Ex-Ante Risk Management and Implications for Sustainable Poverty Reduction

Disaster Risk Financing and Insurance (DRFI) Workshop presentation

Risk-avoidance strategies are commonplace and costly to poor and vulnerable households across the developing world. We argue that neglecting to take this properly into account, and valuing DRFI solely based on the impact of disasters on welfare when they occur, will result in a systematic under-estimation of the value of DRFI strategies for reducing poverty. This brief has presented two empirical case studies, reflective of a broader literature, to reinforce the point that DRFI strategies are important not only for protecting household welfare from covariate and idiosyncratic shocks but also for fostering economic growth, and maintaining social stability.