Source: UNISDR Disaster Risk Reduction
Latin America and the Caribbean face a critical imbalance in resource allocation for disaster risk reduction (DRR). According to the 2024 Regional Assessment Report on Disaster Risk in Latin America and the Caribbean (RAR24), developed by the United Nations Office for Disaster Risk Reduction (UNDRR) – Regional Office for the Americas and the Caribbean, only 6% of the public budget classified as DRR in the examined cases is allocated to preventing future risks, while 16% is dedicated to mitigating existing risks. The vast majority of funding is concentrated on response and reconstruction after disasters.
This reactive approach carries a heavy economic toll, with annual disaster losses expected to reach $58 billion across the region. Climate-related hazards now account for 83% of disasters, a trend compounded by rapid, unplanned urbanization. With 81% of the population living in cities—many in high-risk areas exposed to floods, hurricanes, and earthquakes—the urgency to shift from response to prevention has never been clearer.
RAR24 examines Brazil, Guatemala, and Mexico as case studies, recognizing their efforts in implementing budget classifiers that allow for better tracking and analysis of DRR investments. However, the findings reveal that most resources remain allocated to response and reconstruction. These tools represent a crucial step toward identifying gaps and improving investment strategies.
In Brazil, 0.06% of the national budget was allocated to DRR, with over 70% directed toward response and reconstruction. In Guatemala, 2.32% of the national budget was allocated to DRR between 2014 and 2023, but more than 98% of those funds went to response and reconstruction. In Mexico, 0.29% of the national budget was allocated to DRR, with 99% of it dedicated to response and reconstruction. Tracking these expenditures is essential for redirecting efforts toward prevention and demonstrating the potential for a more balanced approach.
The report also highlights missed opportunities due to the imbalance in risk management strategies. Early warning systems, which can reduce economic disaster impacts by 30%, and nature-based solutions, which are up to 50% more cost-effective than traditional interventions, remain underutilized due to insufficient investment in prospective risk management—actions aimed at preventing the creation of new risks rather than merely responding to disasters.
Furthermore, only 5% of disaster losses in developing countries are covered by insurance, compared to 40% in developed nations. This underscores the need for accessible and sustainable insurance schemes, as well as stronger collaboration between governments and the private sector to anticipate risks rather than merely react to them.
“Latin America and the Caribbean are facing a critical funding gap in disaster risk reduction, with most resources dedicated to response and reconstruction instead of prevention,” said Nahuel Arenas, Chief of the UNDRR Regional Office for the Americas and the Caribbean. “Investing in prospective risk management is not only more cost-effective but also an urgent necessity to protect communities, economies, and ensure a resilient future.”
RAR24 outlines a roadmap for correcting this imbalance, emphasizing the need to integrate disaster risk reduction as a fundamental pillar of sustainable development. Key recommendations include prioritizing investment in prospective risk management, strengthening intersectoral governance, adopting nature-based solutions, and expanding early warning systems.
Incorporating DRR into development policies will not only ensure more equitable and resilient growth but also save lives and significantly reduce disaster-related costs. According to the report, every dollar invested in DRR saves four dollars in future losses, reinforcing its strategic role in long-term sustainability.
Addressing the challenges posed by unequal investment in disaster risk reduction requires a collective and committed effort. DRR should not be seen as an expense but as a critical investment in the well-being of present and future generations. RAR24 not only exposes existing weaknesses but also highlights the tremendous opportunities to build a safer, more equitable, and resilient future for all.