2018年-世界发展银行全球_Advancing_Disaster_Risk_Finance_in_Jamaica_54页_2mb

Summary of Advancing Disaster Risk Finance in Jamaica

Core Content

This report provides a comprehensive analysis of disaster risk finance (DRF) in Jamaica and proposes a strategic framework to enhance the country's capacity to manage financial risks associated with natural disasters. It is based on a review of the legal, financial, fiscal, and insurance market environments in Jamaica and draws on international best practices and experiences from other countries, particularly small island developing states (SIDS).

The report outlines a DRF strategy that aims to reduce the economic and fiscal impact of disasters by implementing a combination of risk retention, transfer, and financial instruments tailored to different risk levels and time frames. It also highlights the need for institutional, legal, and financial reforms to improve the efficiency and sustainability of disaster response and recovery mechanisms.

Main Objectives

• To formulate a country-specific DRF strategy for the Government of Jamaica (GoJ).
• To enhance the GoJ's ability to respond to disaster impacts using cost-effective financial instruments.
• To minimize the fiscal burden and opportunity costs associated with disaster financing.
• To integrate disaster risk management into development planning and public investment.

Key Findings

• Jamaica faces significant fiscal risks due to natural disasters, with modeled losses for a 1-in-100-year event reaching USD 3 billion (J$ 386 billion).
• The GoJ currently uses the National Disaster Fund (NDF), capitalized at USD 2 million (J$ 258 million) as of March 2015, and a Contingencies Fund (capitalized at USD 825,000 (J$ 106 million) in 2014) to manage post-disaster expenditures.
• These funds are not effectively utilized, as there have been no payments made for weather-related events as of September 2017.
• Short-term disaster relief and recovery expenditures are reallocated from essential development activities, limiting fiscal space and increasing public debt.
• Annual contingent liabilities from natural disasters are estimated at USD 121 million (J$ 16 billion), equivalent to 0.84% of Jamaica's 2015 GDP or 3.09% of total government expenditures in 2016.
• Public infrastructure, such as buildings, is estimated to suffer USD 67 million (J$ 9 billion) in annual damages from hurricanes and floods.

Main Recommendations

Sovereign Protection

• Short Term (1-2 years):

  • Streamline and institutionalize a damage and loss data collection and reporting system across all ministries.
  • Streamline reporting of disaster relief, recovery, and response expenditures.
  • Use the Revised Chart of Accounts to uniformly track post-disaster spending.
  • Review the Treasury General Ledger (TGL) to facilitate international development partner engagement.
  • Codify or approve a DRF strategy through a manual for post-disaster financing.
  • Increase contingency reserves in the NDF for public liabilities linked to events with a 5-year return period.
  • Conduct an audit of the NDF to ensure all short-term disaster funds are transferred.
  • Establish a mechanism for rapid disbursement of post-disaster financing through Regulation 7 of the Financial Administration and Audit Act (FAA).
  • Engage external development partners in establishing a contingent line of credit for 10-year return period events.

• Medium Term (3-5 years):

  • Establish a robust catastrophe risk insurance program for public assets and parastatals.
  • Enhance management of implicit contingent liabilities related to social protection.
  • Explore diaspora and catastrophe bond markets for long-term financing.

Private Insurance Market

• Medium Term (3-5 years):
  • Enhance availability, penetration, and affordability of private and residential catastrophe insurance through public-private partnerships (PPPs) and micro-insurance schemes.
  • Develop more robust and affordable agricultural insurance products through improved data sharing and tailored policies.

Key Instruments and Concepts

• Contingent Liabilities: Obligations that may or may not materialize depending on the occurrence of specific events.
  • Explicit contingent liabilities are legally binding.
  • Implicit contingent liabilities arise from public expectations or political pressures.
• Fiscal Risk: The risk of deviations in fiscal variables, including macroeconomic shocks and contingent liabilities.
• Parametric Insurance: Insurance that pays out based on the occurrence of a predefined event, not the actual loss.
• Catastrophe Deferred Drawdown Option (Cat DDO): A financial instrument that allows for rapid access to funds in case of a disaster.
• Risk Layering: A framework to differentiate financial instruments based on the frequency and severity of disasters.
• Average Annual Loss (AAL): The estimated annual cost of disaster-related losses.
• Exceedance Probability: The likelihood that a given level of loss will be equaled or exceeded in a specific time period.

Financial Instruments Overview

Conclusion

The report emphasizes the importance of integrating DRF into the broader disaster risk management (DRM) and climate change adaptation frameworks. It recommends a multi-layered approach combining financial instruments, institutional reforms, and legal mechanisms to ensure a more efficient, timely, and sustainable disaster response system in Jamaica. By adopting these recommendations, the GoJ can better manage its fiscal risks and reduce the economic and social impacts of disasters.