Pacific Disaster Resilience Program (Phases 1 and 2)

The potential for success of any innovation cannot be established without taking risks.Taking the risk of an innovative program design that piloted the use of the policy-based lending (PBL) modality for contingent disaster financing (CDF)—for only the second time in ADB (following the Cook Islands’ Disaster Resilience Program) and the first time at the regional level—has led to significant success. It contributed to policy change and product innovation at ADB. More importantly, it created a highly relevant, in-demand product for developing member countries(DMCs) beyond the Pacific region that will become even more important as climate change progresses. The initial design struck a good balance: (i) it addressed financing gaps for medium-layer risks, as evidenced by the drawdown against significant disasters that stretched national financial capacity to provide timely assistance; (ii) it created a platform for policy dialogue on disaster risk management (DRM); and (iii) it incentivized Implementation of DRM reform. Its main features were formalized in the evolving CDF policy, addressing uncertainties and limitations (e.g., adding health emergencies to drawdown triggers and introducing a replenishment option). Confirming its relevance to Pacific DMCs, the program has been replicated and scaled up to 10 DMCs in four phases, with a fifth phase in development.