Financially Prepared - The Case for Pre-positioned Finance in European Union Member States and Countries under EU Civil Protection Mechanism

1 PublicDisclosureAuthorized PublicDisclosureAuthorized PublicDisclosureAuthorized PublicDisclosureAuthorized ECONOMICSFORDISASTERPREVENTIONANDPREPAREDNESS FinanciallyPrepared: TheCaseforPre-positionedFinance inEuropeanUnionMemberStatesandCountriesunderEUCivilProtectionMechanism ©2024 TheWorldBank 1818HStreetNW,Washington,DC20433www.worldbank.org Disclaimer ThisdocumentistheproductofworkperformedbyWorldBankstaffandconsultants.Thefindings,interpretations,andconclusionsexpressedinthisdocumentdonotnecessarilyreflecttheviewsoftheExecutiveDirectorsoftheWorldBankorthegovernmentstheyrepresent.TheWorldBankdoesnotguaranteetheaccuracyofthedataincludedinthiswork.Theboundaries,colors,denomination,andotherinformationshowninanymapinthisworkdonotimplyanyjudgmentonthepartofTheWorldBankconcerningthelegalstatusofanyterritoryortheendorsementoracceptanceofsuchboundaries.NothinghereinshallconstituteorbeconsideredtobealimitationuponorwaiveroftheprivilegesandimmunitiesofTheWorldBank,allofwhicharespecificallyreserved. ThispublicationwasproducedwiththefinancialsupportoftheEuropeanUnion.ItscontentsdonotnecessarilyreflecttheviewsoftheEuropeanUnion. AdministrationAgreementbetweentheEuropeanCommissionandtheInternationalBankforReconstructionandDevelopmentconcerningthePartIIEurope2020ProgrammaticSingle-DonorTrustFund(No.TF073835)(ECContractNo.ECHOSUB/IBRD/2022/876156). RightsandPermissions Thematerialinthispublicationiscopyrighted.Copyingand/ortransmittingportionsofthisworkwithoutpermissionmaybeaviolationofapplicablelaws.Forpermissiontophotocopyorreprintanypartofthiswork,pleasesendarequestwiththecompleteinformationtoeitherTheWorldBankorEuropeanCommission. Pleaseusethefollowingwordingwhencitingthisreport: WorldBankandEuropeanCommission.2024.FinanciallyPrepared:TheCaseforPre-positionedFinance. Translations Ifyoucreateatranslationofthiswork,pleaseaddthefollowingdisclaimeralongwiththeattribution:ThistranslationisanadaptationofanoriginalworkbyTheWorldBankandshouldnotbeconsideredanofficialWorldBanktranslation.TheWorldBankshallnotbeliableforanycontentorerrorinthistranslation. Adaptation Ifyoucreateanadaptationofthiswork,pleaseaddthefollowingdisclaimeralongwiththeattribution:ThisisanadaptationofanoriginalworkbyTheWorldBank.ViewsandopinionsexpressedintheadaptationarethesoleresponsibilityoftheauthorsoftheadaptationandarenotendorsedbyTheWorldBank. ACKNOWLEDGMENTS Thisreportwasdevelopedaspartofthetechnicalassistanceproject‘Phase2-EconomicAnalysisofPreventionandPreparednessinEuropeanUnionMemberStatesandCountriesunderEUCivilProtectionMechanism’,coordinatedbytheDirectorate-GeneralforEuropeanCivilProtectionandHumanitarianAidOperations(DGECHO)andotherEuropeanCommission(EC)stakeholders.ThetechnicalassistanceisfundedthroughtheUCPMMulti-AnnualWorkProgramme2021–2024.ThisreportwasproducedunderComponent3:BringingNationalandRegionalFinancetoScale. ThisreportwaspreparedundertheguidanceandsupervisionofChristophPusch(PracticeManager,Urban,DisasterRiskManagement,Resilience,andLand,EuropeandCentralAsia),MarinaWes(CountryDirectorfortheEuropeanUnionCountries),andSamehWahba(RegionalDirectorforSustainableDevelopment,EuropeandCentralAsia).ItwasdevelopedundertheleadershipandcoordinationofSamanthaCook(SeniorFinancialSectorSpecialist)andZuzanaStanton-Geddes(SeniorDisasterRiskManagementSpecialist),withexpertinputsfromJoKemp(SeniorPublicFinancialManagementConsultant),DanielMcGree(SeniorActuarialConsultant),YiaoYu(ActuarialConsultant),andNicolasPondard(SeniorDisasterRiskManagementConsultant). ThereportcontentdrewondatafromEuropeanForestFireInformationSystem(EFFIS),andmodellingoutputsunderEconomicAnalysisofPreventionandPreparednessinEuropeanUnionMemberStatesandCountriesunderEUCivilProtectionMechanism-Phase1developedbyJBARiskManagementandtheGlobalEarthquakeModel. ThereportalsobenefittedfromcommentsandguidancefromMatijaLaco(SeniorEconomist),MaryBoyer(DisasterRiskManagementSpecialist,GFDRR),andTatianaSkalon(FinancialSectorSpecialist). Thereportdrewonconsultationswithcivilprotectionagencies,institutionalactors,andexpertsforthecountry-specificcasestudiesaswellasinputsfromWorldBankstaff. TheteamwouldliketoexpressitsgratitudeforthecooperationandguidanceoftherepresentativesoftheECandallthestakeholdersconsultedduringthereport’spreparation.ThisincludestheDirectoratesGeneralforCivilProtectionandHumanitarianAidOperations(DGECHO)fortheoverallcoordination,ClimateAction(DGCLIMA),JointResearchCentre(JRC),EconomicandFinancialAffairs(DGECFIN),RegionalandUrbanPolicy(DGREGIO),EuropeanInsuranceandOccupationalPensionsAuthority(EIOPA),andEnvironment(DGENV). ThereportwaseditedbySelvarajRanganathananddesignedbyArianeKaschaandphotoimagerywasprovidedbythe©EuropeanCommission. Contents STATEMENTFROMFROMTHEWORLDBANK9 EXECUTIVESUMMARY11 1.INTRODUCTION18 1.1.Context19 1.2.Methodology23 2.RISKRETENTIONINSTRUMENTSINEUROPE26 2.1.RegionalInstruments27 2.2.NationalLevel32 3.RISK-BASEDBUDGETING34 4.RISKTRANSFERINSTRUMENTS38 4.1.SovereignInsuranceorCapitalMarketInstruments38 4.2.PublicAssetInsurance39 4.3.Hou