Publication

Natural disasters and climate change impacts have caused heavy damages and losses to all sectors. It is the public sector however that absorbs a large portion of the financial costs of disasters. Damages to public buildings and critical infrastructures for example, are considered contingent liabilities of the government which they are responsible to repair or replace. In addition, the government spends huge amount of money for emergency response and relief, as well as in efforts for recovery and reconstruction. Oftentimes, these losses are disproportionate to the total annual financial allocation of national and local governments and guzzle up funds allocated for social services and development projects. Swiss Re (2012) estimates that natural disasters caused US$126 Billion in economic losses in 2011, and US$186 Billion in 2012 worldwide. A big chunk of these losses are shouldered by the public sector. The Thailand floods of 2011 for example, resulted in US$46.5 billion of economic losses and required the Thai government to spend almost 5 per cent of its annual revenues for response and recovery efforts (World Bank, 2012). ASEAN countries suffer annual damage of over US$4.4 billion each year because of disasters—an amount equivalent to more than 0.2 percent of the region’s total GDP (World Bank, 2012).