This month's floods are a worrisome reminder of the increasing uncertainty of extreme weather events. Thailand's flood season usually ends in November, but this year, influenced by a low depression area and a strong northeast monsoon, widespread flooding in the south of the country has killed more than 90 people, affected over 330,000 households, and resulted in widespread asset losses.

Far from being an anomaly, however, the unpredictability of these extreme weather events may become the norm. Using a United Nations global methodology to estimate future disaster losses, we anticipate that average annual losses in Thailand due to floods will reach more than US$2.5 billion by 2030, or 0.65% of the country's 2015 GDP, which is the equivalent of 2.6% of gross fixed capital formation, and 2% of gross savings.

The final impact on Thailand's GDP for 2017 will depend on the duration of the floods. To date, the worst affected sector is rubber, which accounts for 1.5% of GDP and 2.4% of export revenues. The Rubber Authority of Thailand estimates that approximately 10% of the country's rubber production has been lost so far.

As Thailand is the world's largest exporter of rubber, accounting for 38% of world exports, a tighter global market supply may result in an increase in prices, which would somewhat mute revenue losses. Nevertheless, based on climate outlook forecasts which expected the floods to recede by the end of January, a loss of 10 to 15 billion baht could still be expected.

Measures can and must be taken to minimise the impact of these disasters.

The El Nino climate phenomena has resulted in both prolonged drought and floods in quick succession, with poor farmers in particular, bearing the brunt. The exposure of rubber farmers in southern Thailand to severe drought in 2015 and 2016 and the current floods signals a new norm of complex disaster risk.

Poverty is a contributing factor in vulnerability to these disasters because it limits income earning options. The poor are much more likely to cope by reducing spending on education and health, which in turn further weakens their recovery and reinforces the transmission of inter-generational poverty in irreversible ways. Monetary values attached to disaster losses seriously underestimate the links between poverty and disasters.

Last November, the 7th Association of Southeast Asian Nations (Asean) Climate Outlook Forum predicted a strong northeast monsoon, and the Meteorological Department forecast medium and short range floods, which helped ministries and provincial governments prepare for various flood scenarios. Nevertheless, experience demonstrates that early warning messages tend to become less effective when they reach "the last mile".

This is not because of the lack of preparedness on the ground but rather because of the overall content of early warning messages and the way risk is communicated. Often there is a lack of communication on not only the severity of impacts, but also on what specific areas, communities, and assets are most at-risk and likely to be most affected. In other cases, communities may not receive information in time, or they may receive unreliable risk information from various media sources, including social media, which can create confusion.

To prompt action at the community level, risk information needs to be both tailored and standardised. Calibrating these two requirements is central to maintaining the credibility of risk information. Finding the right balance can be challenging, so in recognition of this the Economic and Social Commission for Asia and the Pacific's (Escap) Multi-donor Trust Fund on Tsunami, Disaster and Climate Preparedness has prioritised financial support for initiatives that have built capacity in impact-based forecasting and last mile outreach.

With the intensification of climate change effects, disasters are increasingly trans-boundary phenomena. This demands trans-boundary solutions. Actions taken on a regional cooperative basis can be particularly effective because the benefits are greater than the sum of individual responses.

Consequently, Escap has created a climate risk communication platform, the Monsoon Forum, for improved understanding of climate outlooks and seasonal forecasts in high risk-low capacity countries such as Myanmar, Lao PDR and Cambodia. Through South-South cooperation, Escap will tap into Thailand's experience and knowledge in short and medium range forecasts and early warning communication systems, while continuing to support the integration of innovative tools and techniques for forecasting and monitoring tropical cyclones through the Panel on Tropical Cyclones and the Typhoon Committee, in partnership with the World Meteorological Organisation (WMO).

In partnership with the United Nations Office for Disaster Risk and the United Nations Development Programme, Escap coordinates UN intervention at all stages of the disaster cycle, while Asean and the UN have adopted a Joint Strategic Plan of Action on Disaster Management. These multiple initiatives have undoubtedly helped countries to be better prepared to face disasters.

Escap will further analyse these issues in depth in the 2017 edition of the Asia-Pacific Disaster Report to be launched in October. The report will explore viable and effective methods of building the poor's resilience to disasters, which is key to achieving the 2030 Agenda's aspiration of leaving no-one behind in Asia and the Pacific.

source: http://www.bangkokpost.com

Glenn McGillivray is managing director of the Institute for Catastrophic Loss Reduction.

There is often a perception that the costs associated with natural disasters are paid out of many pockets, including governments of all levels, insurers, property owners and others.

The reality is that when there is a catastrophe, taxpayers are generally left to cover a substantial portion of the expenses, both directly and indirectly. Not only must they pay the insurance deductible for their own property damage and pay out of pocket for any uninsured damage they experience, but their tax dollars must also go toward paying for first response, evacuation costs, damage to public infrastructure, overtime expenses for government and/or public utility employees, and government-disaster assistance.

Consider the 2013 Alberta flood or last May’s wildfire in Fort McMurray, which prompted the federal government to direct a reported $2.8-billion and $300-million, respectively, to Alberta for disaster assistance. These are substantial unbudgeted amounts that are ultimately funded by all Canadians.

But it needn’t be this way, as there are now many traditional and non-traditional reinsurance products that can be used to transfer all but the very biggest risks off the backs of taxpayers and onto the balance sheets of some of the world’s largest and most capable risk-transfer experts.

What’s more, there are also products that can be used to smooth annually budgeted government expenses that prove to be quite volatile. Imagine an insurance product that kicks in if a city’s snow-removal expenses exceed a certain threshold, or one that reimburses a municipality or public utility if storm-related overtime costs exceed a certain amount? How about a simple stop-loss cover that kicks in if federal Disaster Financial Assistance Arrangements (DFAAs) exceed a certain amount, or what if the DFAAs were laid off to the private reinsurance industry altogether? What about a parametric cover that kicks in if a rainstorm, windstorm or snowstorm of a certain size affects a community?

One of the challenges that has to be overcome is that governments typically do not leverage the many reinsurance and financial instruments that are available to them, possibly because of a reluctance to deal with the up-front costs of implementing the solution (such as having to pay an annual insurance premium for a policy that may not be triggered).

But it may just be a matter of breaking old habits.

While average people tend to be risk averse (and, therefore, purchase insurance to ensure a soft landing if a loss occurs), governments tend to be risk neutral, not insuring their assets (or insuring only certain asset classes) and usually paying for losses directly out of public coffers. This is particularly true as you go up the food chain (municipalities, especially small ones, often at least partially insure their assets while more senior levels of government tend not to).

But governments are showing a desire to get away from this model, as paying for increasingly costlier disaster-related expenses makes it challenging to finance pet projects and/or balance the books. Indeed, likely as a direct result of the 2013 Alberta flood, the federal government altered the DFAAs. Now, provinces and territories affected by a significant loss event have to absorb significantly more of the costs before obtaining disaster assistance from the federal government.

Aside from questions regarding risk aversion vs. risk neutrality, it appears that most governments are not used to thinking in terms of mitigating risk beyond traditional types of insurable losses. It isn’t even clear whether governments know that they can transfer all kinds of risk to reinsurance companies.

On the flipside, some reinsurers are not quite used to approaching certain governments about how they can help manage and temper expenses associated with natural disasters and other expenses related to severe weather. And while there are many examples around the world where private reinsurers work well with governments in the creation of very innovative risk-transfer programs, there just isn’t a long tradition of such collaboration in Canada. But this could easily be changed.

With governments at all levels showing a desire to get out of the business of financing natural-disaster losses and other volatile expenses such as snow removal and wildfire suppression, they need to be open to taking advantage of the reinsurance industry in order to lighten the financial burden that is placed on taxpayers.

This is an imperative, as the frequency and severity of natural disasters is increasing in Canada while the pressure is on for governments to cut taxes while also grow services and invest in public infrastructure.