Disaster risk since a macroeconomic perspective: a metric for fiscal vulnerability evaluation

Abstract

The various planning agencies dealing with the economy, the environment, housing, infrastructure, agriculture, or health, to mention but a few relevant areas, must be made aware of the risks that each sector faces. In addition, the concerns of different levels of government should be addressed in a meaningful way. If risk is not presented and explained in a way that attracts stakeholders’ attention and concern, it will not be possible to make progress in reducing the impact of disasters. This means that appropriate evaluation tools are necessary to make it easy to understand the problem and guide the decision-making process, using the language of the policy makers and stakeholders. In this framework the Disaster Deficit Index (DDI) was developed, thinking in the need to have an appropriate figure to measure risk from macroeconomic and financial perspective and to evaluate the contingent liabilities that a potential extreme disaster may represent for the fiscal sustainability of a country. This extended abstract presents the model of the DDI and the results for fourteen countries of the Americas to express risk in the language of the finance decision makers and to guide the governmental investment for risk reduction, retention and transfer.