Today we are introducing you to Lydia Poole, who heads the work of the Centre for Disaster Protection on evidence and learning. Since its establishment in 2017, the Centre has been a key stakeholder in advocating for and producing guidance on the use of disaster risk financing ahead of disasters. It does so through a team of experts who hold deep knowledge on diverse aspects of disaster risk financing, and who deliver impartial, evidence-based advice.
We were particularly excited to interview Lydia following the publication of the Centre’s inaugural The state of pre-arranged financing for disasters 2023 report. This report is a potential game-changer for all those working towards the scale-up of disaster risk financing that is arranged in advance of disasters – and we asked Lydia to tell us why.
1. Tell us about The state of pre-arranged financing for disasters 2023. What led you to publish the paper and why is it so important?
Shifting how we pay for disasters from unpredictable, discretionary, ex-post responses towards an approach where financing is planned and arranged in advance is core to the Centre for Disaster Protection’s mission.
We want to see a substantial scale-up in pre-arranged financing (PAF). But currently, nobody really knows how much there is, let alone how much we need. It is important to establish a baseline and monitor our performance to see where we are making progress and where we need to do better if we are serious about shifting the default in how we pay for crises.
With this report, we started collating the best available data to build a picture of how much pre-arranged financing there is in low- and middle-income countries.
In this first iteration, we have focused on pre-arranged financing that is supported by international development financing. By that, we mean a combination of aid – or official development assistance – and other aid-like flows from official donors.
The headline news is that pre-arranged financing IS growing. International development financing for PAF increased from just USD 177 million in 2017 to USD 1.9 billion in 2021, but it is very far from the default. It represented just 2.2% of total crisis financing – that is, of all the international development financing spent on preventing, preparing for, and responding to crises – in the 5-year period 2017-2021.
But what was remarkable was not just the low levels of investment in pre-arranged financing – we expected that – it was just how little was reaching the poorest countries. High-income and upper-middle-income countries received at least 43% of this financing (USD 2.3 billion) and lower-middle-income countries 38% (USD 2.1 billion), while low-income countries received a tiny 3.7% of the total (USD 201 million) between 2017 and 2021. This finding is prompting some hard reflections on whether we have the right tools and approaches to reach people most at risk.
2. What else is the Centre working on that can support stakeholders in the early warning early action space?
Much of the Centre’s core work is providing impartial pro-bono advisory, quality assurance and training services to governments and international organisations looking to develop disaster risk financing plans and instruments. We have an in-house multi-disciplinary team of experts – in actuarial science, catastrophe risk modelling, risk management, finance, economics, public financial management, social protection, humanitarian delivery, Gender Equality and Social Inclusion (GESI) – who help to make sure that disaster risk financing solutions deliver for effective financing responses for all parties involved, including most importantly, people vulnerable to disasters. Our Advisory team works with partners to develop and refine crisis financing solutions, which often target early action.
For example, over the last couple of years, our Advisory team acted as an impartial adviser for IFRC as they worked through insurance structure options with Aon and private sector partners to develop an innovative financing mechanism to allow them to scale the available finance in the Disaster Response Emergency Fund (DREF) using risk transfer and the private insurance market.
3. How has being a REAP Partner helped you in your work?
REAP’s role as a convenor of motivated partner organisations is extremely useful in providing direct access to communities of practice and networks capable of driving change. This helps us connect efficiently with partners with operational and policy expertise and influence to help shape our thinking and initiatives and, of course, amplify our work. We are also lucky to have a close collaboration with the REAP Secretariat and we are in regular dialogue to share information and ideas and spark new collaborations.
We saw the effectiveness of REAP’s influencing and convening power with the launch of the Getting Ahead of Disasters Charter at COP28. Our partnership with REAP meant that we had an opportunity to both contribute to the development of the Charter and, as an endorser, join a much bigger network of actors who share our goals.
4. What do you see as the key 1-2 priorities to tackle so that we ensure we are making best use of available finance for early warning and early action?
The state of pre-arranged financing report brought home just how little PAF is reaching low-income and fragile settings. We are now focused on identifying how financial protection against disasters can be extended to challenging environments where some of the most vulnerable people are. This year, one of our big research and policy priorities will be to understand what it would take to break out of the cycle of pilots and small-scale anticipatory action projects to a systematic and widespread adoption of anticipatory action, particularly in fragile and conflict-affected settings.
The second major theme is accountability and learning. We see this as a critical tool to ensure that we are spending money well, that PAF delivers impact, and that it works for vulnerable people. PAF is very supply driven, and metrics of success are often focused on the numbers of products sold and volumes of coverage. There is a real accountability deficit, and disincentives to be transparent if something isn’t working. We recently produced guidance on how accountability can be built into pre-arranged financing to help demystify accountability for practitioners. We need to shift towards accepting accountability and learning as a core requirement of good PAF, including building a much greater willingness to fund it and build a culture in which learning and being honest about what is not working, is not a risk, but something to be encouraged.