Natural disaster risk in Asian megacities: A case for risk pooling?

This paper examines the characteristics of natural disaster risk in the context of megacities generally, and Asian megacities particularly. A key gap in approaches to managing megacity risk has been attention to the financial aspects, for which interest has lately been emerging in terms of exploring whether such risk may be suitable for a donor-assisted regional Asian risk pooling scheme. One suggestion concerns insuring public sector liabilities in terms of infrastructure replacement funding, liquidity support and relief to the population. Recently, this was operationalized in the Caribbean regional pooling of hurricane and earthquake risks, and by the Mexican government for earthquake risks. In both cases, central governments are the actors. We assess the rationale and applicability of such deliberations given the dynamic nature of vulnerability and risk, and discuss conditions for conducting similar transactions for Asian megacity risks. Overall, given our adopted criteria, we tentatively conclude that there may indeed be a case for risk pooling, yet the dynamics of assessing formal and informal risks as well as the specificity of conditions in respective megacities pose important hurdles that have to be overcome.

Research highlights
► Introduces the idea of risk pooling of megacities against natural disasters.
► Gives motivation why such an approach is and will be important in the future.
► Gives examples where similar arrangements are successfully applied.
► Shows obstacles and discuss possible solutions of risk pooling for Asian megacities.
► Novel contribution to the discussion of megacity risks and possible risk strategies to decrease risk effectively.