Financing for Disaster Risk Reduction in Pakistan

Abstract

Disaster records in Pakistan during the last few years show severe impact both on the citizens as well as the Government. The losses incurred during the floods of 2010 and 2011 resulted in damages amounting to US$10 billion and US$3.7 billion respectively. Likewise, the earthquake of 2005 caused a loss of US$5.2 billion, which is enormous when compared to the national budget of US$25 billion for the year following the quake. The losses due to the drought of 1998–2001 were also staggering. In 2000–2001 financial year alone, the drought reduced the average economic growth rate from 5 to 2.5 %. The financial pressure generated by these and other disaster events had short-term severe fiscal impact as well as long-term developmental implications, and therefore, need effective remedial measures. These, in turn, demand critical insight into investments in disaster risk reduction and recovery to identify weaknesses therein, so that appropriate fiscal instruments may be put in place. This is particularly important in the wake of expanding population and economy that are exacerbating the disaster risk. This paper analyses the past and present mechanisms to finance disaster management in Pakistan. With the scanty data available in Pakistan, quantifying overall Disaster Risk Reduction (DRR) and recovery investments is a challenging task. Nevertheless, a review of data shows that investments in DRR have been scarce and spending on disaster preparedness has not been given priority in the national development plans. Moreover, for every dollar spent on disaster management, only a tiny fraction was spent on preventing or preparing for them; most of the funds went into relief and rehabilitation. This applies to all kinds of funding including those of the Government, private sector, charities as well as international donors. However, the growing losses from natural hazards demand much greater investment in enhancing resilience, which includes risk assessment, risk reduction, and efficient management of residual risk. A wind of change has started in the country with the creation of institutional mechanisms and establishment of a Disaster Management Fund. The study found that there is still a big vacuum, which can be filled only by the development of a comprehensive risk financing strategy with a range of instruments. It further recommends financing through public-private partnerships for the promotion of cost-effective solutions to counter enhanced threats from climate change.