Caribbean countries are exposed to high levels of risks from natural hazards, which can have significant negative impacts on their economic and fiscal stability. In recent years, countries in the region have expressed high demand to deepen their financial preparedness to disaster shocks.
With support from GFDRR, and in partnership with the European Union (EU) within the framework of the EU-funded Caribbean Regional Resilience Building Facility (CRRBF), the World Bank is pursuing a gradual, incremental approach to better understanding and quantifying Caribbean countries’ financial exposure to the effects of natural hazards. The World Bank tailors country-specific ways to improve each country’s financial resilience to disaster shocks: the goal is to develop comprehensive disaster risk financing (DRF) strategies that can help enhance long- term disaster resilience and adaptation capacity for the most vulnerable countries in the Caribbean.
Developing coherent risk financing strategies and enhancing financial preparedness requires a solid understanding of each country’s context. Governments in the Caribbean have expressed increasing interest in strengthening institutions to mainstream DRF principles and approaches into their decision-making.
At the regional level, an interactive role-playing game, Hurricane Hurry, was developed to help stakeholders confront individual and collective challenges around balancing investments in disaster risk management and financing. The game was tested at four workshops between September and December 2021; the workshops were attended by over 100 people, of whom 67 percent were women. Also at the regional level, a partnership with the University of the West Indies was undertaken to develop practical courses that can easily disseminate good practices and lessons learned on DRF in the Caribbean and beyond.
At the national level, in Barbados, a disaster risk profile that provides future probabilistic loss estimates for earthquake and tropical cyclone hazards has been developed. And in St. Lucia, an innovative analytical tool has been developed to determine both the physical and social vulnerabilities that form the core of the analytics for adaptive social protection and DRF activities of the government.
Under the EU-funded Technical Assistance Program for Disaster Risk Financing and Insurance in Caribbean Overseas Countries and Territories (OCTs), several OCTs have benefitted from support to strengthen the DRF agenda. For example, Aruba requested an assessment that would offer strategies to strengthen resilience in its food supply chain. This assessment allowed the country’s Department of Economic Affairs and Department of Agriculture, Livestock and Fisheries to deliver a plan that was later approved by the Council of Ministers to operationalize the recommendations.
These national-level engagements are combined with efforts to mainstream core DRF principles throughout the region, including via academia, government entities, private sector institutions, and the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company (CCRIF SPC). CCRIF SPC was established in 2007, with technical support from the Japan–World Bank Program for Mainstreaming Disaster Risk Management in Developing Countries, as the ﬁrst multi-country risk pool in the world.
A subscription to CCRIF SPC reflects the shift away from a focus on reactive post-disaster response to a more proactive approach that focuses on prevention and preparedness and on the success of global partnerships. With support from the EU CRRBF, CCRIF SPC was able to increase members’ insurance coverage and reduce their premium costs Haiti, for example, because it is a CCRIF SPC member, benefited from a special premium discount of 26 percent in its response to the pandemic.
Haiti also has other financial support mechanisms in place, including the World Bank’s Contingency Emergency Response Component (CERC), which allows funds to be reallocated from existing projects to address emergency response needs. For instance, the CERC of the Haiti Rural Accessibility & Resilience Project, for US$33 million, has been triggered to restore road connectivity following a recent earthquake. The World Bank is also working with the government of Haiti and other development partners on a comprehensive needs assessment and recovery plan. This will be used to mobilize funding from the World Bank and partners for resilient and inclusive recovery and reconstruction in Haiti.
With continued support from GFDRR and the World Bank, the governments of the Caribbean will keep working to strengthen their financial resilience and their ability to protect the most vulnerable from disasters.