Multilateral financing in the face of natural disasters
As climate change intensifies, so does the number and severity of natural disasters. In this context, multilateral financing seeks not only to respond after the event, but to prevent, mitigate, and financially prepare countries to respond more effectively.
Climate change is altering the usual patterns of extreme weather events. According to data from Europa Press, 398 natural disasters were recorded in 2023, resulting in economic losses of $380 billion and 95,000 deaths — the highest figure since 2010. Among the most devastating events were the earthquakes in Turkey and Syria, floods in China, Hurricane Otis in Mexico, and droughts across the La Plata region and the United States. Floods alone have made headlines in Pakistan, India, Central Europe, and Spain in 2024, and more recently in Texas and Vietnam in 2025.
Two of the four types of natural disasters mentioned above are directly related to water — or its absence. The growing frequency, intensity, and extent of catastrophic flooding worldwide reveal a troubling trend. This is partly driven by climate change, which increases extreme precipitation (heavier but shorter rain events) and raises sea levels, worsening coastal flooding.
The growing frequency, intensity, and extent of catastrophic flooding worldwide reveals a troubling trend, partly driven by climate change
Indeed, across the wide spectrum of environmental and social risks — from earthquakes to epidemics — studies show that flooding poses a greater threat to people than any other natural hazard, especially for populations living in coastal cities.
Against this backdrop, it is worth examining how international organisations are responding.
It is clear that natural disasters inflict enormous economic, social, and human losses, particularly in developing countries. Prevention, preparedness, and proactive financial planning — before disasters strike — can significantly reduce their impact. Consequently, many disaster response programs emphasise not only financial instruments but also institutional capacity and risk assessment.
Today, resilience to natural disasters, defined as “the ability of communities to adapt, recover, and grow after adverse events, while minimising their impact”, has become a central pillar of programs and strategies run by development cooperation agencies, NGOs, multilateral financial institutions, and other actors. Resilience is increasingly viewed as a tool to combat poverty, inequality, climate change, and vulnerability to catastrophic risks.
Studies show that flooding poses a greater threat to people than any other natural hazard, especially for populations living in coastal cities
Although the United Nations had been promoting global initiatives to reduce disaster risk since the early 1990s, the turning point came with the Second World Conference on Disaster Reduction (WCDR), held in Hyogo, Japan, in 2005. The devastation caused by the 2004 Indian Ocean earthquake and tsunami, along with the destruction left by Hurricane Katrina in 2005, spurred a global rethinking of resilience as a guiding framework for managing climate crises.
Since then, numerous programs have emerged to build disaster resilience. For instance, UNOPS (the UN Office for Project Services) leads the Cities Alliance, a partnership of bilateral and multilateral development agencies, governments, NGOs, foundations, private-sector companies, and research institutions operating a Multi-Donor Fund to enhance urban resilience against natural disasters.
The World Bank (WB) is another key player. Through its City Resilience Program (CRP) — supported by the Global Facility for Disaster Reduction and Recovery (GFDRR) — the Bank underscores that “investing in urban resilience is essential to ensure sustainable development and poverty reduction”. Established in 2017, the CRP provides technical and financial assistance for proactive investments in areas such as flood control, water management, sanitation, energy, urban transport, upgrading informal settlements, and land cadastre systems.
The Disaster Risk Financing and Insurance (DRFI) Program, jointly run by the International Bank for Reconstruction and Development (IBRD) and the World Bank, aims to strengthen the financial protection of governments, households, businesses, and farmers against natural disasters. Its four core areas include: (1) sovereign disaster risk financing, (2) insurance market development, (3) actuarial and financial analysis, and (4) global partnerships and knowledge management.
Prevention, preparedness, and proactive financial planning, before disasters strike, can significantly reduce their impact
In Latin America and the Caribbean — the most urbanised developing region in the world, where over 80% of the population lives in cities — the Inter-American Development Bank (IDB) launched the Emerging and Sustainable Cities Initiative (ESCI) in 2010 to help cities manage their vulnerability to natural disasters and adopt climate mitigation measures. The IDB also developed the Regional Disaster Risk Transfer Program, allowing vulnerable countries to transfer the risks of extreme events (hurricanes, floods, droughts, earthquakes) to reinsurance and capital markets.
In Europe, the EU-funded project BINGO (Bringing Innovation to Ongoing Water Management), launched in 2015, aimed to provide practical knowledge, innovative solutions, and advanced prediction tools for integrated water management under climate change. Led by Portugal’s National Civil Engineering Laboratory (LNEC), it involved 20 European partners — including research centres, local governments, and water companies — across Germany, Cyprus, Spain, Norway, the Netherlands, and Portugal. Using innovative modelling tools (1D-2D simulations), the project assessed the social, economic, and environmental impacts of floods and developed integrated drainage–marine systems for evaluating the effects of wastewater discharges on beaches.
In Asia and the Pacific, the Asian Development Bank (ADB) has launched the Disaster Risk Management Action Plan 2024–2030, focusing on both structural and non-structural measures for resilience in the world’s most disaster-prone region. Meanwhile, the African Development Bank (AfDB) implements the Africa Disaster Risk Financing Programme (ADRiFi) to strengthen African countries’ capacity to assess climate risks, design adaptation measures, and deploy disaster risk financing tools. The Multi-Donor Trust Fund (MDTF) behind ADRiFi finances climate insurance premiums, early warning systems, and data analytics.
Since the Second World Conference on Disaster Reduction, held in 2005, numerous programs have emerged to build disaster resilience
In recent years, multilateral development banks have deepened their collaboration to operate “as a system” in climate and disaster strategies — enhancing early warning systems, policy coherence, and national resilience platforms. The International Flood Initiative (IFI), led by organisations such as UNESCO-IHP, WMO, UNDRR, and UNU, promotes integrated flood management through modelling tools, training, knowledge exchange, and the establishment of national and regional water and disaster resilience platforms (e.g., in the Philippines, Myanmar, Pakistan, and Sri Lanka).
Ultimately, these programs demonstrate that the goal is not merely to react after a disaster but to prevent, mitigate, and financially prepare countries to respond more effectively. Incorporating disaster risk into investment frameworks, infrastructure planning, and development policies is essential to reducing future vulnerability.
Finally, there is growing interest in market-based instruments — such as parametric insurance, contingent debt, and adaptive loans — to help cover the financial impacts of natural disasters.
All these initiatives offer opportunities for collaboration. ICEX works to identify such opportunities and provides Spanish companies with advisory, training, information, and promotion programs within this multilateral framework.