Directorate for Public Governance

Fiscal Resilience to Natural Disasters

Lessons from Country Experiences

Available from May 20, 2019

Natural disasters continue to cause widespread damage and losses, with fast growing economies particularly exposed. Governments often shoulder a significant share of the costs of disaster recovery and reconstruction. This is true in OECD countries and even more so in developing economies, where private insurance markets are not as well developed. The fiscal impact of disasters on a government’s budget can be sizeable. Expenditures for the government arise from both explicit and implicit commitments to compensate for disaster losses. This report presents the results of a study that compares country practices in the management of the financial implications of disasters on government finances for a set of OECD member and partner countries particularly exposed to natural hazards.

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policy recommendations

  1. Design clear framework rules for a government’s post-disaster financial assistance.
  2. Establish clear cost sharing mechanisms across levels of government.
  3. Include the assessment of disaster-related contingent liabilities in fiscal risk management frameworks.
  4. Make risk reduction part of the framework conditions for co-financing disaster risk management measures.
  5. Manage remaining fiscal risk through multi-pronged financial protection strategies.

Framework for managing the financial cost of disasters