The Asian Development Bank has highlighted the pressing need to improve Pakistan’s present disaster risk finance approach after analyzing the region’s vulnerability to floods and earthquakes.
The Asian Development Bank (ADB) issued a report on Monday stating that private insurance solutions for natural disasters including floods and earthquakes have only reached a small fraction of the market.
According to the report “Narrowing the Disaster Risk Protection Gap in Central Asia,” these difficulties are exacerbated by low levels of financial inclusion, which make many Pakistanis more vulnerable to disaster events, and a challenging external financing context at the sovereign level, which makes it difficult to access debt quickly and cheaply after a disaster.
The paper used the 2010 and 2015 floods, which cost Punjabi farmers an estimated Rs32.6 billion in losses, to demonstrate the difficulties Pakistan faces. Government aid totaling Rs6.7bn (18.5 percent of the total needed) was given to the afflicted farmers.
The ADB research suggests better coordination between national and provincial disaster management funds to expand the reach and depth of existing risk retention instruments for high-frequency disasters.
Risk transfer instruments may be used in addition to this to help pay for emergency services or repair lost or destroyed property.