DISASTER RISK FINANCING IN DEVELOPING COUNTRIES



DISASTER RISK FINANCING IN DEVELOPING COUNTRIES

Over the last decades the frequency of major natural disasters as well as losses, both total economic and insured, caused by them have increased significantly. it can be seen that over the last half-century (1950–2005), the frequency of ‘great natural disasters’ caused by different natural perils has been on the rise – from a global mean level of about two per year in the 1950s to about seven in recent years.
In this context, ‘great natural disasters’ are defined as events in which the affected region’s ability to help itself is distinctly overtaxed. One or more of the following criteria apply:
•        Interregional or international assistance is necessary
•        Thousands are killed
•        Hundreds of thousands are made homeless
•        Substantial economic losses• Considerable insured losses.
As great disasters are well documented in the newspapers and other media, there is little room for a reporting bias in these data. We are also quite convinced that the trend in the number of these great disasters, contrary to the level of economic damage caused by them, has no relevant confounding by population growth and increasing values. This means that a great disaster in 2004 would also have been a great disaster in 1950, even with less people involved and lower values affected in the latter case. Another interesting result from the data presented in Figure 1 is that there is no relevant trend for natural events of geophysical origin, such as earthquakes, volcanic eruptions or tsunamis (all represented by red bars). This means that the upward trend in the number of annual events is carried solely by weather-related events, which are inherently linked to climate change.
As can be seen from Figure 2, compared to the number of events, the trends in total economic and insured losses (all values already adjusted for inflation to values of 2005) are much more pronounced.
Figure 2 shows economic and insured losses only from great weather-related disasters. The economic losses in the last decade (1996–2005) have increased by a factor of seven as compared

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