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The Philippines by virtue of its geographic circumstances is highly prone to natural disasters, such as earthquakes, volcanic eruptions, tropical cyclones and floods, making it one of the most disaster prone countries in the world. This report seeks to document the impacts of natural disasters on the social and economic development of the Philippines; assess the country's current capacity to reduce and manage disaster risk; and identify options for more effective management of that risk. The Philippine institutional arrangements and disaster management systems tend to rely on a response, or reactive approach, in contrast to a more effective proactive approach, in which disasters are avoided, by appropriate land-use planning, construction and other pre-event measures which avoid the creation of disaster-prone conditions. To evolve to a more proactive role, it is important that a national framework for comprehensive disaster risk management be prepared and implemented. The framework should incorporate the essential steps of integrated risk management, which include risk identification, risk reduction, and risk sharing/financing. The study identified some specific areas under these key themes that would need to be addressed to improve the current system, discussed through the study. The study also found that currently, the Government and individual households bear the majority of costs caused by natural disasters. More effective options for financing disaster risk, and relieving the burden of disasters from the public sector should be explored, including the idea of a catastrophe insurance pool, and/or contingent credit facilities. Also found was that, despite the high hazard risk in the Philippines, the insurance coverage for residential dwellings' catastrophes is almost non-existent. It is stipulated the Bank should examine the ongoing portfolio to identify how its projects can support the goal of disaster risk reduction. In addition, the Bank should consider more direct support to the development of an integrated disaster management risk approach, through the provision of technical assistance and lending.
