It will be remembered from the disaster cycle in Chapter 1 that once the emergency phase cools, the next phase starts: reconstruction. The reconstruction phase varies in its duration from weeks to years, since it depends completely on the scale of destruction and the countries‘ capacities to bounce back effectively and efficiently. One of the major challenges a State faces in this regard is the question of appropriate funding, especially in cases where private insurance coverage is not easily accessible or not available at all, as is the case for most developing States. For example, in 2016 Asia suffered an estimated loss of USD 87 billion due to natural catastrophes, of which roughly only 11.5 per cent were insured. Thus, when appropriate private insurance coverage is lacking, it is up to the respective Government to find appropriate funding for reconstruction. This chapter first explores the means available to governments of developing States where appropriate insurance coverage is usually missing to get enough funding for reconstruction in the aftermath of an extreme weather event.

In its second part, this chapter explores the connection to climate change in more depth, as the frequency of extreme weather events is triggered by climate change. In particular, it looks at the question of State responsibility – whether States may be held responsible for climate change damage, such as damage caused by extreme weather events. However, since this approach faces many legal obstacles in order to make a legal sound argument, the chapter also suggests an alternative approach and argues that developed States and emerging economies have an obligation under international law to financially support disaster-prone developing States. This is then followed by an examination of sovereign risk transfer solutions and suggests, in the end, a pragmatic solution to fulfil this obligation.

FUNDING AND MANAGEMENT OF RECONSTRUCTION PROJECTS AFTER A NATURAL DISASTER

Compensation and funding for reconstruction in the relevant phase of the disaster cycle are usually either managed through insurance, tort litigation or financial help from other States or international organisations. This book focuses mainly on funding from the public sector and insurance companies, and as such excludes tort litigation from its scope. First, the question of private insurance is addressed, and then the chapter moves on to the question of help from international organisations and other States.