GRA · Disaster Risk Finance
Spatial financeWhere capital meets hazard, exposure and transition
Public investment and resilience
The cheapest disaster to finance is the one that causes less damage. Public investment in resilient infrastructure, building codes, land-use planning and early warning reduces the losses that later need financing. Getting there requires appraisal methods that count avoided losses and budgets that fund maintenance. This page sets out how resilience enters public investment, how it is measured, and who decides.
Public investment and resilience on the record.
Public investment and resilience: how the risk develops.
Risk-sensitive budget and capital projects. The dossier below sets out how the risk develops, what is measured, where the data come from, how it is modelled and who decides.
Appraisal misses avoided losses
Standard cost-benefit appraisal often ignores disaster risk or counts only direct damage. Including avoided losses, disruption and co-benefits changes which projects rank highest.
Maintenance is underfunded
New assets are funded; upkeep is not. Poorly maintained drains, embankments and roads fail in events they were designed to withstand.
Location decides exposure
Building in floodplains or on unstable slopes locks in risk for decades. Land-use rules and siting decisions shape future losses more than engineering alone.
Benefits are invisible
Avoided losses do not appear in any account. Budget processes reward visible projects over prevention whose success is a disaster that did not happen.
Where projects sit, and which layer protects them.
Where development projects meet hazard and poverty, and which financing layer protects them. Hypothetical projects and design values.
What is measured, and how well.
Each indicator carries its unit, its cadence, the kind of source behind it and the evidence label a value would carry. No values are shown: a programme supplies them under its own authority.
| Indicator | Unit | Cadence | Source type | Label |
|---|---|---|---|---|
| Public investment projects screened for disaster risk | share of approved projects | annual | Public investment management records | DECLARED |
| Maintenance spending on public infrastructure | currency and share of asset value | annual | Budget execution | Published statistics |
| Infrastructure assets in high-hazard zones | count or value | periodic | Asset registers and hazard maps | MODELLED |
| Benefit-cost ratio of risk reduction investments | ratio | per appraisal | Project appraisals | MODELLED |
| Building code adoption and enforcement | categorical | on change | National building regulations | Published statistics |
| Public investment management assessment scores | score by institution | on assessment | IMF PIMA reports | Published statistics |
Parametric trigger monitor.
The screen a team would use to follow this subject: its measures, states and decisions. Names are examples and values are illustrative.
Parametric trigger monitor
Public investment and resilience · Sovereign C · Season 2
Index vs trigger
Payment structure
| Attachment | 63 | 0 | Close |
| Mid | 76 | 55 | Not met |
| Exhaustion | 92 | 100 | Not met |
Risk layers
local m, pre-arranged
Payment to people
- Triggeragent confirms
- Payment11 days
- Treasurytransfer
- Social protectionscale-up
- Householdscash
Where the evidence comes from.
Named public datasets and institutional records, each with its licence class. Sources by agreement are used only under their terms and never republished.
| Source | What it gives | Licence class |
|---|---|---|
| IMF Public Investment Management Assessments | Quality of public investment institutions including climate | Free, IMF terms |
| World Bank Lifelines report and resilient infrastructure work | Analysis of infrastructure disruption and resilience benefits | Free, World Bank terms |
| Coalition for Disaster Resilient Infrastructure reports | Infrastructure resilience practice and data | Free to read, terms to check |
| National Institute of Building Sciences mitigation saves studies | Benefit-cost analysis of hazard mitigation in the United States | Free to read, terms to check |
| OECD infrastructure resilience guidance | Policy guidance on resilient infrastructure | Free, OECD terms |
Transition and physical risk on a portfolio.
Three scenario families after the NGFS framework move a sector portfolio through carbon costs and warming damages; the transmission view follows the losses to lenders, investors, public finances and households. Scenario: named assumptions about the future, not a forecast. The map on this page shows Pacific Island states; the model itself is not tied to a place.
Controls
- Carbon price at the horizon, orderly path
- 200 per tCO2
- Delay before a disorderly transition
- 50% of horizon
- Cost passed to customers
- 50%
- Warming today above pre-industrial
- 1.30°C
- Warming per decade, current policies
- 0.25°C
- Damage coefficient
- 0.24% per °C²
- Years ahead
- 25 years
Readouts
- Worst scenario at the horizon
- −33.6% of value
Numbers, methods and sources
| Year | Orderly transition (% value) | Delayed, disorderly transition (% value) | Current policies (% value) |
|---|---|---|---|
| 0 | −0.38 | −0.38 | −0.38 |
| 3 | −2.87 | −0.53 | −0.67 |
| 6 | −5.36 | −0.68 | −0.97 |
| 9 | −7.84 | −0.84 | −1.27 |
| 12 | −10.33 | −0.99 | −1.57 |
| 15 | −12.82 | −7.12 | −1.87 |
| 18 | −15.31 | −15.05 | −2.17 |
| 21 | −17.80 | −23.00 | −2.48 |
| 24 | −20.29 | −30.94 | −2.79 |
Methods
- Climate scenario families NGFS (2023), Climate Scenarios for central banks and supervisors, Phase IV
- Climate stress test of the financial system Battiston and others (2017), Nature Climate Change 7
- Damage function Nordhaus (2017), Revisiting the social cost of carbon, PNAS 114
- Transmission channels BCBS (2021), Climate-related risk drivers and their transmission channels
- Uncertainty fan (parameter Monte Carlo) Spiegelhalter, Pearson and Short (2011), Visualising uncertainty about the future, Science 333
- One-at-a-time sensitivity (tornado) Saltelli and others (2008), Global Sensitivity Analysis: The Primer, Wiley
Data
The model runs on the teaching values set by the controls. To calibrate it for a place, read it against these admitted layers and series, which this page's map can draw:
- Urban extents Natural Earth
- Seaports Natural Earth
- Past year, daily temperature (ERA5 via Open-Meteo) Open-Meteo.com (CC BY 4.0), Copernicus ERA5 (C3S/ECMWF) · register open-meteo.public-pages
- Surface air temperature, daytime (AIRS) NASA AIRS · register nasa.gibs.context-live-layers
Across the six pillars, led by Nexus Consortium
- Experiments Labs
- Built in Disaster Risk Finance in Foundry
- Tested at Disaster Risk Finance in Universe
- Codified in Hazards and Disaster Risk Reduction in Standards
- Published in Disaster Risk Finance in Reports
- Taught in Faculty of Hazards, Disasters and Resilience in Academy
Who decides, and what the evidence serves.
Disaster Risk Finance prepares evidence. The decisions below are taken by the authorities named, under their own rules, and never by the platform.
| Who decides | The question | Evidence this page serves |
|---|---|---|
| Planning and finance ministries | How appraisal rules treat disaster risk | Appraisal methods and comparable practice |
| Infrastructure agencies | Which assets to strengthen, maintain or relocate | Asset exposure and condition data |
| Local land-use authorities | Where development may proceed | Hazard maps and loss evidence |
| Development banks | Which resilience investments to finance | Benefit-cost evidence and country priorities |
Outputs this topic produces
- Guide to including disaster risk in project appraisal
- Method note on avoided-loss benefit-cost analysis
- Comparative notes on maintenance budgeting
- Questions for planning ministries on siting
Trace a shock in public investment and resilience to the balance sheet.
Assembled from the Nexus Standards area profile Disaster and climate risk finance: the shocks it names, the systems and sectors that carry the loss, the controls that dampen it and the data that observe it. Pick an initiating shock and step through the cascade to see which exposures it reaches and where losses could concentrate. The Map view places the run on an example geography with open data. Every weight is a stated assumption. An exercise, not a forecast, a valuation, a rating or investment advice. To model a place of your own choosing, open the full System Builder.
Hazards
- Tropical cyclone
- Earthquake
- Ice-jam flood
- Storm surge (set off downstream)
- Intense rainfall (set off downstream)
- River flood (set off downstream)
- Flash flood (set off downstream)
- Dangerous surf (set off downstream)
- Widespread power outage (set off downstream)
- Mass displacement (set off downstream)
- Coastal flood (set off downstream)
- Aftershock sequence (set off downstream)
- Fault surface rupture (set off downstream)
- Soil liquefaction (set off downstream)
- Slope slide (set off downstream)
- Rockfall (set off downstream)
- Tsunami (set off downstream)
- Building collapse (set off downstream)
Systems and couplings
Controls
NS-0Constitution and principlesNS-3Risk record UNIs (grammar, legacy crosswalk, allocation authority)NS-9Contextual UNIs (deployments, instances, programme instances)NS-10Policies and clauses (machine-readable obligations: definition, binding, evaluation and enforcement)NS-11Verification and monitoring (evidence, attestations, zero-trust conformance observation)NS-14Conformance and crosswalk to external standardsNRS-F8Parametric and index-based risk transferNRS-F7Disaster risk finance and pre-arranged financeNRS-H113Hazard family: Financial-system fragility (NHS-1 soc.financial-system)NRS-H114Hazard family: Macroeconomic and fiscal shocks (NHS-1 soc.macro-fiscal)NRS-D1Risk-informed development and project screeningNRS-H28Hazard family: Climate-state shifts (NHS-1 eco.climate-state)
Observation
- ERA5 reanalysis (Copernicus Climate Data Store) (listed for reference)
- CHIRPS quasi-global gridded precipitation (listed for reference)
- USGS earthquake GeoJSON summary feeds (listed for reference)
- Total public international support for national disaster risk reduction actions (Sendai indicator F-1)
- Direct economic loss attributed to disasters in relation to global GDP
Example geography
- Western Europe: 152 hexagonal cells
- Rain rate, last half hour (IMERG), NASA GIBS
- Night lights tonight, outages (VIIRS Day/Night Band), NASA GIBS
- Surface water through cloud, 30 m (OPERA DSWx-S1 radar), NASA GIBS
- Surface soil moisture (SMAP), NASA GIBS
The questions experts ask.
- Are new public investments located and designed with disaster risk in mind?
- How are the benefits of resilience investment, mostly avoided losses, valued in budget decisions?
- How is maintenance funded, so that assets keep their resilience over time?
- How do climate projections enter design standards for long-lived assets?
- How do budget processes track and prioritise resilience spending?
What public investment and resilience means for exposure, loss and capital.
The exposure, loss, scenario and capital views a risk officer, supervisor or ministry of finance would ask for, with the frameworks they report against. Structures follow supervisory and actuarial practice. Values are illustrative: never prices, ratings or advice.
Financing instruments by layer
How retention and transfer instruments could share losses from public investment and resilience, from frequent to extreme.
| Layer | Who holds the risk | Speed of funds | Main limit |
|---|---|---|---|
| Retention and reserves | Budget, contingency funds | Immediate | Size of the budget |
| Contingent credit | Development banks, ministries of finance | Days to weeks | Debt capacity |
| Parametric cover and risk pools | Regional pools, insurers | Days, on a trigger | Basis risk |
| Reinsurance and catastrophe bonds | Reinsurers, capital markets investors | Weeks to months | Cost of capital |
| Residual loss | Households, firms, humanitarian funding | Uncertain | Unfunded |
Risk in the public investment cycle.
Public investment management covers appraisal, selection, implementation and maintenance of capital projects. Disaster risk can enter at each stage: appraisal can include hazard exposure and avoided losses, selection can prioritise resilience, implementation can apply appropriate standards, and maintenance budgets can preserve performance. In practice, avoided losses are hard to see and easy to discount, while upfront costs are visible, so resilience is often under-funded.
Long-lived assets such as bridges, ports and hospitals will face hazard conditions that differ from those in historical records. Design approaches that consider a range of future climates, or that allow later upgrades, can reduce the risk of costly failure. Maintenance is frequently neglected in budgets, and deferred maintenance erodes resilience before a disaster reveals it.
Budget tagging, which identifies resilience and climate-related spending in budgets, helps governments see and manage these investments, though definitions vary.
Financing and investment interact. Governments that understand their contingent liabilities can see more clearly how resilience investment reduces future fiscal exposure, and some disaster finance arrangements reward or require risk reduction, linking ex ante investment with ex post protection.
Methods and their limits.
Cost-benefit analysis
Including avoided losses in project appraisal; results depend on hazard probabilities and discount rates.
Robust decision methods
Testing designs across many futures; demands data and expertise.
Budget tagging
Identifying resilience spending in budgets; classification is partly subjective.
Limits: avoided losses are uncertain and hard to verify, and appraisal results are sensitive to assumptions about future hazards and discounting.
How it is studied, and what the methods cannot say.
- 01Economics and development economicsCost of ex post versus ex ante finance · Household welfare effects · Fiscal impact of disastersApplied here
- 02Decision analysis under uncertaintyChoosing an instrument mix · Trigger threshold choice · Release rules for contingency fundsApplied here
- 03Forecasting and time-series analysisForecast verification for triggers · Seasonal outlooks for drought financeApplied here
Questions and answers.
Does disaster risk reduction pay for itself?
What is a public investment management assessment?
Why does maintenance matter for disaster finance?
Is resilience investment always worthwhile?
Does GRA appraise projects?
Why is maintenance part of disaster finance?
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