Ten Pacific Island countries which are members of the World Bank have a population of about 3.4 million people, scattered across an area equivalent to 15 percent of the globe’s surface, with a development trajectory that will be shaped by their economic geography.
Read More »
REGION: EAST ASIA AND THE PACIFICCOUNTRY: PACIFIC ISLANDSFOCUS AREA: FINANCIAL PROTECTIONResults & AchievementsPCRAFI’s Pacific Catastrophe Risk Insurance Pilot is the first parametric c... Show More +atastrophe risk transfer transaction in the Pacific region. Successes and best practices from the PCRAFI pilot have informed discussions for developing a similar risk pooling mechanism in the Indian Ocean Islands. More than $1.2 million was awarded in early 2014 to Tonga, the first country to benefit from an immediate payment,following Cyclone Ian. Participating Pacific Island Countries have obtained an estimated 50% reduction in premiums under the risk pooling mechanism when compared to a country-specific approach.The Pacific Island region is highly vulnerable to natural disasters and climate-related hazards, costing some countries an average of up to 6.6% of gross domestic product (GDP) every year. In response to requests from 15 countries, the World Bank, the Global Facility for Disaster Reduction and Recovery (GFDRR), and other partners formed the Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) in 2007 to help mitigate disaster and climate change risk.Under this initiative, the first regional Catastrophe Risk Insurance Pilot (the Pilot Program) was formed and is significantly helping post-disaster response in the Marshall Islands, Samoa, the Solomon Islands, Vanuatu, Cook Islands and Tonga. In 2014, Tonga became the first country to receive a recovery payment following the devastation from Cyclone Ian in January.The 22 Pacific Island Countries (PICs) are among the top 30 nations most vulnerable to natural disasters. Subject to cyclones and tropical storms and prone to volcanic eruptions, earthquakes, and tsunamis, the PICs suffer, on average, combined disaster damages of more than $280 million every year. When a disaster strikes, governments in these countries often struggle to secure liquidity for swift post-disaster emergency response, constrained by their small population, limited borrowing capacity, and access to international markets, as well as the small size of local economies. The pilot program is one component of the Pacific Disaster Risk Financing and Insurance (DRFI) program, which is designed to increase the financial resilience of the PICs against natural disasters as part of the broader PCRAFI umbrella.ApproachThe pilot program is a risk pooling mechanism that allows participating countries to purchase catastrophe coverage as a group at significantly lower cost than the cost of independently purchasing insurance. It was designed: As a solution to short-term cash flow problems that small developing economies face following major disasters that disrupt the provision of government services. With the World Bank acting as an intermediary between the PICs and a group of reinsurance companies. To be the first scheme in the Pacific to trigger payments based on specific physical parameters that are determined beforehand (wind speed, ground movement, etc.).Lessons LearnedInsurance is only one component of comprehensive financial protection. In February 2013, a magnitude 8.0 earthquake and subsequent tsunami hit the Solomon and Santa Cruz Islands without resulting in a payment transfer, as the level of physical damage caused by the disaster was relatively low, as confirmed by the rapid impact assessment undertaken through PCRAFI. This demonstrated the need to better communicate the benefits as well as limitations of the pilot program—for instance, that it covers only a portion of the losses when they disrupt the provision of government services.Partnering programs increase efficiency and effectiveness. This pilot program and the Pacific DRFI program benefit from PCRAFI’s other undertakings, such as work on catastrophe risk information and disaster rapid impact assessments. Financed by the European Union (EU) through the African Caribbean Pacific (ACP) – EU Natural Disaster Risk Reduction Program, an initiative of the ACP Group managed by GFDRR, these efforts are helping refine the models that ultimately benefit applications like the pilot program, enhancing their credibility and attractiveness to the private sector, which is becoming increasingly critical to ensuring resilience in the PICs.Next StepsThe Pacific DRFI Program is seeking additional funding from donors to enable greater participation of low-income countries through the provision of premium subsidies and technical assistance. The continuation of the pilot for at least two more years would stimulate discussion among governments on establishing sustainable sources of finance. Additionally, the establishment of a dedicated entity is under consideration. Show Less -
Moving ForwardThe government’ s response to the recent disaster of tropical cyclone Ian, an order of magnitude larger than the tsunami, is testament to increased capacity in tackling critical re... Show More +construction and recovery . Increased mapping capacity was used to quickly develop robust and high-quality damage maps from post-disaster aerial surveillance to support reconstruction and recovery planning. The building designs used in the project will be replicated and housing reconstruction planning is well advanced, with specific emphasis given to address crucial land tenure issues in a timely manner and with highest political BeneficiariesFe’ao Vakata is from Niuatoputapu. Member of Parliament for the Niuas, he came over as part of one of the first relief teams, bringing clothes and other urgent supplies to the affected communities. He describes what it was like at the time:“From wharf to shore you could see damage and there was no one around. It was like a ghost-town. There was no house that wasn’t affected. All the houses on the right-hand side were gone.”“The community was devastated. You talked to them at the time and everyone cried, even the men. They said it’s not just the wave but the whole sea that came to us. The week after it happened, people refused to come down from the mountain. They stayed in the bush, too scared that another disaster might strike.“The project is about much more than a number,” says Fe’ao. “It is about the joy and happiness of the people.”Uini Limoni is one of those whose family has benefitted from the new homes. “The families are safer now, the children are safe. How can we not be thankful for that?” Show Less -
ChallengeTonga comprises three main island groups with a total land area of about 700 sq. km dispersed over a 400,000 sq. km area of the South Pacific. Basic infrastructure is of reasonably good quali... Show More +ty, as is its social service system. However, its small size, geographic dispersion and isolation and limited natural resources provide a narrow economic base, making it particularly vulnerable to external economic shocks. Tonga faces many challenges in developing and maintaining sustainable internal, regional and international transport and communication linkages, all of which are crucial to the economic development and social well-being of its estimated 105,000 population. The country is faced with limited capital resources and decaying infrastructure, combined with financial and administrative constraints, as well as challenges of meeting domestic and international transport safety security requirements.SolutionThe project was to assist the Government of Tonga in establishing and consolidating the operations of the newly-created Ministry of Transport as a unified ministry, and to improve compliance of the civil aviation and maritime entities with international safety and security standards. The Ministry of Transport was subsequently merged with the Ministry of Works to form the Ministry of Infrastructure. The project supported a change management process to focus this new Ministry on its core activities, which was recognized with an international award in 2013 by the United Kingdom’s Institute of Asset Management.The International Development Association (IDA) is recognized by the Government of Tonga and the Government of Australia as having the specialist expertise and long-standing association with this particular sector in Tonga to be well positioned to help develop appropriate policy and regulations needed to better coordinate these various initiatives.ResultsA total of 171km of roads maintained or rehabilitated between January 2012 and June 2013 by eight domestic contractors: Two contractors are firms owned by women.The creation of a domestic road contracting industry for Tonga which employed 88 people, including 12 women, working on road maintenance throughout Tonga.Improved safety standards for passenger vessels, under an improved regulatory framework with the Government of Tonga’s Marine and Ports Division.Aids to navigation and port-related works completed to improve safety and security of seafarers.Improved infrastructure, including the fire station at the airport and an extension to the airport transit lounge.Road safety improvements through signage, road markings and pedestrian facilities in Tongatapu, Ha’apai and Vava’u.The establishment of a ‘Road Maintenance Fund’ to ensure sustainable finance of future investments.The successful creation of the new fully-functioning Ministry of Infrastructure. Show Less -
Bank ContributionThe Bank supported the project with a grant from the Global Environment Facility (GEF) of US$1.8 million within a total project cost of US$7.7 million. PartnersThe project was co... Show More +-financed by the Australian Agency for International Development (AusAID) and the New Zealand Aid Programme (NZAP). AusAID provided US$3.43 million, the New Zealand government US$1.05. The Government of Kiribati provided US$1.42 million.The National Adaptation Steering Committee in Kiribati helped coordinate KAP II. Overall direction was provided from the Office of Te Beretitenti through the Strategic National Policy and Risk Assessment Unit (SNPRA). Toward the FutureAdaptation work started by KAP II, which closed in June 2011, is being continued by the KAP III Project. KAP III will build on its predecessor’s successes to improve climate resilience by both strengthening the government’s and communities’ capacities to manage climate change effects. KAP III will also focus on increasing fresh water quality and storage capacity at the local level. The US$10.8 million KAP III project is being financed by the Global Environment Facility Least Developed Countries Fund, the Japan Policy and Human Resources Development Fund, the Global Facility for Disaster Reduction and Recovery, and the Government of Kiribati. Show Less -