|Disaster Economics - 1st Edition (Department of Humanitarian Affairs/United Nations Disaster Relief Office - Disaster Management Training Programme - United Nations Development Programme , 1992, 52 p.)|
|Part 3 - Financing options|
Having identified requirements for disaster relief and rehabilitation investment, foreign aid needs to be coordinated before and after it arrives. This requires the government to establish a data base of all aid inflows, pledged and actual. Protocols for handling aid inflow should be an important preparedness activity. Such a unit is necessary if some of the following counter-productive consequences of aid and concessional assistance are to be avoided:
· The drawdown and disbursement of aid is often very much less than total aid committed, so that aid tends to pile up.
· There is frequently too much aid, of the wrong type, arriving at the wrong time, in the wrong place, for the wrong sector.
· If aid is in the form of cash, it can adversely affect the balance of payments because it can overstate the true position of the country's foreign exchange reserves and its rate of exchange.
· While aid is usually accepted when it is free, it can seriously destabilize; for example, food aid can change consumption patterns, lead to inefficient domestic production, and create dependency. Also, it is difficult to monitor government expenditure which has been financed through counterpart funds raised by the sale of food aid.
Q. True or false: It is acceptable to wait until after a disaster occurs to design protocols to handle and coordinate foreign disaster assistance.
Disaster insurance schemes provide a fast response private sector financing mechanism to promote recovery and can be used to inspire pre-disaster mitigation efforts.