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Three good reasons to invest in disaster resilience

Written by Anna Locke

​The Paris climate talks this week may focus on limiting the extent of climate change, but significant parts of the agenda also look at how to tackle the inevitable – and potentially devastating – impacts of climate change on people and economies.

Economic losses from extreme weather events cost $150 - $200 billion a year, up from $50 billion in the 1980s, driven by rapid urbanisation, population growth and climate change. These figures show that our efforts to build resilience and reduce such losses are inadequate. Greater action is especially needed in poorer and more vulnerable countries, where losses can amount to a significant proportion of GDP and set back development progress by many years.

So, why aren’t we investing more in disaster resilience? In many instances, competing development priorities and limited resources push such spending off the agenda. Decision-makers in governments, businesses, households, and development agencies are unaware of the many ways investing in disaster resilience can pay off. They focus on avoiding losses from disasters, and as a result perceive the return on investment as uncertain – only realised if a somewhat unlikely disaster event actually happens. 

One way of addressing underinvestment therefore is to look again at how we conceptualise the benefits of investing in resilience. Building on the idea of dividends of resilience, people working in disaster risk management are increasingly looking beyond avoided losses to the benefits gained even if disaster doesn’t strike for many years. 

The ‘Triple dividend of resilience’ approach breaks the benefits down into three areas:

Preventing loss of life and property: clearly, the first dividend and the fundamental reason for investing in disaster resilience will always be to save lives and avoid losses in the event of a disaster. In 1999, the most powerful tropical cyclone ever recorded in the North Indian Ocean claimed nearly 10,000 lives in Odisha, India. This triggered enormous efforts to reduce the risks associated with a similar disaster, and when an equally powerful storm hit in 2013, timely evacuation along the coast meant that fatalities were less than 1% of the prior event. 

Attracting investment by lowering the looming threat of losses from disasters: the second dividend is to unlock economic potential by reducing ‘background risk,’ which can restrict long-term investments in income-generating assets, entrepreneurial enterprises and other growth areas. For example, Mexico’s CADENA program shows that weather-indexed insurance not only helps to compensate farmers for drought losses, it also enables farmers to overcome credit constraints and invest in tools and fertilisers, boosting their productivity.

Additional benefits in everyday life: the third dividend represents the ‘co-benefits’ of resilience building – measures that have multiple uses beyond just disaster risk reduction. For example, Malaysia’s SMART multipurpose tunnels are used for road traffic when the tunnel is not being used to manage storm water. The tunnel is also a toll-road, which reduces the cost to the government of investing in the resilience-building project.

This year, the Sendai Framework for Disaster Risk Reduction and the Sustainable Development Goals both emphasised the need for building climate and disaster resilience. Adaptation and resilience remain central to countries’ climate pledges to be renegotiated at the Paris talks later this week. Making the case for investing in disaster resilience is therefore essential if we are to safeguard hard-won development gains and secure future progress.

By Francis Ghesquiere, Head of the GFDRR Secretariat, and Anna Locke, Director of Land, Water & Climate at ODI

Related report: The triple dividend of resilience: realising development goals through the multiple benefits of disaster risk management (Thomas Tanner et al. 2015)