1 Introduction
2 Addressing Residual Risk and Precarious Urban Environments
2.1 Disaster Risk Management and Disaster Risk Transfer
2.2 An Urban Disaster Risk Reduction Strategy: Neighborhood Approach (NA-DRR)
2.3 Evaluation of the Effectiveness and Sustainability of the NA-DRR Strategy
General features | Peru | Colombia | Guatemala | Honduras |
---|---|---|---|---|
City | Independencia, Lima | Medellín | Mixco | Tegucigalpa |
Project implementer | PREDESa | Global communities | Project concern international | GOALb |
Project duration | 1 Oct 2014–31 Mar 2017 | 1 Oct 2014–31 Jan 2017 | 28 Sept 2012–30 Sept 2016 | 23 Sept 2013–23 Dec 2016 |
Total project budget (USD) | 1,303,302 | 1,708,726 | 3,082,151 | 1,377,444 |
NA area (hectares) | 11.2 | 95.7 | 8.1 | 59.3 |
NA built area (hectares) | 8.1 | 131.0 | 4.8 | 53.4 |
Dwelling surface area (m2) | 119.3 | 67.8 | 122.9 | 100.8 |
Total dwellings | 678 | 19,333 | 390 | 5300 |
Household members (average) | 5 | 6 | 6 | 5 |
Total of individuals | 3296 | 115,999 | 2298 | 27,718 |
Population density (people/hectare) | 295 | 1211 | 285 | 467 |
Square meter per person (m2) | 24.5 | 11.3 | 20.8 | 19.3 |
Precariousness Index (0–100) | Peru | Colombia | Guatemala | Honduras |
---|---|---|---|---|
City | Independencia, Lima | Medellín | Mixco | Tegucigalpa |
Legal (0–30) | 11.11 | 8.12 | 6.02 | 10.95 |
a. Issues with land use and land tenure (0–10) | 1.27 | 2.12 | 3.27 | 3.26 |
b. Unplanned settlements/lack of compliance with urban planning & zoning (0–10) | 3.33 | 2.22 | 2.22 | 1.11 |
c. Issues with building regulations/lack of compliance with building regulations (0–10) | 6.51 | 3.78 | 0.53 | 6.59 |
Physical (0–40) | 12.58 | 13.55 | 13.35 | 14.21 |
a. Issues with access to water, sewage, energy (0–10) | 0.23 | 0.15 | 0.40 | 0.15 |
b. Deficient or poor housing conditions (0–10) | 0.53 | 3.18 | 2.06 | 0.08 |
c. Overcrowding, environmental degradation (0–10) | 4.09 | 3.64 | 5.08 | 5.61 |
d. Exposure to natural and human-induced hazards (0–10) | 7.73 | 6.58 | 5.81 | 8.38 |
Social (0–30) | 5.38 | 5.43 | 4.30 | 6.27 |
a. Issues with access to social infrastructure: health, education, cultural, commercial (0–10) | 2.78 | 2.34 | 3.27 | 3.85 |
b. Marginalization (0–10) | 0.91 | 0.68 | 0.48 | 0.45 |
c. Violence and illegal activities (0–10) | 1.68 | 2.41 | 0.55 | 1.97 |
Informality/precariousness Index (0–100) | 29.07 | 27.09 | 23.67 | 31.43 |
2.4 Disaster Risk Assessments
3 Methodology
3.1 Experiences in the Implementation of Risk Transfer Instruments for Vulnerable Populations
Case # | Geographical Scope | Initiative | Instrument | Target Population | Highlights |
---|---|---|---|---|---|
1 | Manizales, Colombia | Solidarity Collective Insurance Marulanda et al. (2014) | Seismic risk insurance, with a 3% deductible. Other risks such as natural phenomena or events like strikes, riots, civil commotion, and acts of bad intent to third parties, with a deductible of 10% | Most vulnerable population located in the lowest socioeconomic strata | Through the payment of property tax, private homeowners can purchase voluntary insurance, which under certain conditions covers the most vulnerable population, through a cross-subsidy scheme |
2 | Ethiopia, Senegal, Malawi, and Zambia. Kenya and Zimbabwe are under test | Rural Resilience Initiative—R4 World Food Programme (2018) | Considers four risk management strategies: improved resource management through the creation of assets (risk reduction); insurance (risk transfer); diversification of livelihoods and microcredit (prudent risk taking); and savings (risk reserves) | Rural vulnerable households | It offers coverage to 57,000 farmers (300,000 people). By 2018, it is estimated that R4 made insurance payments of approximately USD 1.5 million in the five countries |
3 | India | Health scheme for farmers in the cooperative Yeshasvini, Karnataka Radermacher et al. (2005) | Health microinsurance. Discounts in surgery and hospitalization | Households below the rural poverty line | Association between the rural cooperative sector and the Cooperation Department of Karnataka. It offers coverage to 1.45 million users |
4 | Philippines Bulos and Portula (2016) | Tulay sa Pag-Unlad, Inc. (TSPI) | Microinsurance—offers group and individual loans | Small business owners, farmers, and others | Life insurance is mandatory for credit holders. It offers coverage to 500,000 users |
Center for Agriculture and Rural Development, Inc. (CARD) | Financial products such as savings, loans, and insurance | Farmers and small business owners | Life insurance is mandatory for credit holders. It provides coverage to 7 million users | ||
Prudential Life Insurance Company (PPLIC) | Offers a variety of life insurance products | Clients of microfinance institutions, rural banks, and other organizations in the Philippines | Offers coverage to 60,000 users | ||
Life and General Insurance Cooperative (CLIMBS) | Life insurance for the lowest income population | Insurance cooperative, with more than 2000 primary cooperatives and federations throughout the Philippines | Provides coverage to 1.1 million users | ||
MicroEnsure | It offers life, health, climate, and natural disaster insurance | Provides coverage to 2 million users. | |||
5 | Guatemala | Insurance and Microinsurance COLUMNA Herrera and Miranda (2004) | Life insurance, linked to cooperative loans Fire insurance and other risks Life insurance to savings | Members of cooperatives, Owners of savings accounts | Approximately 90% of COLUMNA’s clients are members of the 35 cooperatives. It covers geographically dispersed rural areas and work in agriculture and the informal economy |
6 | El Salvador | Produce Seguro MiCRO (2018) | Parametric insurance that covers events such as excess rain, droughts, and earthquakes | Clients who acquire credits for productive activities: agriculture (livestock, sugarcane, fruit, basic grains, vegetables, banana, güisquil, loroco, or tomato), cosmetology, and grocery stores | Clients receive information on other DRR tools, such as family emergency plans |
7 | Guatemala | Esfuerzo Seguro Peinado (2018) | Parametric insurance that covers events such as excess rain, droughts, and earthquakes | Clients that manage productive and agricultural credit | Offered by Aseguradora Rural and Banrural. Insured persons receive training to manage their risks |
3.2 Pure Risk Premium
Country | Peru | Colombia | Guatemala | Honduras | ||||
---|---|---|---|---|---|---|---|---|
City | Independencia, Lima | Medellín | Mixco | Tegucigalpa | ||||
Peak Ground Acceleration, PGA (for 1500-year return period) (cm/s2) | 252 | 249 for Pinal sector and 363 for Llanaditas, Santo Domingo Savio, and Compromiso sectors | 415 | 210 for Sector 1 and 159 for Sector 2 | ||||
Exposed Value (USD) | 21,214,537 | 403,425,000 | 17,102,603 | 211,353,121 | ||||
Average Annual Losses (AAL) (USD) | 26,824.53 | 557,895.62 | 61,121.89 | 174,245.39 | ||||
Pure Risk Premium (PRP) | 1.26‰ | USD 26,825 | 1.38‰ | USD 557,896 | 0.36‰ | USD 61,122 | 0.82‰ | USD 174,245 |
Country | Peru | Colombia | Guatemala | Honduras | ||||
---|---|---|---|---|---|---|---|---|
City | Independencia, Lima | Medellín | Mixco | Tegucigalpa | ||||
Susceptibility Class | High and very high susceptibility to the occurrence of landslides | Areas with high, moderate, and low susceptibility to the occurrence of landslides | Moderate susceptibility to landslides; small areas with very high susceptibility | Areas with high and low susceptibility to the occurrence of landslides | ||||
Exposed Value (USD) | 21,214,537 | 403,427,349 | 17,102,602 | 211,353,115 | ||||
Average Annual Losses (AAL) (USD) | 21,638.83 | 511,357.88 | 91,820.13 | 196,000.00 | ||||
Pure Risk Premium (PRP) | 1.02‰ | USD 21,639 | 1.27‰ | USD 511,358 | 5.37‰ | USD 91,820 | 0.93‰ | USD 196,000 |
City | Peru | Colombia | Guatemala | Honduras |
---|---|---|---|---|
Independencia, Lima | Medellín | Mixco | Tegucigalpa | |
Total Households | 678 | 19,333 | 390 | 5300 |
Pure Risk Premium (PRP)—Seismic (USD) | 26,824 | 557,895 | 61,121 | 174,245 |
PRP Cost per Household—Seismic (USD) | 39.56 | 28.86 | 156.92 | 32.88 |
PRP Cost per Household—Seismic (% monthly income) | 15 | 9 | 44 | 8 |
Pure Risk Premium (PRP)—Landslide (USD) | 21,638 | 511,357 | 91,820 | 196,000 |
PRP Cost per Household—Landslide (USD) | 31.91 | 26.45 | 235.74 | 36.98 |
PRP Cost per Household—Landslide (% monthly income) | 12 | 9 | 66 | 9 |
4 Results and Discussion
Risk Transfer Mechanism | Main Risk Transfer Features | Common Risk Transfer Features |
---|---|---|
Option 1—Collective Insurance | Focus on handling residual risks Based on the principle of solidarity (not paid by the user, but by the citizens voluntarily) | Address a variety of hazards Reduce disaster impact on income and socioeconomic development Reduce government resources burden associated to disaster response and recovery Opportunity for public–private partnerships |
Option 2—Structural Retrofitting + Individual Insurance Coverage | Handles residual risks Built on risk mitigation measures | |
Option 2—Hybrid Parametric Insurance Coverage | Handles residual risks Maintenance of mitigation works Livelihoods generation |
4.1 Decision Option 1: Collective Voluntary Insurance
4.2 Decision Option 2: Credit for Structural Retrofitting with Comprehensive Housing Insurance
City | Peru | Colombia | Guatemala | Honduras |
---|---|---|---|---|
Independencia, Lima | Medellín | Mixco | Tegucigalpa | |
Exposed value (USD) | 21,214,537 | 403,425,000 | 17,102,603 | 211,353,121 |
Total housing | 678 | 19,333 | 390 | 5300 |
Value per housing unit (USD) | 31,285 | 20,867 | 43,909 | 39,879 |
Physical intervention costa (USD) | 4800 | 4800 | 4800 | 4800 |
Cost of the annual premium (USD) | 313 | 209 | 439 | 399 |
Cost of the monthly premium (USD) | 26 | 17 | 37 | 33 |
Annual premium as % of intervention | 6.52 | 4.35 | 9.15 | 8.31 |