Abstract
The objectives of this research are to investigate resource loss effects from flooding and to provide recommendations on disaster risk reduction policies. This research utilized a dynamic computable general equilibrium (CGE) model, which found that losses of resources had major negative impacts on real gross domestic product (GDP). Transitioning from national catastrophe insurance fund to an international risk pooling approach is discussed, and as the Global Catastrophe Risk Insurance Facility has not yet been established, our proposal suggests the Association of Southeast Asian Nations plus three (ASEAN + 3) Catastrophe Risk Insurance Facility (ACRIF) and the Association of Southeast Asian Nations plus three catastrophic bonds (ASEAN + 3 CAT bonds) as effective means of reducing fiscal liabilities arising from natural disasters, also effectively enhancing disaster risk reduction. These tools are complementary to Catastrophe Risk Swaps which are innovative global financial adaptation strategies designed to make communities and governments more resilient to disaster damages. They are ex-ante risk financing tools and sources of liquidity for damage restoration and economic recovery, which facilitates flexibility among the Association of Southeast Asian Nations plus three (ASEAN + 3) and other governments requiring special assistance. Most importantly, utilization of insurance and catastrophic bonds promotes the achievement of set objectives of global adaptation strategies, sustainable economic growth, and climate resilient development.
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Notes
The Department of Disaster Prevention and Mitigation will announce a disaster once 50 households have been damaged or floods have occurred for 15 days.
The compulsory purchase of insurance and fire insurance for households has been beneficial in building an information database in purchasing insurance, which could be used for other insurance businesses.
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Thirawat, N., Udompol, S. & Ponjan, P. Disaster risk reduction and international catastrophe risk insurance facility. Mitig Adapt Strateg Glob Change 22, 1021–1039 (2017). https://doi.org/10.1007/s11027-016-9711-2
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DOI: https://doi.org/10.1007/s11027-016-9711-2