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Financial and Fiscal Instruments for Catastrophe Risk Management

Financial and Fiscal Instruments for Catastrophe Risk Management

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This applied study addresses the large flood exposures of Central Europe and proposes efficient financial and risk transfer mechanisms to mitigate fiscal losses from such natural catastrophes. In 2010 the V-4 Visegrad countries (i.e., Poland, Czech Republic, Hungary and Slovakia) demonstrated their historical vulnerability to floods – Poland suffered $3.2 billion in flood related losses, comparable to it $3.5 billion of losses in 1997. Flood modeling analysis of the V-4 shows that a disaster event with a 5 percent probability in any given year can lead to economic losses in these countries of between 0.6 percent to 1.9 percent of GDP, as well as between 2.2 percent to 10.7 percent of government revenues. Larger events could quadruple such losses. The European Union Solidarity Fund is available as a mechanism for disasters but it comes into effect at only very high levels of losses, does not provide sufficient funding, and is not speedy
This applied study addresses the large flood exposures of Central Europe and proposes efficient financial and risk transfer mechanisms to mitigate fiscal losses from such natural catastrophes. In 2010 the V-4 Visegrad countries (i.e., Poland, Czech Republic, Hungary and Slovakia) demonstrated their historical vulnerability to floods – Poland suffered $3.2 billion in flood related losses, comparable to it $3.5 billion of losses in 1997. Flood modeling analysis of the V-4 shows that a disaster event with a 5 percent probability in any given year can lead to economic losses in these countries of between 0.6 percent to 1.9 percent of GDP, as well as between 2.2 percent to 10.7 percent of government revenues. Larger events could quadruple such losses. The European Union Solidarity Fund is available as a mechanism for disasters but it comes into effect at only very high levels of losses, does not provide sufficient funding, and is not speedy

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Publish date: Jul 2012
Added to Scribd: Jul 02, 2012
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12/19/2015

Code

Asset Category

AN.1114

Cultivated assets (such as livestock, vineyards, orchards, and so forth.)

AN.112

Intangible fxed assets (such as artistic originals, computer software, and so forth.)

AN.122

Work in progress

AN.13

Valuables (such as precious metals, antiques, and so forth.)

AN.2

Non-produced assets

AN.21

Tangible non-produced assets (such as land, sub-soil, non-cultivated biological, water, and so forth.)

AN.22

Intangible non-produced assets (such as patents, goodwill, and so forth.)

AF

Financial assets

Source: Intermap Technologies.

3.2.4. Reclassification of asset cateGoRies

In this analysis, the asset categories as defned in section 3.2.3, are aggregated into two
super-classes, that is, “building” and “content” (Asset Category). In addition to the classes
listed in table 2.3, the Household Equipment class, which is not registered by the national
statistical authorities, is defned. It is included in the content super-class. The value of
Household Equipment is calculated by an expert estimate based on (1) insurance data, (2)
population data, and (3) GDP per capita data. The algorithm of the Household Equip-
ment value calculation is described in appendix section 5.1.4.

A World Bank Study

42

Table 2.5. Structure of Asset Category Classes (“Building” and “Content”) and Their
Defnitions as Used in the Study

Building

AN.1111Dwellings
AN.1112Other buildings and structures

Content

AN.1113Machinery and equipment
AN.12

Inventories

Household equipment

Source: Intermap Technologies.
Note: For comparison see table 2.3.

3.2.5. institutional sectoR

The third dimension is the classifcation by Institutional Sectors also based on the
ESA’95.39 The ESA sectors/units included in the “public” class are listed in table 2.6.

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