Disaster risk reduction financing in Asia and the Pacific: Scoping study for the Midterm Review of the Sendai Framework for Disaster Risk Reduction 2015-2030

This study reviews trends in financing disaster risk reduction (DRR) in Asia and the Pacific since the adoption of the Sendai Framework for Disaster Risk Reduction in 2015.In this context, the financial instruments that the public and private sectors and multilateral development banks use or can use in DRR financing were examined. In addition, the contribution of the DRR Financing Strategy to the more effective use of financial instruments that can be used to finance DRR investments was highlighted. 

Taking into account the barriers to DRR financing, some of the recommendations made to accelerate DRR financing include:

For governments:

1. Develop DRR financing strategies and budget stress testing.
2. Undertake annual budget expenditure reviews for DRR.

For the private sector:

1. Continue to fuel growth in the bond market for financing risk reduction investments by elaborating further on the principles already created for thematic bonds to include reference to the Sendai Framework and concept of resilience, or the creation of distinct principles for DRR bonds.
2. With Asia’s equity market and sovereign pension funds comprising over $6 trillion in assets, engage with these sectors to leverage point for financing DRR, including hazards exacerbated by climate change.

For international development organizations:

1. Undertake finance reviews and increase ODA targeting ex-ante DRR and climate adaptation and ex-post recovery and reconstruction that build resilience.
2. Continue exploring the potential of Islamic Finance instruments.