1. Module 6: Mobilizing and Managing Financial Resources ASEAN Training of Trainers (TOT) on Recovery

2. Module 6: Module Description Module 6 elaborates on the mobilization of funds from various sources, the different modalities for disbursement and channeling, and national and local budgeting for recovery needs within the complexity of the recovery process. Module 6: Mobilizing and Managing Financial Resources

3. Module 6: Overview Duration: 1.5 Hours Topics Funding Post-Disaster Recovery Characteristics of Funding Sources Group Activity Mobilizing and Managing Financial Resources Challenges in Disbursement Module 6: Mobilizing and Managing Financial Resources

4. Module 6: Overview Learning Outcomes Participants will become familiar with primary funding sources for recovery efforts. Participants will be able to appreciate key characteristics of finance sources. Participants will examine strategies to mobilize and manage financial resources for recovery Participants will be able to develop a strategy for resource mobilization and finance management Module 6: Mobilizing and Managing Financial Resources

5. Increasing Disaster Losses  Rising Recovery Costs Module 6: Mobilizing and Managing Financial Resources

6. Funding Post-Disaster Recovery Module 6: Mobilizing and Managing Financial Resources

7. Overview of Funding Sources We Finance Recovery: National Entities Budget Contingency / Reallocation National Insurance Schemes Catastrophe Bonds Module 6: Mobilizing and Managing Financial Resources Others Finance Recovery: External Entities Donations / Grants Emergency Loans Remittance Payments

8. We Finance Recovery: Budget Contingency or Reallocation Governments build contingencies into annual budgets for disaster response and recovery. Governments may also be able to reallocate funds from one part of the budget toward recovery efforts. Considerations as a recovery source: Competition for contingency funds Subject to political priorities Speed of receipt is dependent on bureaucratic processes Module 6: Mobilizing and Managing Financial Resources

9. We Finance Recovery: National Insurance Schemes Create disaster insurance markets: Establish a national insurance organization, or Incentives to existing insurers to sell disaster policies Requirements for National Insurance: Widespread financial access and depth Systematic risk assessments and expertise to set insurance premiums Secure system of transactions Module 6: Mobilizing and Managing Financial Resources Goal: Make hazard insurance more affordable and defray the demand for government aid.

10. Insurance Scheme Example – National Flood Insurance Program (NFIP), USA Developed in 1968 to provide an avenue for insurance to increase the amount of insured losses due to flooding. Private insurers sell policies, US Government pays Systematic development of flood risk maps Encourages community mitigation action Encourages building in flood zones (subsidizes risk) Premiums only now adjusting to actual risk NFIP is US $24B in debt Module 6: Mobilizing and Managing Financial Resources

11. We Finance Recovery: Catastrophe Bonds A catastrophe bond is an investment asset issued by national governments. A special ‘trigger’ is set which would allow the bond issuer to withdraw invested funds with no penalties. Bond Issued Catastrophe Trigger Principal Withdrawn Bond Matures Module 6: Mobilizing and Managing Financial Resources

12. They Finance Recovery: Donations and Grants Grant financing represents any transfer of money or goods to a recovering country with no obligation of returning the value of the grant. Module 6: Mobilizing and Managing Financial Resources

13. They Finance Recovery: Donations and Grants Advantages No obligation of repayment Provides necessary funds for recovery from catastrophic disasters Often comes with expertise and support Disadvantages Funding amounts can be uncertain Recovering country has little control over what is donated May come with conditions or restrictions Module 6: Mobilizing and Managing Financial Resources

14. Determinants of Grant Contributions The factors below often lead to increased donor contributions: Higher impacts (e.g., deaths, people affected) Proximity to the disaster Former historical ties (e.g., former colonies) Countries with good governance High volume of trade or oil production Module 6: Mobilizing and Managing Financial Resources

15. They Finance Recovery: Emergency Loans Countries in acute need of recovery funds can also access different emergency loan programs through international finance organizations like the World Bank or International Monetary Fund (IMF). Eligibility requirements and conditions Significant funds available (up to $500 million USD) Module 6: Mobilizing and Managing Financial Resources

16. Emergency Loan Funding Organizations World Bank Development Policy Loans (DPL) Built for wider development and DRR projects Provides a drawdown option for catastrophic disasters International Monetary Fund Emergency Natural Disaster Assistance (ENDA) Rapid financial assistance at concessional rates Module 6: Mobilizing and Managing Financial Resources

17. They Finance Recovery: Remittance Payments Remittance payments are monies that comes from the friends and families of recovering populations Typically from other countries Not directly controlled by recovery agencies Funding is self-selected Module 6: Mobilizing and Managing Financial Resources

18. Volume of Remittance Payments Module 6: Mobilizing and Managing Financial Resources

19. Characteristics of Funding Sources Module 6: Mobilizing and Managing Financial Resources

20. Funding Source Characteristics Funding mechanisms may be evaluated by considering the following criteria: Speed Efficiency Conditions and Restrictions Module 6: Mobilizing and Managing Financial Resources

21. Donations / Grants Budget Contingency / Reallocation Emergency Loans National Insurance Schemes Remittance Payments Catastrophe Bonds Speed refers to the time needed by the implementing agency to acquire, administer and monitor funding according to the recovery plan, or according to the needs identified by damage assessments. Module 6: Mobilizing and Managing Financial Resources Which of these funding mechanisms would be able to rapidly fund recovery efforts?

22. Donations / Grants Budget Contingency / Reallocation Emergency Loans National Insurance Schemes Remittance Payments Catastrophe Bonds Efficiency refers to the ability of administering agencies to acquire and distribute money and material according to the recovery plan. This typically entails getting the right things to the right place for the right people. Module 6: Mobilizing and Managing Financial Resources Which of these funding mechanisms may be most efficient at acquiring and distributing funds for recovery?

23. Conditions/Restrictions Funding may be dependent upon requirements of the funding source(s). Requirements may be explicit and include conditions like repayment of loans, providing evidence of proper use of funds, or developing mitigation plans to limit the effects of future hazard events. Module 6: Mobilizing and Managing Financial Resources Which of these funding mechanisms will have the fewest conditions or restrictions? Donations / Grants Budget Contingency / Reallocation Emergency Loans National Insurance Schemes Remittance Payments Catastrophe Bonds

24. Discussion: Evaluating Finance Sources Funding SourceSpeedEfficiency Conditions/Restricti ons Remittance Payments Dependent on the availability of financial services in the recovering country. Highly efficient as funds are directly controlled by individual households and businesses. Recovering nation has no control over the distribution of funds or their use in recovery efforts In the immediate aftermath of a disaster, what actions can be taken to improve the speed and efficiency of remittance payments to aid in recovery? Module 6: Mobilizing and Managing Financial Resources

25. Group Activity: Planning for Funding Acquisition Module 6: Mobilizing and Managing Financial Resources

26. Group Activity Assignments and Worksheet Funding Source: Speed Efficiency Conditions/Restrictions Group 1: Catastrophe BondsGroup 4: Emergency Loans Group 2: Budget Contingency/Reallocation Group 5: Recovery Grants Group 3: National Insurance Policies Module 6: Mobilizing and Managing Financial Resources

27. Group Activity: Planning for Funding Acquisition Discuss the funding mechanism assigned to your group and use the worksheet to record the following: Assess your assigned funding source based on your experience, and considering the characteristics we just learned (speed, efficiency, conditions/restrictions). Identify actions that can be taken before a disaster to improve the characteristics of those funding sources. Module 6: Mobilizing and Managing Financial Resources

28. Mobilizing and Managing Financial Resources Module 6: Mobilizing and Managing Financial Resources

29. Developing a Finance Mobilization Plan Mobilization of recovery and reconstruction funds will be based on financial needs as determined by the PDNA, and refined via the national Disaster Recovery Plan. Identify funding sources for recovery that take into account: Aspects of the disaster (e.g. size, complexity) Capacities of recovery agencies Aspects of the funding source (e.g. speed, efficiency, conditions/restrictions) Module 6: Mobilizing and Managing Financial Resources

30. Dimensions of Finance Mobilization Module 6: Mobilizing and Managing Financial Resources

31. Preparing for Funding Before the Disaster Disaster modeling: What are the range of disaster events that we may need to recover from? Exposure data: Estimates of the exposure of people, goods, infrastructure and assets should be used to pre-plan recovery efforts. Recovery capacity: What can the local agencies recovery from on their own? What can the nation recover from on its own? When do we need to ask for help? Module 6: Mobilizing and Managing Financial Resources Identify thresholds for action

32. Take Preliminary Action Below national threshold Create procedures to facilitate budget contingency/reallocation legislation Practice bureaucratic processes Facilitate resource-sharing between jurisdictions Broaden financial services Above national threshold Become eligible for large emergency loans Work closely with key international organizations and NGOs Establish accountability standards to support external funds Module 6: Mobilizing and Managing Financial Resources

33. Challenges in Disbursement Module 6: Mobilizing and Managing Financial Resources

34. Challenges in Disbursement Front-loading versus back-loading of funds It is tempting to front-load funds when they become available (typically first two years following a disaster), but recovery efforts often extend much longer. Recovering countries must evaluate funding timelines to make sure that recovery monies are spread over the entire recovery timeframe. Module 6: Mobilizing and Managing Financial Resources

35. Challenges in Disbursement Pledges versus Donations Acquisition can be a challenge Credibility and accountability help assure donors that funds are used as intended. Monitoring and Reporting Tracking systems facilitate fund disbursal, coordination between recovery organizations, and enhance likelihood of future recovery funding. Module 6: Mobilizing and Managing Financial Resources

36. The Need for Accountability Why does accountability matter in a discussion about funding for disaster recovery? Module 6: Mobilizing and Managing Financial Resources

37. Conclusion Recovery funding can take many forms, via both internal and external sources. Funding sources have different characteristics that must be considered. Some funding sources take years and initial funding to establish. Proper monitoring and reporting of the use of recovery funds, and developing timelines for recovery projects and programs will help address common challenges in the receipt and disbursement of recovery funds. Module 6: Mobilizing and Managing Financial Resources