Disaster Risk Financing and Social Protection
With disaster risk financing, East Asian and Pacific social protection systems can be more responsive in times of crisis.
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A strong and well-financed social protection system can enable governments to protect households and livelihoods, especially children, from the worst impacts of shocks and disasters. This requires ensuring disaster financing is quickly and adequately released and channeled to social protection responses in times of crisis. National shock-responsive social protection (SRSP) systems can support disaster risk management objectives promoting the use of cash before, during and after various shocks, including natural disasters, disease outbreak and economic crisis. Disaster risk financing (DRF) solutions and SRSP both contribute to building a comprehensive approach to resilience of the poorest and most vulnerable, including children. Social transfers contribute to the economic resilience of households, whereas prearranged, predictable funding adds to the financial resilience of not only households but of whole communities.
While the opportunities for linking DRF with SRSP are becoming more recognized, comparatively little is known about the factors that enable or hinder such financing reaching those who need it most in a quick, transparent and efficient way. Risk financing enables governments to understand how much the scale-up mechanism — social protection systems in this case — could cost, and develop appropriate strategies, with clarity on who pays, to finance response — i.e., how to position funding in advance so as to trigger assistance quickly.
Social Protection in East Asia and the Pacific
In East Asia and the Pacific, DRF and SRSP are relatively new sectors, although there is substantial interest in operationalizing them in the face of increased climate and disaster risks. Southeast Asia, the most disaster-prone region in the world, experiences a significant number of large disasters, although the vast majority of shocks are small or localized. While the region is highly exposed to shocks arising from natural hazards, especially climate-related ones, SRSP systems are still nascent, and few countries have established comprehensive DRF strategies that link to them. Overall, the region relies on a mix of largely ex-post humanitarian and limited government financing to respond to crises. With intensifying risks from climate change, there is increased interest in more permanent and efficient systems for anticipation of and responses to shocks, supported by adequate risk financing and disbursement mechanisms.
By analyzing the gaps and strengths of current systems in several countries in East Asia and the Pacific, especially those highlighted by the COVID-19 crisis, this report provides lessons and recommendations to improve the effectiveness of financing for SRSP in the region.