, 500, and 1,000 year events.

• The MOF has a clearly thought-out and explicit financing strategy

Follow Up CATSIM dissemination and use • Action 1: Countries should take up IIASA’s offer to share the CATSIM

software to interested governments and provide technical assistance. • Action 2: Data collection, particularly as an input to CATSIM, should be

improved. • Action 3: CATSIM should be extended to deal with multiple hazards. Utilize available lines of assistance • Action 1: Countries should take full advantage of the technical and financial

support available from the CDB, IDB and other entities.

• Action 2: Countries should take full advantage of the technical and financial support available from the CDB, IDB and other entities.

Multilateral cooperation • Action 1: CDB, IDB and other similar entities should continue to

collaborate in the promotion of DRM. • Action 2: Teamwork and cooperation are required to address the

magnitude of the tasks and challenges.

Management of Disaster Risk through Fiscal and Budget Planning

I. BACKGROUND AND PURPOSE

1.1 As a means of addressing increasing disaster risk in the Caribbean and the potential threat that disaster impacts pose to Caribbean economies and societies, in 2005 the Caribbean Development Bank (CDB) and Inter-American Development Bank (IDB) established a Joint Initiative on Mainstreaming Disaster Risk Management (DRM). This initiative seeks to encourage and support countries in the Region to integrate DRM in their strategic and operational planning, management decisions and processes.

1.2 The first phase of the process consisted of a planning meeting of permanent secretaries in finance and planning and heads of specialised agencies, held at CDB’s Headquarters in Barbados in October 2005. At that meeting, countries strongly supported the need for DRM mainstreaming and endorsed the CDB/IDB Initiative.

1.3 From June 26 to 27, 2006, the Presidents of the two organizations co-hosted a Technical Workshop on the Management of Disaster Risk through Fiscal and Budget Planning, which was held at CDB’s Headquarters in Barbados. The Agenda of the workshop is presented as Appendix 1. Over 70 participants involved in disaster risk reduction and management in the Caribbean attended, including 39 national representatives comprising permanent secretaries and directors responsible for the budget and planning functions in ministries of finance and planning and national disaster coordinators; CDB and IDB staff; and development partners (Appendix 2).

1.4 The purpose of the workshop was:

(i) To enhance the understanding of permanent secretaries of the ministries of finance and of planning, as well as national disaster coordinators, of the processes involved in the integration of disaster risk management in their national budgetary processes and fiscal strategies; and

(ii) To provide practical tools for their use.

1.5 It was anticipated that at the end of the workshop, participants would possess the knowledge and the practical tools required to facilitate the mainstreaming of natural hazard risk reduction into the annual work plans and policy documents of the public sector.

II. OPENING SESSION

2.1 In their opening remarks, both Dr. Compton Bourne, President of the CDB, and Mr. Luis Alberto Moreno, President of the IDB, assigned a high priority to the mainstreaming of disaster risk management and restated the commitment of their respective institutions to the Joint Initiative on Mainstreaming DRM. Both presidents also referred to the need for increased attention to be placed on engaging both the public and private sectors in mainstreaming efforts and urged participants to make strengthening DRM a high priority for individual countries as well as the Region.

2.2 In his Welcome and Opening Remarks Dr. Bourne, issued a special welcome to his IDB counterpart, and noted the high importance being placed on the subject. He alluded to the vulnerability of the CDB Member States and drew attention to the linkage between poverty, environmental degradation and the increasing impact of disasters on the Region. He also noted

CDB/IDB Technical Workshop

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the shift in the Region from reactive measures related to ‘relief’ towards more strategic “proactive” interventions related to risk reduction (mitigation and prevention) and risk transfer mechanisms. It was noted that this shift was taking place at both the national and the regional levels with dialogue on a Catastrophe Fund being reinvigorated after Hurricane Ivan in 2004.

2.3 The CDB President noted several ‘common Caribbean issues’ including poorly planned and under-regulated settlements, squatting, the occupation of vulnerable sites, non-observation of building codes or standards, and under resourced/ineffective physical planning agencies were cited as contributing to the repetitive cycle of economic loss, damage to productive capacity, destruction of housing stock and physical infrastructure too regularly experienced by Caribbean States. Dr. Bourne also pointed out that the states had not made adequate financial provision for hazard mitigation, relief or rehabilitation as few states had paid explicit attention in their budgeting and planning processes to natural hazard risk reduction, or risk management. He concluded by pointing out that these issues had impacted negatively the economic performance of Caribbean states, and reduced their ability to improve the quality of life and achieve economic growth on a sustained basis.

2.4 The workshop, it was pointed out, was a part of a cluster of activities of CDB in association with its regional partners in response to the impacts and lessons of recent events. It drew specific attention to the plight of the smaller Bank member countries (BMC) whose economies were particularly fragile and emphasised the need for greater attention to be paid to loss reduction efforts and the building of resilience in the Region. The important contribution being made by CDB’s Disaster Mitigation Facility for the Caribbean since its inception was referred to, as was the need for mainstreaming risk reduction activities in both the public and private sectors. He noted that the workshop was focussing on sharing experiences and practical tools to facilitate the mainstreaming Natural Hazard Risk Reduction into the annual work plans and policy documents of the public sector, through the efforts of the ministry responsible for finance and planning.

2.5 Mr. Luis Alberto Moreno in his remarks also emphasised that the presence of both presidents indicated the extreme seriousness of the subject, and urged that mainstreaming at all levels be taken very seriously. He reiterated that the immediate aim of the workshop was to showcase and demonstrate practical measures (tools and methods) of value in core government systems, and to share lessons learnt. The need for proactive approaches and direction as the basis for sound and effective budget decision-making in disaster situations was emphasized as a lesson emerging from the many disaster and crisis situations encountered by nations in the hemisphere. It was pointed out that strengthening DRM had to be a top priority for the entire region, and that the IDB was committed to strengthening the capacity of Caribbean governments to managing disaster risk, and protect and expand hard-won development gains.

2.6 The IDB President reinforced the link between poverty and disasters, pointing out that the poor are more likely to live in disaster prone areas, and less likely to have the means - such as savings and insurance to deal with disaster impacts. The experience of the IDB in assisting its members in responding to the direct and indirect costs of natural disaster was cited, and the specific challenges (compared to a balancing act) to the national budget management and planning apparatus referred to. It was pointed out that over the past 25 years, natural hazards in the Caribbean alone have cost over US$8 billion in direct damages and possibly the same amount in indirect losses.

2.7 President Moreno pointed out that the IDB had many relevant initiatives that would be discussed throughout the meeting. Most recently he highlighted the launch of a disaster prevention fund for strategic interventions for disaster prevention, and that he was also launching an innovative


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partnership with the Caribbean Disaster Emergency Response Agency (CDERA) for DRM related to sustainable tourism in the region.

2.8 The opening session was followed by three technical sessions on Day 1.

III. TECHNICAL SESSION 1: SOCIOECONOMIC IMPACT OF NATURAL HAZARDS IN THE CARIBBEAN

3.1 Mr. Ricardo Zapata, of the Economic Commission for Latin America and the Caribbean (ECLAC), had been invited to review the direct and indirect impacts of natural hazards and their implications for macroeconomic performance in the Caribbean. He presented a comprehensive overview of ECLAC's experiences in responding to the impacts of the wide range of hazards that threaten life, limb, property, infrastructure, livelihoods and sustainability in the Region. He confirmed that there was an urgent need to fully develop emergency management capacities and the appropriate capacities and systems for timely assessment of the direct and indirect costs of natural hazard impacts.

3.2 He pointed out the linkages with macroeconomic and sectoral performance, and the implications for revenue projections, economic performance, inflation, balance of payments and public sector financing. He drew many examples from the recent events in the Region and from the lessons learned from using ECLAC's methodology for post-disaster impact assessment, and their efforts at capacity building.

3.3 The increases in population in Latin America and the Caribbean, he noted, had in general coincided with a reduction in the number of disaster related casualties. This reflected improvements in the early warning system, particularly those related to meteorological events. At the same time economic impact of disasters over the last 25 years had significantly increased. He indicated that the annual average direct and indirect damages due to extreme events in the hemisphere was almost US$6.5 billion, and that in 2005 the cost to the Mexican economy of three hurricanes was estimated to be US$4.6 billion.

3.4 Mr. Zapata pointed out that these data suggest an urgent need for more attention to be focussed on risk reduction, and that the responsibility was not confined to the state sector. The important role of community action, genuine engagement of the private sector and the role of social and cultural mechanisms were strongly emphasized.

3.5 He explored risk transfer issues and pointed out that local, national and international levels of risk transfer were all required. He reinforced the point made by others regarding the strong correlation between exposure to risk and persistent poverty, citing the direct linkage between vulnerability and poverty, marginalization, and gender/ethnicity.

3.6 Mr. Zapata ended by noting that the data being cited was from Latin America, with very little data and information from the Caribbean islands. He encouraged the meeting to examine means of improving the collection of such data for future assessments.

3.7 Dr. Len Ishmael, Director General of the Organisation of Eastern Caribbean States (OECS), had been invited to present highlights of the socioeconomic impacts caused by recent disaster events in the OECS. Unfortunately, due to a conflicting engagement, she was unable to attend the workshop.


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IV. TECHNICAL SESSION 2: ELEMENTS OF DISASTER RISK MANAGEMENT

4.1 This technical session provided an overview on the fundamental elements of DRM in order to acquaint fiscal and planning policymakers with the subject and to allow them to understand where their role would fit in.

4.2 Dr. Cassandra Rogers of the CDB reviewed five primary policy elements of a risk management framework: risk evaluation; mitigation and prevention; financial risk transfer; emergency preparedness and response; rehabilitation and reconstruction. She traced the evolution and progress of efforts in Caribbean societies over the years to manage their vulnerability and the exposure of the Region to multiple hazards and noted that earlier ‘reactive’ programmes focused on post-disaster relief had been replaced by proactive strategic initiatives and activities focussing on risk reduction and management.

4.3 She emphasised the clear linkage between disasters, development and poverty, citing studies done by multilateral agencies, including the United Nations Development Programme (UNDP), which indicated that disasters placed at risk natural and human capital, as well as the region’s social and economic development targets. She indicated that among risk transfer, mechanisms and options available to Caribbean states were:

i. Insurance/re-insurance of public infrastructure and private assets.

ii. Financial market instruments e.g. ‘’catastrophe bonds”.

iii. Privatization of selected public services [with safety regulations].

iv. Calamity funds.

4.4 Dr. Rogers provided a brief but comprehensive description of CDB’s policy and strategic initiatives in proactive DRM, being implemented under the CDB/USAID Disaster Mitigation Facility for the Caribbean. These included the mainstreaming of DRM into national development planning, the development of a model Disaster Risk Reduction (DRR) policy for the Caribbean, national DRR policies (in five of the BMCs); hazard mitigation plans; national digital databases for hazard mapping/vulnerability assessments; production of hazard maps and vulnerability assessments; legislative reviews and capability assessments for disaster mitigation; capacity building in hazard mapping and vulnerability assessment; and training courses in DRM. Other related activities included the completion of a Sourcebook on Integrating Natural Hazards into the Environmental Impact Assessment Process (the NHIA-EIA Sourcebook) and regional training in its use; facilitating regional fora on mainstreaming DRM in national development planning (targeting Physical Planners, National Disaster Coordinators); and mainstreaming DRM in fiscal and budget planning (the current activity).

4.5 Future planned activities cited by Dr. Rogers included for 2006: the proposed establishment of a permanent focal point for DRR and in 2007, revision of CDB’s Natural Disaster Management Strategy.

4.6 Dr. Keipi, of the IDB, addressed the issue of “Disaster Risk Reduction and Financial Protection” and he sought to pose and respond to the question of ''who bears the risk and who pays?''.


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4.7 He emphasised that the participants were drawn from agencies with an ''imperative of reducing risk'' since the region was facing increasing fiscal and budgetary ''gaps'' to finance the disaster losses being experienced. These recurring ''gaps'' were demonstrating that the Region’s traditional focus on a ''reactive'' mode (emphasizing emergency response and reconstruction) was in fact unsustainable. He indicated that disaster losses had had annual growth rates of 20% since 1980, while GNP growth has been [averaging] only 3-4% per year for the same period. The solution proposed by the IDB is to improve integrated risk financing, combining the reduction of risk with the ex-ante financing of residual risk. Appropriate and strategic investments in prevention were therefore needed to break the vicious cycle of disasters and their impact on the vulnerable economies and societies of the Caribbean.

4.8 He described in detail work done in developing methods and tools for assessing the resource gap to finance reconstruction - the Disaster Deficit Index (DDI). Using the methodology he indicated results of case studies of Jamaica and Trinidad and Tobago. These indicated that the DDI for Jamaica is >1, i.e. there are not enough resources to cover a 100 year event (with a gap of 70%); Trinidad and Tobago, he showed, was better off.

4.9 Despite rising awareness and some progress, Caribbean countries are not adequately addressing the risk disasters pose to development. Some of the challenges to risk management include:

i. Disaster prevention is considered a cost, not an investment.

ii. Incentives that shape both government and private behaviour, do not favour vulnerability reduction; in the case of governments, the short political cycle (4 to 5 years) is a disincentive.

iii. Governments seldom have a well-established financing plan for contingent disaster liability.

iv. Risk is not adequately transferred through insurance in most Caribbean states.

4.10 The unusually wide range of national and sub-national actors, regional organisations and donors in DRM was also indicated as a factor that may inhibit effective action. These actors include: (i) ministries of central/national government (finance and planning, interior/defence/national security, health, education, environment, tourism, industry, energy, agriculture, public works, local government); (ii) municipalities/townships; (iii) civil society (community organisations, the general public); (iv) the commercial private sector; (v) financial sector; (vi) media; (vii) academia; (viii) humanitarian organisations; (ix) bilateral donors; (x) multilateral entities; and (xi) regional organisations (CDERA, OECS, Caribbean Community Climate Change Centre, universities, etc).

4.11 With regard to the matter of ''moral hazard'' and its avoidance, it was indicated that an imperative in risk reduction and ex-ante risk financing is a clear definition of who assumes what parts of the risk and that if no such definitions exist, every one will have an incentive to try to “pass on” the reconstruction bill. In addition, the inherent moral hazard problem of relying on ex-post help by others was alluded to, as in such cases there is no incentive to undertake activities to mitigate future events.

4.12 It was suggested that progressive modern governments, their state machinery and agencies should avoid policies that create or contribute to the moral hazard problem. Hence, the state should seek


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to define what part of any risks it will NOT cover for the private sector, as part of an integrated risk financing strategy.

4.13 Along the same lines, the potential role of corporate social responsibility of the private business sector was explored, and it was suggested that where the risk bearer is clearly identified, private businesses will have an incentive to contribute to risk reduction and management through prevention, employee protection, business continuity systems, etc.

4.14 Several potential areas for the private sector contribution were cited as the response phase, employee rescue (and welfare), philanthropy with humanitarian entities, support to emergency action by the state, participation in reconstruction finance. Such private sector contributions were capable of being influenced by Government providing incentives to private risk reduction measures. It was pointed out that these could provide an increased safety net for the poor, reduce the burden on government resources, and increase the states’ abilities to finance reconstruction of their own assets.

4.15 Two main prerequisites for effective risk transfer and a functioning insurance market were pointed out: (i) acceptable quality of risks (building standards, zoning regional physical planning, awareness, regulations and control); and (ii) reduced quantity of risk (incorporation of prevention and mitigation measures). It was suggested that the insurance market may abstain from covering risks perceived to be too high, if basic risk management is not in place. The still poorly quantified exposure data in much of the Caribbean, especially data related to flood and storm surge exposure, and suitable hazard models and credible scenarios were referred to as needs to be addressed. The case of Jamaica was paraphrased and factors such as majority of housing is not covered – either because they are not insurable due to inadequate quality or quantity of risk or not insured because of lack of agreement among the insurers and the clients on the price of the coverage.

4.16 Dr. Keipi gave several suggestions to be followed if the current “vicious cycle” was to be broken including:

i. The imperative of reducing risk through prevention - choosing right instruments.

ii. The governments defining their own liability and risks the state will NOT cover.

iii. Mainstreaming management of contingent liabilities of government in fiscal and budget planning.

iv. Businesses must practice corporate social responsibility.

v. Strengthening risk transfer through local insurance industry and making use of opportunities in international insurance and capital markets.

4.17 Several IDB initiatives, including its policies, programmes, regional dialogue processes, and national engagement with governments and non-state stakeholders within countries were briefly indicated. The current regional programming paper, which includes DRM as an important action item for the region, was highlighted as being available to facilitate DRM initiatives in the IDB and CDB member countries. Examples of country risk evaluation actions currently underway were given, including the Jamaica pilot, and an indicators programme for Trinidad and Tobago. Proposals under discussion, including efforts to prioritise countries at high risk from impacts, adjusting country strategies to ensure that the development agenda in high risk countries


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adequately incorporates risk management, and evaluation of institutional capacity were mentioned.

4.18 It was pointed out that the IDB had also taken note of some specific challenges, including:

i. The weak demand for disaster prevention by countries (notable exceptions to this have included The Bahamas, Haiti and the Dominican Republic).

ii. The need to improve coordination (between countries and donors) of regional programs to address disaster risk in an inter-related world.

iii. Use of disaster indicators and country risk assessments for country strategies and programming.

iv. Provision of financing for prevention and response.

4.19 Several financial instruments available through the IDB were described as being suitable for utilisation before, during and after emergencies, and information on IDB Disaster Prevention Fund with grant financing up to US$1 million was provided. It was reiterated that the IDB is willing to work with all the regional and national players to tackle and meet the significant challenge of mainstreaming DRM.

V. TECHNICAL SESSION 3: ELEMENTS OF BUDGET AND FINANCIAL PLANNING AND POLICY RELEVANT FOR DISASTER RISK MANAGEMENT

5.1 Session 3 represented the core of the workshop and was designed to facilitate participants’ efforts at integrating disaster risk into budget and financial planning. It also set the stage for the working group exercises in Session 4.

A. Integrating Natural Disasters into Development Planning

5.2 Dr. Reinhard Mechler of the International Institute for Applied Systems Analysis (IIASA) gave a presentation on the subject of “Integrating Natural Disasters into Development Planning”. He first outlined the need for mainstreaming disaster risk into development planning in hazard-prone countries. Concrete insights into how to mainstream risk into national development planning was provided, via a discussion of the IIASA CATSIM model. By probabilistically incorporating direct disaster risk into macroeconomic projections (as losses of assets or capital stock), economic consequences can be analyzed on variables such as economic growth, the fiscal position, the distribution of income and the prevalence of poverty in the aftermath of a disaster as well as assessing potential financing gaps for funding disaster-induced losses.

5.3 The presentation ended with emphasizing three important issues to consider when mainstreaming disaster risks:

i. First, there is a need to use a probabilistic approach to appropriately represent natural disaster risk. Probability distributions should be derived and integrated with development planning.


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ii. Second, for economic planning it is crucial to assess both direct risks to assets (stock impacts) and indirect and macroeconomic risks on economic flows.

iii. Finally, as disasters are extreme events, average risk metrics such as the mean or expected value, do not suffice for a comprehensive analysis, but the volatility (for example, represented by the variance) should be accounted for as well.

5.4 In the discussion following the presentation, one question focused on the role of climate change and its representation in CATSIM. In CATSIM, climate change impacts on the intensity and frequency of weather-related extreme events can be accounted for by altering the probability distributions for the direct risks. Another question was on model availability. IIASA will make CATSIM available free of charge to participants of the workshop and others interested.

B. Ex-Ante Financial Risk Management

5.5 Dr. Mechler’s presentation on “Ex-ante Financial Risk Management” focused on ex-ante financial risk management options for the public sector. First, the rationale and need for risk financing for the public sector was presented. In contrast to wealthy countries, developing country governments often face post-disaster deficits for their contingent liabilities of financing relief and reconstruction, which can have serious effects on their long-term development, and their ability to finance needed social and economic programs.

5.6 Historically, developing countries’ governments have had to resort to ex-post financing by diverting from the budget, or already disbursed development loans, as well as by relying on new loans and donations from the international community. Furthermore, those resources have often been insufficient, are associated with a time lag and do not provide incentives for risk reduction. As a consequence, in recent years, in line with a general paradigm shift from ex-post disaster management to ex-ante risk management, the pro-active financing of disaster risks has become an important cornerstone for tackling the substantial and increasing effects of natural disasters.

5.7 Different risk financing instruments are available for public sector risk hedging, falling into two categories: spatial risk spreading (insurance, reinsurance, catastrophe bonds, weather derivatives) and temporal risk spreading (reserve funds, contingent credit). One instrument popular among the public sector in a substantial number of countries is a “reserve fund”, that holds liquid capital to be used in the event of a disaster. Normally, such a fund is financed on an annual basis, so that capital can accumulate in years without catastrophes and then can be used in the case of an event to finance the losses.

5.8 For example, in Mexico a catastrophe reserve fund filled with the remaining funds from an annual budget for disaster management has been set up to pay for Mexico’s post-disaster liabilities of providing relief to the poor and to undertake reconstruction of affected or lost public assets in the case of more extreme disaster events, where annual budgeted amounts would not suffice.

5.9 A contingent credit arrangement also spreads risk temporarily rather than transfer it. In exchange for an annual fee, the right is obtained to take out a specific loan amount post-event that has to be repaid at contractually fixed conditions. Recently, Colombia has arranged such a transaction with the World Bank.

5.10 The most common form of risk transfer is “insurance or reinsurance”, (the latter is used when large risk portfolios are to be pooled internationally), which provide cover against losses in exchange for a premium payment.


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5.11 The objective of the proposed Caribbean Catastrophe Insurance Facility is to provide coverage to Government treasuries for extreme events. In the form currently proposed, the facility will pool risks over Caribbean countries, develop a reserve fund to pay for more frequent losses, and purchase reinsurance or alternative reinsurance instruments in the market for extreme events. Initially, donor contributions would assist with setting up a viable reserve fund. Whereas traditionally, insurance and reinsurance have been indemnity-based (i.e. related to the actual losses incurred), in recent years “derivatives” have been offered in the market, where the claim payment is associated with a physical trigger of an index of losses. One interesting application of a contract based on a physical trigger, was the purchase in 2005 of cover for possible relief spending for drought-exposed smallholders in Ethiopia, by the World Food Programme.

5.12 Another novel instrument is a catastrophe bond, that pays high yields, but interest and/or principal may default if a specified catastrophe event occurs during the lifetime of the bond. Catastrophe bonds are rather new and have until recently been issued only by insurance companies. Recently, Mexico as a sovereign entity has transferred part of its public sector catastrophe risk (beyond the capability of the reserve fund), via a mix of catastrophe bond and reinsurance.

5.13 The talk ended with flagging key challenges for government risk financing. One is the substantial cost of risk financing instruments. Often the costs can amount to a multiple of the average losses incurred over a number of years, creating important opportunity cost, as these funds are not available for social programs or infrastructure. Careful analysis of the costs and benefits is needed when considering implementing risk-financing instruments. Another important issue is the current lack of and need for explicit integration of risk financing, with a disaster risk management framework and risk reduction measures.

C. Planning and Budgeting for Fiscal Risk

5.14 Prof. Allen Schick of the University of Maryland, one of the leading academics in the field, made a provocative presentation on “Planning, Budgeting and Accounting for Fiscal Risks: Framework and Methods for Incorporating Risk Analysis into Financial Planning, Budgeting and Accounting for Government”, in which he also explored the issues of implicit liabilities and the moral hazard challenges. He elaborated four categories of fiscal risk: (i) direct and explicit; (ii) direct and implicit; (iii) contingent and explicit; and (iv) contingent and implicit.

5.15 Prof. Schick pointed out that current planning and budgeting processes are generally inadequate for preparing for natural disasters, or coping with the economic and fiscal upheavals that ensue from them. Government decisional processes generally assume that future conditions will be favorable. In general, they do not plan for economic downturns, adverse changes in interest or exchange rates, or “shocks” such as natural disasters. In addition, governments tended to favor allocation of financial resources to pay for direct liabilities, such as the salaries of teachers and the expenses of operating health clinics, not for contingent liabilities, such as those that might emerge after disaster strikes. A third, related problem explored by Prof. Schick was that many of the costs of responding to disasters are implicit rather than explicit liabilities of government. That is, government has no explicit statutory or contractual obligation to aid firms or households injured by disasters, but it often is impelled to do so. Planning and budgeting for implicit liabilities expose governments to ‘moral hazard’ by giving businesses and households incentives to take greater risks, such as locating in flood-prone areas.

5.16 Such problems have the potential according to Prof. Schick to destabilize the economies and public finances of developing countries to a much greater degree than those of the developed countries. In contrast to developed countries, which finance recovery from natural disasters by


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borrowing at low interest rates, less developed countries often have to redo their budgets during the fiscal year to free up resources to rebuild infrastructure or assist victims of disasters. Often they must curtail planned social or investment expenditure, in order to cover the unbudgeted costs of disasters.

5.17 Prof. Schick concluded that the sensitizing of participants to their countries’ exposure to the ravages of hurricanes and floods, could lead to the eventual devising and acceptance of new planning and budgeting instruments, to deal with these recurrent events. Key needs are to: (i) limit the government’s fiscal risk; (ii) improve budgeting for disaster risk; (iii) insure government against disaster risk; and (iv) deal with moral hazard.

D. Political Economy Obstacles to a Forward-Looking and Prudent DRM

5.18 Ms. Marcela Tarazona-Gómez of the University of Toulouse explored the political economy obstacles to implementing a forward looking and prudent DRM. A central issue is the contradiction between the growing evidence that disaster prevention is economically and socially superior to responding after a disaster on the one hand, and the reality that most DRM measures are taken ex-post on the other hand. This is generally assumed to stem from a lack of awareness on the part of policymakers and the public. However, Ms. Tarazona-Gómez suggested that there might be deeper explanations for this contradiction. Specifically, political incentives and problems with behavioral decision-making may be the root problems.

5.19 Political incentive problems are threefold. First, disaster prevention activities are largely invisible whereas ex-post disaster response and alternative projects are visible. Consequently, voters are unlikely to reward politicians for good management. Second, the timing of costs and benefits is politically unattractive. The costs of prevention are immediate and certain whereas benefits come in an uncertain future. Moreover, if the future event does not occur, the value of the money spent to protect against the event looks lost. Politically unstable countries where policy-makers use high implicit discount rates are especially likely to prioritize short-term projects rather than prevention. Third, the presence of international aid creates a moral hazard and reduces the incentive for countries to invest in prevention because they know they have the possibility to receive financial aid for reconstruction and rehabilitation from international donors and lending agencies.

5.20 In addition, a growing quantity of research (largely in the fields of psychology and behavioural economics) suggests that individuals are not fully rational and have trouble assessing probabilities and risks. People tend to over-estimate low probability risks, under-estimate high probability risks, anticipate correlation where there is none, and extrapolate from the recent past. People also tend to be systematically over-optimistic. All of these factors lead to “disaster myopia”. Furthermore, because individuals use similar heuristics in the face of risky situations, these heuristics may generate systematic biases in populations.

5.21 Based on the comments made during and after the session, many participants in the workshop indicated that they found it difficult to overcome the ‘’political economy’’ problems presented on their own. Both political and behavioural explanations work to reduce the incentives of policy -makers to invest in prevention. Some solutions to these problems were mentioned. They all have in common the fact that awareness of the population needs to be increased, as well as the quality and amount of information provided to policy makers and the international community. Countries therefore need to elaborate risk-evaluations and related strategies, adapt their policies to these newly understood risk based needs, and also actively create appropriate incentives, for example a national measure of investment in prevention, to reward countries and sectors for pre-event efforts to reduce post event dislocations.


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5.22 Ms. Tarazona-Gómez threw out the challenge of “How to break the vicious cycle’’ to the participants. She presented ideas and approaches aimed at tackling and overcoming the political economy and behavioral obstacles, and incorporating forward looking and prudent DRM measures into governmental budget processes. The growing devastating effects of natural disasters have raised awareness of governments and exposed populations. However, much more attention should be paid to awareness raising campaigns, explaining and advertising the risk and effects of natural disasters, in order to increase knowledge among societies and affected sectors. This is essential to change the perception and behavior that appears to be internalized by policymakers and populations. She quoted the IDB (2006), “when the important and clear links to development are recognized, incentives opposing ex-ante prevention and competing investment priorities can be overcome.”

E. Advances in Fiscal/Budget Planning and Financial Protection Against Natural Hazards in Colombia

5.23 Mr. Jaime Holguín, Risk Manager of the Ministry of Finance and Public Credit of Columbia, explained how his ministry had approached risk related matters and shared many practical experiences with his counterparts from the Caribbean ministries of finance. He showed that his ministry systematically analyzed various categories of contingent liability, of which natural disasters are one category. Colombia has suffered from different types and different intensity events since 1970 with cumulative deaths between 1970 and 2000 estimated at 38,212 and cumulative damage estimated at US$4,576 million.

5.24 The ministry has estimated its total exposure and the probable maximum losses for 100, 500 and 1,000-year events. Using the IDB’s Disaster Deficit Index, he concluded that the Government of Colombia would not be able to replace the assets for which it is responsible for anything larger than a 100-year event.

5.25 The ministry has a clearly thought out and explicit financing strategy. This is divided into retained risk (reserves in a calamity fund and a contingent loan), transferred risk (insurance and reinsurance), long-term initiatives (such as catastrophe bonds, new taxes, long-term bonds), and no protection for the highest level of risk. However, the Calamity Fund has insufficient resources (only US$5 million) and the institutional and legal framework needs to be modernized. The contingent loan is for US$150 million and is provided by the World Bank. Long-term initiatives include studying how to best handle higher-level risks. Nevertheless, there will always be some residual risk that cannot be retained or transferred because it is too expensive. Fortunately, such events have a very low probability of occurrence.

F. Overview of CATSIM Model (Preparation for Day 2 Working Sessions)

5.26 At the end of the first day, Dr. Mechler introduced the group exercise that participants would undertake on the second day of the workshop. The main objective of the group exercise was to put into practice the workshop concepts and approaches to incorporate DRM into fiscal and development planning. Working groups were formed to evaluate stylized country risk information, fiscal position and institutional capacity and programs, in order to develop an integrated risk management and financing strategy for the country, as well as a multi-year public investment program that would support the strategy.

5.27 As background and preparation for the group exercise, Dr. Mechler introduced the CATSIM model, developed by IIASA. CATSIM, a PC-based tool, is designed to provide insights into how policy-makers in disaster-prone countries can reduce public sector financial vulnerability. The


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tool uses Monte Carlo simulation of disaster risks in a specified region, and examines the ability of the government to finance relief and recovery. With input on the budgetary situation of the government, the CATSIM model estimates the probability that a selected country will experience a “financing gap” by simulating plausible catastrophes. The model illustrates the tradeoffs and choices the government must make in closing this gap with pre-disaster strategies. These strategies include, for example, loss mitigation measures (to reduce losses and thus the risk of a financing gap), a catastrophe reserve fund, and contingent financing or insurance (traditional or alternative risk transfer). In showing the tradeoffs involved in choosing pre-disaster strategies, the model takes into account their benefits in reducing a country’s financial vulnerability (avoiding the possibility of incurring unsustainable external debt, for example).

5.28 The model also takes account of the opportunity costs of these instruments in terms of other types of social investments foregone. An important aspect of the model is the user interface and its interactive structure, which allows the user to change parameters and test different assumptions about the hazards, exposure, sensitivity, general economic conditions and the government’s ability to respond. In doing so, least-cost mitigation and risk financing strategies for a country can be assessed.


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VI. TECHNICAL SESSION 4: GROUP EXERCISE

A. Overview of Excercise

6.1 On Day 2 of the workshop, the participants applied the material and concepts presented on Day 1 in a practical exercise based on the CATSIM model. The exercise was informed by three reports (“notebooks”) developed by IIASA, with the help of IDB and CDB country economists, laying out stylized DRM cases broadly based on three Caribbean countries with different DRM profiles. Dr. Reinhard Mechler, IIASA chaired the session and was supported by his IIASA colleague, Mr. Stefan Hochrainer. CDB staff (Cassandra Rogers, Juliette Melville and Joy Braithwaite) and IDB staff (Javier Cuervo, Kari Keipi, and Caroline Clarke) acted as facilitators to the groups.

6.2 Six breakout groups were formed to discuss and work through a country case. Two teams each evaluated one country case. The participants had no difficulty in identifying the countries used for the case studies (Country X – Grenada, Country Y- The Bahamas, Country Z – Jamaica) and in each case the presenters sought to embellish and enhance the country profiles by making direct linkages with the countries.

6.3 Overarching questions for the exercise were:

i. What are potential disaster impacts on the analyzed countries and how can they be analyzed?

ii. How can priorities be set for preventing disasters and transferring risks? What are the respective costs and benefits of preventive measures, and how do they compare with risk transfer? How much risk, thus, should be reduced and how much transferred?

iii. Are these priorities consistent with the broader goals of development planning?

iv. What are the pros and cons of different risk financing instruments?

v. How can risk transfer instruments be effectively linked to risk reduction measures?

vi. What might be the respective roles of the public and private sectors as well as international financial institutions and other donors in disaster risk management?

6.4 In the exercise, the CATSIM model was used for identifying risk and financial vulnerability (in terms of financing gaps or post-disaster liquidity shortfalls for financing reconstruction and relief); furthermore CATSIM informed the evaluation of the costs and benefits of risk financing instruments. After lively discussions within the groups, each group prepared an integrated risk mitigation and risk financing strategy; one of the two groups working a case was asked to present to the plenary while the other group commented. The presentations and commentaries provided an informative view of the country cases and the lively discussions within the groups during the exercise, and outlined for each country case which (additional) risk financing options may be desirable.

B. Country X (Grenada) Presentation

6.5 The Group X presenter made several references to the challenges actually faced by the Grenadian Ministry of Finance immediately after Hurricane Ivan, indicating that the CATSIM tool was


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useful in providing a conceptual framework, and would have been useful if it had been available in the aftermath. He agreed in principle that the case documentation and method presented in the case provided a basis for action, which would have also proved extremely useful to his Ministry if it had been available prior to Ivan. Allusion was made to the financial and revenue gaps which had to be faced and overcome in the post Ivan period, due to the significant damage to the physical assets and infrastructure, the downturn in the economy and reduction of revenue streams.

6.6 He indicated that the group working on Country X case had proposed a DRM strategy involving risk financing through:

i. Developing a reserve fund (by extending the current reconstruction levy beyond [3 to] 5 years;

ii. By participating in the regional catastrophic insurance pool [now under development] by seeking coverage of US$75m which would be adequate to cover the impact of a 50 year event; and

iii. Accepting that any event with a recurrence of >50 years would create a [significant] financing gap.

6.7 He confirmed that the CATSIM tool had facilitated the review of strategies and options that would require high-level decision-making and long-term national commitment – for example any extension of the reserve fund may have to depend on deliberations and consensus building among the main stakeholders in the economy. In the case of the regional catastrophic insurance reserve pool, governments’ participation would be conditional on the cost and terms of the scheme which was still being designed under the auspices of the World Bank

6.8 The risk mitigation strategy proposed by the group included:

i. Implementing and enforcing of building codes, zoning and physical planning regulations.

ii. Retrofitting critical facilities (suggested investment of EC10 million per year).

iii. Preparedness improvement ($2mn per year to the National Emergency Management entity).

iv. Phase in subsidies for structural/housing retrofitting (most vulnerable - shelters, schools, hospitals first).

v. Increased public awareness and information.

6.9 In the subsequent discussion, other members of the group emphasized the need to incorporate and invest in environmental protection, in order to reduce the negative impact of environmental degradation; the need for active mainstreaming of the DRM issues, and for there to be long term commitment to these measures by all political groups. The issue of political will and building societal consensus was raised. Reference was also made to the need for a greater effort to facilitate the penetration of insurance, and other risk transfer mechanisms in all economic sectors.


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C. Country Y (The Bahamas) Presentation

6.10 With respect to Country Y, based on the profile provided in the documentation the group deduced that the case was based on The Bahamas, and sought to provide additional information to that provided in the profile. With regard to the profile of direct risk, the high exposure to hurricane impact of the 23 inhabited islands, the large transient migrant and tourist population, and physical sensitivity due to the lack of elevation, was said to have influenced the adoption of a stringent building code and tight regulation of coastal development.

6.11 The Group noted that the high exposure of the islands of The Bahamas and a high level of societal awareness had provided a basis for effective governmental response to hurricane vulnerability. Further public policy commitments had existed over many years for the implementation and enforcement of the national building code, and this has been supported by an effective inspectorate and a strong commitment to managing coastal development to reduce risk. It was emphasized that the coastal area was the site of both the tourism plant and infrastructure, and the critical facilities upon which the economy depended.

6.12 In exploring the financial resilience issue, reference was made to the favourable debt to GDP ratio, the good credit rating as well as the limitations due to the restricted tax base and small reserve fund. The CATSIM tool suggested that it would take a 100-year event to create a financing gap. The financial vulnerability analysis indicated strong financial resilience, which accounts for the very low probability of financial gaps, and confirmed an ability to meet most financing needs from diversion of budgetary resources.

6.13 The main macroeconomic risk presented (for hurricanes) was likely to be loss of tourist revenue following an event. This presentation emphasized the need for the macroeconomic risk analysis to explore linkages, connections and dependencies on offshore facilities. The presenter cited the case of hurricane damage to ports (Miami and New Orleans) distant from The Bahamas, which had affected the shipments and transport of critical materials. The group also pointed to the relative robustness of the offshore financial sector, providing that communication infrastructure was maintained.

6.14 Risk Management: The group proposed risk management strategies arising from using the CATSIM tool, including increasing the size of the reserve fund, and making it a dedicated fund for disasters. Using the model suggests that insurance may be the most cost effective in closing or reducing the financing gap after credible events.

6.15 The group proposed a number of additional practical steps including making their current reserve fund a dedicated disaster fund, and promoting and facilitating insurance as the risk transfer method of choice. The group also found the graphics containing the IIASA tool useful, and considered it of value in manipulating possible futures and selecting among the options.

6.16 The group members reinforced the point that maintaining societal recollection of extreme events (in the case of The Bahamas, the hurricane of 1929 was mentioned) was critical in promoting and maintaining awareness. They also cited the high cost of maintaining systems across the populated islands, and the need for a culture of public awareness to be utilized to complement the role of the government in this area.

6.17 Group Y suggested improvement to the model to address storm surge and hazards other than hurricanes. They also emphasized the need to incorporate very wide societal players and to build a team approach within government. It was considered that the private sector as well as the


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traditional civil society groups had vital roles to play. The Permanent Secretary in Ministry of Finance for The Bahamas, emphasized the need for maintaining communication links to the tourist market place, and for the provision of appropriate incentives for the repairs of economic assets, including hotel plans and private residences.

6.18 The role of remittances in facilitating short-term personal and family recovery was also emphasized. It was pointed out that most Caribbean islands have extensive networks of overseas citizens, and it was agreed that the model could take into account issues such as the informal assistance available through remittances.

6.19 Comments on the model: The model was flexible/could be adjusted to reflect varying levels of informal assistance. By modifying the assumptions, and taking into account the potential for informal/remittance flows, this increases the country’s ability to finance recovery from its own resources. The conclusion of the group was that the model was both practical and flexible, and allowed a variety of scenarios and options to be examined, to determine policy and strategy before and after disaster impact.

D. Group Z (Jamaica) Presentation

6.20 In the case of country Z (Jamaica), an attempt was made to apply the model to a country faced with multiple hazards including earthquakes. Suggestions were made as to how the model could be more generally applied, and for the standardization of data collection by the joint action of CDERA and CDB.

6.21 Risks. It was agreed that the hazards to which Country Z was exposed (hurricanes, floods, earthquake, drought) all had high economic cost, but varying frequency of occurrence.

6.22 The group discussed the assumptions of the model as opposed to the scenarios for the individual country. It raised issues to do with privatization of public assets, and took note of the need for contextual sensitivity, including the debt burden and societal tax burden.

6.23 Risk prevention strategies mentioned were:

i. Land use zoning.

ii. Revised and enforced building codes.

iii. Pending legislation to deal with relocation and other activities.

iv. Maintenance of drainage systems.

v. River training.

vi. Reforestation.

6.24 The financial management strategy arising from the model that the group found useful included, support for the concept of reserve fund, but as with Grenada they agreed that it would be critical to put aside an annual fund for mitigation; funding the reserve out of the property tax.

6.25 This presentation emphasized the need to incorporate the needs of the informal sector and the role of remittances in a more structured way.


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6.26 The group agreed that the scenario created by the model of high financial losses was realistic and would support the need of appropriate financial intervention strategies.

6.27 They also agreed that the tool facilitated the estimation of financial gaps for events of different scales, and that it also facilitated strategic choices addressing issues such as interventions to create a safety net for populations near or below the poverty line. Risk transfer mechanisms including insurance were also mentioned.

6.28 Building code, zoning and land use regulation were also recognized as public goods capable of reducing risk and lowering the cost of insurance.

6.29 Reserve fund integrity and sustainability were also raised as issues.

6.30 Public and private sector dialogue in establishing the strategy was emphasized.

E. Discussion

6.31 The participants identified the following issues with the model:

i. Global warming and risk – effect on the model was raised as a topic requiring future discussion. IIASA agreed to pay attention to this subject in the Caribbean context.

ii. Drought was also mentioned in the case of country Z (Jamaica).

iii. The need for the model to be extended to multiple hazards and be amenable to utilization at sub-national and sectoral levels.

iv. The need for the ministries of finance to experiment and innovate with the current model to improve their capacity and capability with the model.

6.32 General comments on the workshop:

i. The importance of mainstreaming within the ministries of finance and other ministries; and

ii. National level training of the model would be required.

6.33 Participants expressed interest in having access to CATSIM and appealed for training within each ministry of finance to build a cadre of staff capable of manipulating the model, and with the capacity to champion the DRM mainstreaming process in the finance ministries, across the other critical ministries and state agencies, and to grow partnerships with the private sector and civil society in each country.

6.34 IIASA expressed its willingness to make the model available free of charge to interested participants and governments, possibly by providing its tool on the internet and taking part in further capacity building at national and regional levels if invited to do so by the appropriate entities.

6.35 The participants recommended the need for political buy-in of the process, through recognised agencies such as CDB.


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VII. CLOSING SESSION

A. Next Steps in the Caribbean

7.1 Invited summary remarks were made by Ambassador Gordon Shirley (Chair of Organisation of American States/IDB Working Group), Ms. Rebecca Arias of the UNDP, Ms. Nalini Ablack of Canadian International Development Agency (CIDA) and Ms. Monica Zaccarelli of Pan American Health Organisation (PAHO).

7.2 Ambassador Gordon Shirley emphasized the need for the IDB, CDB and other similar entities to continue their collaboration in the promotion of DRM, and indicated that the workshop had proven to be was useful for all facets of the risk management spectrum – identification, mitigation, and financing. He indicated his disappointment that for the CATSIM so much data had to be assumed and/or imported from outside of the Caribbean, and encouraged all participants to improve data collection.

7.3 He made reference to the role of private investments, alluding to the fact that even economies (such as Trinidad and Tobago) which were said to be relatively robust, were at risk, as there was a trend (supported and facilitated by formal policies) toward regional cross investments in the Caribbean. So although Trinidad and Tobago itself is not at high risk – T&T residents’ investments may be located in a country like Jamaica that has more significant risk exposure. He therefore urged that the private sector be involved in the dialogue on DRM, and that the dialogue be quickly expanded to policy makers in both public and private sectors.

7.4 Ambassador Shirley reiterated the need for the Region to establish priorities and chart a way forward – past disaster relief and recovery, and insurance/catastrophe funds, but towards a coherent plan to improve resilience by reducing vulnerability to disaster events. He urged that the effect of ‘shocks’, including those linked to climate change be anticipated and reduced. In closing he made reference to the improved collaboration between the IDB, World Bank, International Monetary Fund (IMF) and Organization of American States, and urged that CDB BMCs take full advantage of the support available from the technical assistance “windows”, including the Disaster Prevention Facility and Regional Public Goods Initiative (IDB) and similar bilateral opportunities.

B. Donor Presentations

7.5 Ms. Rebecca Arias (UNDP, Deputy Resident Representative) in her remarks pointed out the importance of ministries’ of finance participation and capacity building in this area during the workshop. She then described a number of UNDP’s initiatives in the region targeting the creation of increased capacity for risk reduction and the improvement in areas such as: preparedness and response; post-disaster recovery and early recovery; risk reduction mainstreaming into development planning, policies and national systems; and appropriate human capital development, information and knowledge management; as well as the creation and strengthening of partnerships and networks.

7.6 Information was also provided on UNDP’s Eastern Caribbean Regional Programme for 2005-2009, which included support for governance reform, poverty reduction and social sector development, and capacity building for environment and natural resources management. The component focusing on disaster risk reduction and management includes resilience building, mitigating negative impacts of external shocks, and enhancing national capacities for effective disaster recovery in post disaster situations. The UNDP also indicated its intent to also collaborate


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with the tertiary educational system by supporting University of the West Indies (UWI) initiatives.

7.7 UNDP closed by emphasizing its commitment to DRM, mainstreaming in public sector planning and poverty reduction initiatives. It was also confirmed that they were being catalytic in producing a regional version of the Global Reducing Disaster Risk Report, and that they were in collaboration with other UN agencies seeking to carry out vulnerability and capacity assessments, focussed on critical sectors including agriculture, tourism, integrated water resource management (in collaboration with Caribbean Community Climate Change Centre MACC.) The UNDP also reiterated its continued support for the Comprehensive Disaster Management processes and inter-agency coordination and cooperation.

7.8 In her presentation the CIDA representative, Ms. Nalini Ablack, re-emphasized Canada’s support based on its recognition of the Caribbean’s vulnerability. She noted the linkages and convergence of the risk, sustainable development and disaster planning agendas and indicated CIDA’s intent to continue to support the critical regional organisations including CDERA, and the CDB. It was revealed that CIDA was in the early stages of designing a new risk reduction programme that it hoped would address public sector, private sector and community capacity issues. CIDA also confirmed Canada’s interest in supporting collective insurance schemes to facilitate private investors, and Canada’s support in principle for the development of the regional catastrophe insurance scheme being spearheaded by the World Bank.

7.9 Ms. Monica Zaccarelli, PAHO endorsed the comments regarding support for the continued development of the DRR agenda and pledged the support of PAHO in the effort. She made a special plea for adequate investment in the health sector, pointing out that the health infrastructure - such as hospitals and wastewater treatment plants, - not only had to survive the impact of extreme events, but also had to provide a vital societal function in the aftermath. She urged the representatives of the ministries of finance to consider appropriate and sustained attention to “safe hospitals” as a practical matter, and that they look into the state of current infrastructure and ensure that in the future new hospitals be made disaster resistant. She endorsed the appeal for “mainstreaming” pointing out that the ministries of health, with support from PAHO over several decades, had made significant progress in mainstreaming and capacity building of disaster and emergency related capacities within the health sector. PAHO, she concluded, remained committed to the continuation of its historic partnerships with regional and national agencies as well as the tertiary institutions in the Caribbean.

C. IDB Next Steps

7.10 The Workshop was formally closed by Dr. Dora Currea of the IDB and Dr. Compton Bourne, in his capacity as President and host.

7.11 Dr. Currea, speaking on behalf of the IDB pointed out that all the entities responsible for critical functions related to reducing the impacts of disasters on society (including the financial and investment aspects), were facing the challenges of mainstreaming and that the IDB representatives had found the workshop useful in advancing the Bank’s own internal mainstreaming processes. The workshop therefore was of value for the IDB as well as for the member countries. It had in her view provided an opportunity for discussion with country partners on many aspects of DRM, and facilitated learning through the introduction and exposure to various “tools”. She also indicated the value of the sharing of knowledge through the discussion of experiences and lessons learned.


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7.12 Particular mention was made of the work underway related to risk transfer and the development of practical proposals, related to the Disaster Prevention Fund as innovative, strategic interventions. The need expressed by participants for research and studies to ensure that decision-making related to risk reduction was built on a solid platform, was an area of interest for IDB and she pledged the continued support in that area. She reiterated the IDB’s support for knowledge creation and dissemination. The results of other IDB studies and studies in progress were also available to inform the DRM processes. Such studies were providing valuable information capable of informing and improving the cluster of comprehensive disaster risk programs, required to change and improve practice in the region.

7.13 She concluded by pointing out the critical risk-related role of the ministries responsible for finance, budgeting and planning processes and indicated that the IDB looked forward to the follow-up activities, particularly those focused on improving the national planning and budget related agencies.

D. CDB Next Steps and Closing Remarks

7.14 President Bourne in formally closing the workshop indicated that it had been designed to be a learning experience and was therefore expected to influence the participants and their agencies, to improve their planning. He noted the strong interest and engagement of the participants drawn from the highest levels of the targeted ministries, as well as the diversity and range of internal and external regional experts. President Bourne indicated interest in seeing the CATSIM software utilized in the national ministries, and pointed out that there is a need to modify and improve the CATSIM model to address for multiple exposures and impacts.

7.15 He emphasized the need for continuing to take a strategic approach to the DRM issues, and to prioritise and coordinate response to the needs through the joint action of the CDB, IDB and other multilateral and bilateral stakeholders at the regional level. The need to continue to have dialogue with the CDB member countries, and the need to support their inclusion of DRM in budget planning at the national level were also emphasized, as was the need to engage the private sector in this critical process.

7.16 The issues related to DRM and regional interdependence were raised as requiring continued, close attention as the hazard impacts were often trans-boundary, and impacts in one country may have adverse effects in other countries in the Region.

7.17 Dr. Bourne indicated that an early action and first step should be the winning of political support and “buy-in” of all the administrations in the Region, if DRM was to be effectively included in budgets, the political directorate must agree.

7.18 He also urged the:

i. Dissemination of information on the workshop, the status of DRM initiatives and the need to support DRM with relevant stakeholders.

ii. Engagement of the political directorate in direct discussions – either at CARICOM/ OECS Heads of Government or at a specially convened meeting focused on DRM issues.

iii. Acceptance of DRM and continuity of operations framework to be mandatory for critical and essential services in the Region.


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7.19 Dr. Bourne noted that gaps in data and the need to standardise data had been highlighted during the workshop, and that these gaps would need close attention from the appropriate regional bodies. He confirmed that CDB wished to continue its joint initiative with the IDB and that at the individual country level, several actions including pilots were underway and would be continued. These included capacity building exercises, programmes related to regional public goods and national and sectoral risk assessments.

7.20 He concluded by pointing out that the magnitude of the tasks and challenges to the Region related to risk cannot be handled by any single, regional or national entity working alone, but must involve team work with other multilateral and bilateral donors, to increase and optimise resources available for effective DRM at local and regional levels.

Appendix I Page 1 of 3

Technical Workshop: Management of Disaster Risk through Fiscal and Budget Planning

June 26 - 27, 2006 CDB Conference Centre St. Michael, Barbados

Agenda

Master Facilitator: Mr. Franklin McDonald

June 26, 2006 Time Description Presenter

8:15 am – 9:00 am REGISTRATION

9:00 am – 9:30 am OPENING SESSION

9:00 am – 9:10 am Welcome and Opening Remarks Dr. Compton Bourne, President CDB

9:10 am – 9:20 am Opening Remarks Mr. Luis Alberto Moreno , President IDB

9:20 am – 10:30 am SESSION 1. SOCIOECONOMIC IMPACT OF NATURAL HAZARDS IN THE CARIBBEAN

9:20 am – 9:40 am

A review of both direct and indirect impacts of natural hazards and their implications for macroeconomic performance in the Caribbean. With special emphasis on economic growth projections, balance of payments, inflation, and public finances.

Mr. Ricardo Zapata ECLAC

9:40 am– 10:00 am

Highlights of socioeconomic impacts caused by recent disaster events in the OECS, including: displaced individuals and communities; exacerbation of poverty; unemployment and absenteeism at work; psychosocial trauma; and impacts on vulnerable groups such as women and the elderly.

Dr. Len Ishmael, OECS Director General

10:00 am – 10:30 am Discussion

10:30 am – 10:45 am I. Break

10:45 am – 12:00 pm SESSION 2: ELEMENTS OF DISASTER RISK MANAGEMENT

10:45 am – 11:05 am

A review of the primary policy elements of a risk management framework: risk evaluation; mitigation and prevention; financial risk transfer; emergency preparedness and response; rehabilitation and reconstruction.

Dr. Cassandra Rogers, CDB

11:05 am – 11:25 pm

An outline of key actors for disaster risk management, with special attention to who are risk bearers (public and private sectors), and their role in financial management of disaster risk and fiscal contingent liabilities.

Dr. Kari Keipi , IDB

11:25 pm – 12:00 pm Discussion


June 26, 2006 Time Description Presenter 12:00 pm – 1.15 pm Lunch

1:15 pm – 5:00 pm SESSION 3: ELEMENTS OF BUDGET AND FINANCIAL PLANNING AND POLICY RELEVANT FOR

DISASTER RISK MANAGEMENT

1:15 pm – 1:35 pm Integrating natural disasters into development planning: incorporating disaster losses into macroeconomic projections and the planning process.

Dr. Reinhard Mechler, IIASA


1:50 pm – 2:15 pm

Ex-ante financial risk management: an overview of ex-ante risk financing options, including reserve funds, traditional insurance instruments (public or private), alternative insurance instruments such as catastrophe bonds, and contingent credit lines/facilities.


2:15 pm – 2.30 pm Discussion

2.30 pm – 3:20 pm

Planning, Budgeting and Accounting for Fiscal Risks: Frameworks and methods for incorporating risk analysis into financial planning, budgeting and accounting for government. The special problems of implicit liabilities and moral hazard.

Prof. Allen Schick University of Maryland, USA

3:20 pm – 3:45 pm Discussion 3:45 pm – 4:00 pm Break

4:00 pm – 4:20 pm A review of political economy obstacles/barriers to implementing a forward looking and prudent disaster risk management.

Ms. Marcela Tarazona-Gómez University of Toulouse

4:20 pm – 4:40 pm Advances in fiscal/budget planning, and financial protection against natural hazards in Colombia.

Mr. Jaime Holguín, Ministry of Finance and Public Credit, Colombia


5:00 pm – 5:15 pm Explanation of next day group activities; breaking out into groups, and required readings.


7:00 pm Reception END OF DAY 1


8:30 am – 9:00 am Review of Day 1 Mr. Franklin McDonald , Master Facilitator

9:00 am – 5:00 pm SESSION 4: GROUP EXERCISE

9:00 am – 12:30 pm

Participate in a hands-on exercise to put into practice the risk management and financing concepts through a set of country scenarios. Through a group exercise, teams will evaluate stylized country risk information, fiscal position, and institutional capacity and programs, in order to: develop an integrated risk management and


Mr. Stefan Hochrainer, IIASA



financing strategy for the country, a multi-year public investment program that will support the strategy.

12.30 pm – 1.30: pm Lunch 1.30 pm – 2.30 pm Group exercise (continued) 2.30 pm – 4:00 pm Group presentations and discussion

4:00 pm – 5:00 pm SESSION 5. CLOSING

4:00 pm – 4:10 pm Next steps in the Caribbean Ambassador Gordon Shirley, Jamaican Ambassador to the US

4.10 pm – 4.40 pm Related donor activities Four donors (UNDP, PAHO, CIDA)

4:40 pm – 4:50 pm IDB next steps Dr. Dora Currea, IDB

4:50 pm – 5:00 pm CDB next steps and closing remarks Dr. Compton Bourne, President CDB

END OF DAY 2

Appendix II Page 1 of 6

Caribbean Development Bank/Inter-American Development Bank Joint Initiative on Mainstreaming Disaster Risk Management: Technical Workshop on the

Management of Disaster Risk through Fiscal and Budget Planning June 26-27, 2006

LIST OF PARTICIPANTS

TITLE FIRST NAME

SURNAME POSITION ORGANISATION COUNTRY TEL. NUMBER FAX

NUMBER EMAIL

BORROWING MEMBER COUNTRIES

Ms. Shona Proctor Budget Officer Ministry of Finance and Economic Development

Anguilla 264-497-2547 264-497-3761

[email protected]

Mr. David Matthias Budget Director Ministry of Finance and the Economy

Antigua and Barbuda

268-462-5015 268-562-4260

[email protected]

Mr. William Layne Permanent Secretary Ministry of Finance and Economic Affairs

Barbados 246-426-3227 246-429-4032

[email protected]

Mr. Patrick McCaskie Chief Economist Ministry of Economic Affairs and Development

Barbados 246-426-0009 246-228-9330

[email protected]

Lt. Col. George Lovell Acting National Emergency Coordinator

National Emergency Management Organisation

Belize 501-822-2054 501-605-1863

[email protected]

Ms. Merlene Harrigan Deputy Director Development Planning Unit

British Virgin Islands

284-494-3701 Ext 2175

284-494-3947

[email protected]

Mr. Michael Nixon Director Budget and Management Unit

Cayman Islands 345-244-2220/ 926-2463

345-946-6290

[email protected]

Mrs. Marcella Powell Senior Administrative Officer

Ministry of Housing, Lands, Telecommunications, Energy and Ports

Dominica 767-266-3413 767-448-4807

[email protected]

Ms. Lourdes Meyreles Director Social and Territorial Development Division

Office of National Planning

Dominican Republic

809-221-8625 809-221-8627

[email protected]

Mr. Lennox Andrews Permanent Secretary Ministry of Finance and Planning

Grenada 473-440-2731 473-440-4115

[email protected]

Mr. Sylvan McIntyre National Disaster Coordinator

National Disaster Management Agency

Grenada 473-440-8390-4

473-440-6674

[email protected]

Mr. Neermal Rekha Finance Secretary Ministry of Finance Guyana 592-226-3371/226-0024

592-227-3120

[email protected]


TITLE FIRST NAME


NUMBER EMAIL

Mme. Josette Clermont Assistant Coordinator of Land Use Planning and Local Development

Ministere de la Planification et de la Cooperation Externe

Haiti 509-223-2693 [email protected]

Mr. Jean Donat Andre Gestionnaire/Economiste Ministere De L'Economie Et Des Finances

Haiti 509-299-1741 509-299-1732

[email protected]

Ms. Rolda Grey Deputy Financial Secretary (Public Expenditure)

Ministry of Finance and Planning

Jamaica 876-948-0026/922-8600-16

876-932-5977

[email protected]; [email protected]

Ms. Claire Bernard Director, Sustainable Development and Regional Planning

Planning Institute of Jamaica

Jamaica 876-906-4463-4/4574

876-906-5011

[email protected]

Dr. Barbara Carby Director General Office of Disaster Preparedness and Emergency Management

Jamaica 876-930-0796 876-930-0796

[email protected]

Ms. Cynthia Farrell Development Officer Development Unit, Ministry of Finance, Economic Development and Trade

Montserrat 664-491-2066/2557

664-491-4632

[email protected]

Ms. Laura Anthony Browne

Director of Planning Central Planning Division, Ministry of Finance, Planning and Development

St. Vincent and the Grenadines

784-457-1746 784-456-2430

[email protected]

Ms. Adelien Wijnerman Permanent Secretary Ministry of Finance Suriname 597-412-009 597-476-309

[email protected]

Ms. Liane Halfhide Head Treasury Department

Ministry of Finance Suriname 597-474-184 597-426-082

[email protected]

Mr. Jerry Slijngard National Disaster Coordinator

National Coordination Centre for Disaster Preparedness

Suriname 597-520-840 597-520-840

[email protected]

Ms. Helen Ebong Permanent Secretary Ministry of Finance The Bahamas 242-327-1530 242-327-1618

[email protected]

Mr. Carl Smith Under Secretary, Director

National Emergency Management Agency

The Bahamas 242-322-8601 242-326-5456

[email protected]

Mr. Maurice Suite Permanent Secretary (Ag)

Ministry of Finance - Trinidad

Trinidad and Tobago

868-624-6880 868-627-6108

[email protected]

Mr. Joseph Howard Deputy Permanent Secretary

Ministry of Planning and Development

Trinidad and Tobago

868-627-9700, Ext 2025

868-623-8123

[email protected]


TITLE FIRST NAME


NUMBER EMAIL

Mr. Hartley Coalbrooke Permanent Secretary, Finance

Ministry of Finance and Health

Turks and Caicos

649-946-1587 649-946-1498

[email protected]

Mr. Delton Jones Chief Economist Ministry of Finance and Health

Turks and Caicos

649-946-2801 649-946-2557

[email protected]

REGIONAL ORGANISATIONS AND DONORS

Mr. Jeremy Collymore Coordinator Caribbean Disaster Emergency Response Agency

Barbados 246-425-0386 246-425-8854

[email protected]

Mr. Elvis Nurse Deputy Coordinator Caribbean Disaster Emergency Response Agency

Barbados 246-425-0386 246-425-8854

[email protected]

Ms. Elizabeth Riley Programme Manager - Mitigation and Research

Caribbean Disaster Emergency Response Agency

Barbados 246-425-0386 246-425-8854


Ms. Monica Zaccarelli Davoli

Sub Regional Advisor for Disaster Preparedness and Response

Pan American Health Organisation

Barbados 246-436-6448 246-436-6447

[email protected]

Mr. John Wilson Development Program Specialist (Environment)

United States Agency for International Development

Barbados 246-228-8070 246-228-8070

[email protected]

Mr. Sidney Velado Regional Advisor United States Agency for International Development Office of Foreign Disaster Assistance

Barbados 246-228-8584 246-431-2905

[email protected]

Ms. Rebeca Arias Deputy Resident Representative

United Nations Development Programme

Barbados 246-467-6003 246-429-2448

[email protected]

Ms. Sandra Pepera Head Department for International Development

Barbados 246-430-7901 246-430-7959

[email protected]

Ms. Nalini Ablack Second Secretary (Development)

Canadian International Development Agency

Barbados 246-429-3550 246-429-3876

[email protected]

Mr. Paul Mondesir Project Officer Delegation of the European Commission in Barbados

Barbados 246-434-8501 246-427-8687

[email protected]


TITLE FIRST NAME


NUMBER EMAIL

Ms. Evelyn Wayne Deputy Programme Manager

CARICOM Secretariat Guyana 592-222-0001 592-222-0155

[email protected]

Mr. Hidetomi Oi Senior Advisor Global Environment Department

Japan International Cooperation Agency

Japan 81-3-5352-5616

81-3-5352-5348

[email protected]

Mr. Ricardo Zapata-Marti

Focal Point on Disaster Evaluation

United Nations Economic Commission for Latin American and the Caribbean

Mexico 525-5-5263 525-5-5531 [email protected]

Mr. Jason Alexander Graduate Research Assistant

Sustainable Economic Development Unit, University of the West Indies

Trinidad and Tobago

868-667-5142 868-662-6555

[email protected]

Dr. Marlene Attzs Lecturer/Senior Technical Officer

University of the West Indies

Trinidad and Tobago

868-662-6555 868-662-6555


Mr. Jean Marc Racine Project Technical Coordinator- Natural Hazards Specialist

Organisation of American States

United States of America

202-458-3228 202-458-3560

[email protected]

Mr. Francis Ghesquiere Senior Urban Specialist World Bank United States of America

202-458-1964 [email protected]

FACILITATORS Dr. Reinhard Mechler Research Scholar International Institute for

Applied System Analysis Austria 43-2236-807-

313 43-2236-71-31

[email protected]

Dr. Stefan Hochrainer Research Scholar International Institute for Applied System Analysis

Austria 43-2236-807-517

[email protected]

Ms. Marcela Tarazona PhD. Student University of Toulouse Colombia 57-1-618-4935 [email protected]

Mr. Jaime Holguín Risk Manager Ministry of Finance and Public Credit

Colombia 571-381-1700 571-381-1700

Mr. Franklin McDonald Coordinator UWI ISD/WW2BW

University of the West Indies/UNEP

Jamaica 876-927-2564 876-977-0677

[email protected]

Prof. Allen Schick Professor University of Maryland United States of America

301-587-1767 [email protected]


TITLE FIRST NAME


NUMBER EMAIL

Amb. Gordon Shirley Jamaican Ambassador to the United States

Embassy of Jamaica United States of America

202-452-0660 202-452-0670

[email protected]

IDB DELEGATION

Mr. Luis Alberto

Moreno President Inter-American Development Bank


202-623-3100 202-312-4144

[email protected]

Ms. Maureen Vernon Counsellor Inter-American Development Bank


202-623-1041 202-623-3611

[email protected]

Ms. Alicia Ritchie Manager, Regional Operations Department 3

Inter-American Development Bank


202-623-2921 202-623-2153

[email protected]

Dr. Dora Currea Chief, Country Division 6 - Regional Operations Department 3



202-623-2822 202-623-2239

[email protected]

Mr. Clark Sand Principal Coordinator Inter-American Development Bank


202-623-2544 202-623-2239

[email protected]

Dr. Kari Keipi Senior Natural Resource Specialist



202-623-1939 202-623-1786

[email protected]

Ms. Caroline Clarke Senior Specialist Disaster Management Risk



202-623-2852 202-623-1304

[email protected]

Dr. Javier Cuervo Economist Inter-American Development Bank


202-623-2090 202-623-1998

[email protected]

Ms. Margaret Walsh Senior Infrastructure Specialist



202-623-1745 202-623-2064

[email protected]

Ms. Laurence Telson Project Specialist Inter-American Development Bank

Barbados 246-437-7758 246-429-8869

[email protected]

Ms. Daniela Quiñones Project Assistant Inter-American Development Bank


202-623-2014 202-623-2239

[email protected]


TITLE FIRST NAME


NUMBER EMAIL

CDB DELEGATION

Dr. Compton Bourne President Caribbean Development Bank

Barbados 246-431-1890 246-426-7269

[email protected]

Mr. Neville Grainger Vice President (Finance) Caribbean Development Bank

Barbados 246-431-1801 246-426-7269

[email protected]

Mr. Alan Slusher Director, Economics Caribbean Development Bank

Barbados 246-431-1661 246-426-7269

[email protected]

Mr. Carlson Gough Director, Project Supervision Division

Caribbean Development Bank

Barbados 246-431-1710 246-426-7269

[email protected]

Mr. Adrian Debique Deputy Director, Corporate Planning


Barbados 246-431-1670 246-426-7269

[email protected]

Ms. Yvonne Moses Grant Division Chief, Project Financing Division


Barbados 246-431-1720 246-426-7269

[email protected]

Ms. Tessa Williams Robertson

Division Chief, Project Supervision Division


Barbados 246-431-1730 246-426-7269

[email protected]

Mr. Anthony Maughn Division Chief, Private Sector Development Division


Barbados 246-431-1677 246-426-7269

[email protected]

Dr. Juliette Melville Chief Research Economist


Barbados 246-431-1915 246-426-7269

[email protected]

Mr. Kelvin Dalrymple Chief Country Economist


Barbados 246-431-1953 246-426-7269

[email protected]

Dr. Cassandra Rogers Consultant Project Manager, Disaster Mitigation Facility for the Caribbean


Barbados 246-431-1740 246-426-7269

[email protected]

Ms. Christine Dawson Country Economist Caribbean Development Bank

Barbados 246-431-1763 246-426-7269

[email protected]

Mr. Ian Durant Country Economist Caribbean Development Bank

Barbados 246-431-1799 246-426-7269

[email protected]

Mr. Carl Howell Country Economist Caribbean Development Bank

Barbados 246-431-1784 246-426-7269

[email protected]

Appendix III Page 1 of 5

Caribbean Development Bank/Inter American Development Bank Joint Initiative on Mainstreaming Disaster Risk Management (DRM)

Technical Workshop: Management Disaster Risk Management

June 26-27, 2006 Evaluation Summary

Questions Not At

All Somewhat Agree Very

Much Does Not

Apply No Response

Percentage (%)

WORKSHOP GOALS AND OBJECTIVES

How well did the Workshop achieve its stated goal and objectives?

To enhance the understanding of Permanent Secretaries of the Ministries of Finance and of Planning, as well as national disaster coordinators, of the processes involved in the integration of disaster risk management (DRM) in their national development strategies and to provide practical tools for use.

- 7 26 63 - 4

WORKSHOP STRUCTURE AND CONTENT

The Workshop was up to date and provided practical information.

- - 42 58 - -

The content of the Workshop was relevant to my work.

- 23 31 46 - -

The range of topics covered was appropriate. - 4 42 50 4 -

There was ample opportunity for exchange of ideas and experiences.

- 4 63 30 - 3

The length of the Workshop was appropriate to cover the material presented.

4 38 27 31 - -

Overall I am satisfied with the Workshop. - 4 42 42 12 -

TRAINING MATERIALS I read the handouts before and/or during the Workshop

- 26 37 37 - -

The training materials were well suited for the Workshop.

- 15 52 33 - -

The level of difficulty of the material was just about right.

- 27 46 27 - -

The training materials will be of use to me in my work.

- 26 37 33 4

What else could be done to make the training materials more useful to you at work?


Provide them electronically before session. To have the CATSIM model emailed to my office so that it can be used as part of our budgeting process. More training in the model would be ideal. Provide the CATSIM model for use in country.

To present the idea to various Governments possibly at a Heads of Government meeting either at the CARICOM or OECS level. This will help to obtain commitment at that level thereby ensuring the objectives of the workshop are met as far as it relates to fiscal and budgetary planning. Some emphasis with regards to the development of a procedural handbook for Ministries of Finance.

Provide a CD with all materials from the workshop.

The world needs to be more user friendly. There is need for greater familiarity with the model to be able to use it to assist policy making. Utilisation of real cases will be more useful. Categorisation of countries - island. Pilot of model in selected countries. Encourage all countries to constantly keep this at the top of the agenda.

Questions Not At All

Somewhat Agree Very Much

Does Not Apply

No Response

Percentage (%)

FACILITATORS Created and maintained a dynamic and interesting atmosphere.

- 8 38 46 8 -

Clearly presented topics. - 15 48 30 2

Mastered the notions presented. - 4 46 42 8 -

Indicated objectives of the sessions. - 15 44 33 8

ADMINISTRATIVE ARRANGEMENTS I was satisfied with the training facilities (training room, equipment, etc.)

- - 19 77 4 -

I was satisfied with the refreshments. 4 11 37 33 4 11

I was satisfied with the assistance provided by staff.

- 8 23 65 4 -

COMMENTS What was the most valuable part of the Workshop for you?

Roundtable group sessions/Professor Schick's presentation.

The discussion sessions and the practical exercise.

Putting the theory into practice during the group exercises.

The examination and discussion of ex-ante risk management measures. Most of us in the region tend to focus on ex-post financing measures, but I think that the discussion was very useful for planning purposes. The practical exercise and the presentations by Dr. Cassandra Rogers and Reinhard Mechler. The new software by Dr. Mechler. The presentation on the various financing options and the information from Colombia.

Exposure to the (methodology) model.


Involving financial personnel in the disaster risk topic. Group practice was the most valuable.

Professor Schick's presentation. Very clear and comprehensive. The modeling exercise, although more time was required. A very practical tool with some modifications. Integrating natural disasters into development planning. A review of political economy obstacle.

Exchange of practical experiences in the countries during the second day of the group exercise.

The case study. Exposure to the CATSIM tool. The CATSIM exercise proved most useful. The exercise. Exposure to possibilities for cohesion/integration of DRM into overall policies.

The group work. Presentations on both days. The theoretical papers. What was the least valuable part of the Workshop for you?

Too many presentations on day one. Some presentations were a bit too technical. The presentation "Review of political economy obstacles/barrier….". While the topic is quite necessary I think the presenter just basically rehashed or reiterated a lot of things that had been addressed by previous speakers. "A review of political economy obstacles/barriers to implementing a forward looking and prudent disaster risk management." Actually running the model. None. The training material was not presented, in the best way during the second day.

The time for case study was a bit lengthy. Not able to have one on one access to applications to relate to country conditions. Modeling exercise. No part of the workshop lacked value. The whole programme (background presentations, technical presentations, and exercise) as well as interaction of participants was very valuable. Some of the presentations on day one. What if anything you would like to have added, deleted or modified to improve the quality of this and future workshops?

Spread workshop over three days to allow for more time for transfer of knowledge.

More scenario type exercises to bring out/explain the lessons that were intended to be learnt.

Include Prime Ministers in these workshops. More time to work with the model would have been helpful.

Share country experiences with other participants.

The workshop should have been extended by one day to allow for more hands on experience with the model. Do the exercise along with each presentation or group of presentations. Improve the training material and its presentation (second day). The speeches were too long and somewhat duplications and sometimes boring.

A more detailed presentation of the underlying assumptions of CATSIM would be a good addition.

There should have been some attempt to highlight a situation (success or failure) from the Region.

A CD collection of the papers. More time to be spent on the model. A few issues were not well


explained. Participation of the private sector. Timely. A Caribbean country profile should have been presented. APPLICATION What revisions to your work would you suggest/implement since attending the Workshop?

Try to apply some of the aspects of the model in the budget planning.

To sell the idea in the workplace. To implement and/or incorporate some level of financial provision in the budgetary planning process. Re-look at current work of reserve funds and insurance of public assets in my country.

Will attempt to work with finance personnel more.

Integrate the finance-programming department into the disaster risk project; integrate the model into our upcoming project. Maintain a reserve fund not a calamity fund to face disasters.

The Ministry of Finance should be added to the NEMA committee. Limit Government exposure and limit property losses through enforcement of legislation and mandatory insurance. Specific emphasis on DRM. Specific emphasis on the need to have serious databases on "natural risks". Establish relationship between other ministries of planning of the Caribbean area. Being more careful in defining what losses would be and would not be covered by the Governments.

Planning and budgeting of disaster risks. Currently, I do not have risk management responsibility, however, I am working with the Catastrophic Risk Insurance initiative to determining our risks and what levels we should cover. I would be pushing for the provision of a meaningful contingencies fund over the medium-term. I would also be insisting on adherence to the building codes. Participation of the private sector. Implementation of DRM approaches in the national budget.

Aim for greater cohesion. Running similar exercises at national/sub national levels.

Documentation pertaining to models need to be presented in a more comprehensible fashion. If I were sufficiently clear on the model I would have attempted to use it in my workplace.

Implementation of the ideas in medium term planning. Linkages with other related agencies.

What follow-up action would you like to see as a result of this Workshop?

A reporting framework for countries to report progress made.

A mechanism to allow for further training on use of models to guide fiscal planning for DRM. That there be additional training in CATSIM. Training on CATSIM, the modeling software, or making it available to participants.

Training at country level in CATSIM model for finance, development planning and emergency management personnel.

To make a copy of the CATSIM model available to the different islands. Follow up country meetings with the ministries of finance and those responsible for disaster management. Follow up training meeting on the use of the CATSIM model.

Availability of Dr. Mechler's software. Training in its usage.

Workshop with policy makers at regional level to sustain buy-in to the mainstreaming process.


Copy of model shared with all agencies. Exposure for others.

Acquisition of the model and training for it at local level in government offices finance/planning/central banks.

Enhance solidarity between Caribbean countries so that they develop better care on the environment.

Increase regional collaboration and pooling of resources and ideas. Continued education, awareness and capacity building at the national and regional level. Acquisition of the model and training for it at local level in government offices finance/planning/central banks.

Seminars in Haiti. Presentation to the decision makers at the government level.

Get initiatives from individual countries to review their financial strategies as part of integrated DRM by the countries.

A ministerial level discussion on the importance of financial risk management.

A rollout of the CATSIM tool to all the islands and to adjust the model to include other disasters other than hurricanes.

Provide clear mandate to Government for their implementation of DRM.

National training sessions with CATSIM model.

National training and mainstreaming to sector ministries and to the public sector. Would like the software to be made available, supported by relevant training.

Collation of information on countries' disaster risk profile that will be needed to operationalise a model such as CATSIM, or the models that attempt to calculate risks. A separate session to deal with the model itself.

Further workshops for heads of departments. Progress reports on the implementation of the CATSIM in selected countries.

Any Additional Comments? It was an interesting workshop that raised important issues.

The presentation by Dr. Ishmael could have been very useful. Distribution of the study by Ambassador Shirley to the various representatives present at this workshop. Thank you - CDB and IDB and especially Dr. Rogers. A very informative and insightful workshop. All materials should be provided to participants on a CD for future reference. Need to deploy countries outside the Caribbean that are part of our environmental disequilibrium.

CDB was a great host, including the reception at the President's residence. Private sector should be involved. The workshop was very enlightening. Thanks to CDB and IDB for exposure.

Further increased partnership between the banks (IDB, CDB) and other donors and technical assistance providers is necessary. I am not sure how much work the University of the West Indies (UWI) does in the area of disaster management/risk, but the importance to the region is sufficient for UWI to be on board. They needed to be active participants, sharing their work, examining the model, and working to adapt it, better to the region. We need to do the same activity in the individual ministries of finance/planning.

I learnt some new theoretical concepts related to disaster management. It was a good start to be continued. Some material could have been sent to the participants prior to the start of the event. Involvement of UWI, CARICOM, CDB, heads of government.

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