The G20 under India’s Presidency has endorsed a new working group on disaster risk reduction. This makes it well-positioned to prioritise disaster risk financing to achieve the targets set by the Sendai Framework for 2030.
Recent reports on Disaster –
- Centre for Science and Environment (CSE) Report 2022 —
- India has witnessed a climate change-induced natural disaster almost every day in 2022.
- Some examples are Floods in Uttar Pradesh and Amarnath, Manipur Landslides, Cyclone Asani, Uttarkhanad Avalanche, etc.
- As a result, 2,755 lives were lost, almost 1.8 million hectare of crop area was affected, 416,667 houses were destroyed and killed close to 70,000 livestock.
- The Intergovernmental Panel on Climate Change (IPCC)’s Sixth Assessment Report: It highlights that a significant number of people live in areas that are highly vulnerable to climate change, especially South Asia.
- The 2021-22 Human Development Report: The report shows that disasters not only worsen poverty and thwart development, but also generate social polarisation across nations and communities.
What steps should the countries consider to improve Disaster Management?
- States need to enhance their capacity to understand risks and integrate them into government planning and budget processes.
- The insurance industry needs better regulation, legislation, and supervision.
- Partnerships with the private sector need to be enabled to transfer sovereign risk to the capital markets, and the financing for response, recovery.
- Reconstruction needs to be improved by using preventive measures.
Challenges to Disaster Management –
- The lack of competent financial risk management and insurance has provided a fertile breeding ground for these risks to proliferate and intensify.
- Significant difficulty in collecting and analysing data on hazards and exposures.
- The necessity of strengthening technical and institutional capacity for risk assessment and modelling.
- Achieving comprehensive coverage of disaster risks.
- There is also a scarcity of investment in a development-oriented approach that unites all parties into a transparent framework of action at the national level.
How can G20 under Indian Presidency overcome these challenges?
- India has extensive experience dealing with natural disasters and can lead in promoting awareness of the financial impacts of disasters.
- It can also lead the way in establishing a regulatory framework to enhance the financial capacity of insurance companies to cover disaster losses.
- By emphasising the importance of disaster risk financing, the G20 can help governments worldwide to manage risk more effectively and ensure sustainable development.
- The G20’s new Disaster Risk Reduction Working Group (DRRWG) has recognised the importance of prioritising disaster risk financing.
Disaster Risk Reduction Working Group (DRRWG)’ objectives –
- The DRRWG will strive to address all the key components of a comprehensive financial management strategy for disaster risks. This will be the focus of their second meeting in Mumbai in the last week of May.
- The DRRWG will offer an extensive overview of disaster risk assessment and financing practices across a wide range of economies.
- It can also support the harmonisation of definitions and methodologies for data collection and analysis to improve access to international (re)insurance markets.
- DRRWG will offer affordable and comprehensive insurance coverage of disaster risks, financial assistance and compensation for affected individuals and businesses, and risk transfer mechanisms, including catastrophe bonds and insurance, for management of fiscal risks.
- It will help issuers, investors, and other stakeholders to identify and classify disaster-resilient investments, assets, and entities in a more effective and evidence-based manner.
- The DRRWG could channel more capital towards disaster risk reduction investments, while also creating new opportunities for innovation in sectors less commonly associated with disaster resilience, such as health, social protection, and natural capital.
Other important initiatives –
- Sendai Framework 2015 —
- The Sendai Framework works hand in hand with the other 2030 Agenda agreements, including The Paris Agreement on Climate Change, The Addis Ababa Action Agenda on Financing for Development, the New Urban Agenda, and ultimately the SDGs.
- It was endorsed by the UN General Assembly following the 2015 Third UN World Conference on Disaster Risk Reduction (WCDRR).
- It advocates for the substantial reduction of disaster risk and losses in lives, livelihoods, and health and in the economic, physical, social, cultural and environmental assets of persons, businesses, communities and countries.
- State has the primary role to reduce disaster risk but that responsibility should be shared with other stakeholders including local government, the private sector, and other stakeholders.
- The Coalition for Disaster Resilient Infrastructure (CDRI) 2016 —
- CDRI was launched by the Indian Prime Minister at the 2019 UN Climate Action Summit in September 2019.
- It is an international coalition of countries, UN agencies, multilateral development banks, the private sector, and academic institutions, that aims to promote disaster-resilient infrastructure.
- CDRI’s initial focus is on developing disaster-resilience in ecological, social, and economic infrastructure.
- Its objective is to promote research and knowledge sharing in the fields of infrastructure risk management, standards, financing, and recovery mechanisms.
- It aims to achieve substantial changes in member countries’ policy frameworks and future infrastructure investments, along with a major decrease in the economic losses suffered due to disasters.
- Global Platform for Disaster Risk Reduction, 2022 (GP DRR 2022) —
- Its theme was “From Risk to Resilience: Towards Sustainable Development for All in a Covid-19 Transformed World.” The outcome was summarised in the Bali Agenda for Resilience focusing on:
- The need for a whole-of-society approach and human rights-based approach in DRR planning and implementation, which is crucial as people are affected differently by disasters.
Way forward –
- The industry must incorporate material disaster risk into its investment decisions.
- There is a need to move beyond treating disasters as singular events and adopt a multi-hazard approach, considering various emergencies and risks in financial decision-making.
By prioritising disaster risk financing for the first time, the G20, under India’s presidency can convert good intentions into opportunities for investment. Through the DRRWG’s systematic and granular approach, the G20 will make a significant contribution to global efforts to manage disaster risks and build resilient economies and societies.
Source – The Indian Express
QUESTION – How can the G20 under India’s Presidency help to overcome the challenges of disaster management?