Dominican Republic: Building Physical and Fiscal Resilience to Ensure Shared Prosperity

Context and Objectives
The Dominican Republic is exposed to high levels of risk from meteorological and geophysical hazards, and climate change is further exacerbating meteorological hazards. Based on historical data, disaster losses have been estimated at 0.69% of GDP or US$ 420 million per year over the period 1961-2014. The Dominican Republic is one of the top high-risk countries in the world, ranking second in terms of vulnerability of its GDP to three or more natural hazards (i.e. 92% of the GDP is located in areas at risk). The high costs of recovery and reconstruction have resulted in reduced fiscal space and makes it harder for the Government to implement poverty reduction policies. The lack of financial protection strategy results in high opportunity costs, as resources previously allocated to development projects have to be reassigned to cover the losses. Reassignments through ad-hoc process also delay emergency and recovery efforts.

The ACP-EU NDRR Project focuses on improving the government’s capacity to build physical and fiscal resilience to disasters. The project aims to:

  • Promote disaster and climate risk reduction policies in key sectors;
  • Support the Ministry of Finance in developing technical and institutional capacity in disaster risk financing;
  • Target Disaster Risk Management policies and investments towards promoting shared prosperity.  

Main Activities
The technical assistance helps to improve the government’s capacity to build physical and fiscal resilience to disaster, by working on three components: 

Component 1: Promoting disaster and climate risk reduction policies in priority sectors; 

Component 2: Supporting the Ministry of Finance in developing technical and instutional capacity in disaster risk financing; 

Component 3: Targeting disaster risk management policies and investments towards promoting shared prosperity. 

Results
The technical assistance is making good progress in all components. Results to date include:

Component 1:

  • A methodology and tool were developed to assess economic losses from disasters, which is to be applied by line ministries and will be instrumental in quantifying and understanding the economic impacts of disasters.
  • A set of indicators has been developed to measure the impact of policy reforms on resilience.

Component 2:

  • Country Disaster Risk Profiles for earthquake and windstorms have been developed.
  • Two knowledge notes on the liabilities associated to disasters and on financial proteciton mechanisms were drafted.
  • A Working Policy Paper on the impact of hurricane strikes on short-term economic activity in the Dominican Republic was published.
  • An initial assessment of options to manage fiscal risks associated with disasters started.
  • Advice was provide to the Ministry of Finance on the creation of a Fiscal Risk Unit within the Ministry, and on how to best share with other countries in the region experiences on financial protection against disasters.

Component 3:

  • The preliminary results of a study on the impact of disasters on wellbeing indicators have been presented to the Ministry of Economics, Planning and Development.
  • Work has started on a baseline survey that will support analytical work for better understanding the impacts of disasters on poverty and welfare.  

Partnerships and Coordination
The technical assistance project is undertaken jointly with the Ministry of Finance and the Ministry of Economics, Planning and Development. There is a good standing working relation with the EU Delegation, UNDP and JICA (Japan International Cooperation Agency) to discuss on-going initiatives in the Dominican Republic funded by other donors.

Useful Links

The working policy paper on the impact of hurricane strikes on economic activity is available here.

Region
  • Caribbean
Priority area
  • Mainstreaming of disaster risk reduction (DRR)
Window of Action
  • Window 2
Amount approved
  • $900,000
Co-financing
  • $0
Duration
  • 12/2016 to 07/2019