Central America and the Dominican Republic are regions blessed with immense natural, social, and economic wealth, yet they remain among the most disaster-prone areas in the world. Earthquakes, hurricanes, volcanic eruptions, and storms have caused widespread devastation, affecting millions of lives and causing significant economic losses. Beyond these large-scale disasters, countless smaller emergencies impact vulnerable communities daily, deepening cycles of poverty and fragility. This situation presents a historic opportunity to rethink disaster risk management—moving from a reactive approach to one centered on prevention and resilience. Evidence shows that investing in resilience is not only more effective and cost-efficient but also socially just, as it protects those most at risk before disasters strike.
On the International Day for Disaster Risk Reduction, attention has turned to the strides made in Central America and the Dominican Republic with the support of regional and international organizations. Through the Central American Integration System (SICA) and its agencies—the Coordination Center for Disaster Prevention in Central America and the Dominican Republic (CEPREDENAC) and the Council of Ministers of Finance of Central America, Panama, and the Dominican Republic (COSEFIN)—as well as institutions like the UN Office for Disaster Risk Reduction (UNDRR), the World Bank, the Inter-American Development Bank (IDB), and CAF – Development Bank of Latin America and the Caribbean, the region has made notable progress toward resilience.
With guidance from these initiatives, member states have strengthened their public policies and national risk management systems. Finance ministries have also begun integrating disaster-related economic impacts into fiscal planning, supported by financial protection tools that complement emergency funds. However, despite these advances, climate variability and accumulated vulnerabilities continue to create systemic risks. Probabilistic risk analysis estimates that annual infrastructure losses in the region could reach US$4 billion—equivalent to one-fourth of the region’s annual GDP growth—posing serious threats to livelihoods and economic stability.
A shift in perspective is urgently needed: from reacting to disasters to proactively funding risk reduction. This aligns with the global call to “Fund Resilience, Not Disasters.” Currently, less than 2.5% of national budgets and under 1% of international aid are directed toward resilience measures. To lead by example, Central America must prioritize three key actions—protecting new infrastructure, reinforcing existing systems, and ensuring financial preparedness for reconstruction. Countries like Costa Rica, Guatemala, and the Dominican Republic have begun integrating risk criteria into public investment systems, while development banks now require higher resilience standards for project approval. Innovative financial instruments, such as resilience bonds, debt-for-resilience swaps, and blended finance schemes, offer promising solutions to mobilize private capital toward sustainable and resilient growth.
Reconstruction after disasters also offers a vital opportunity to “build back better.” By embedding resilience principles into post-disaster recovery, countries can reduce future risk accumulation. Financial mechanisms like contingent loans and parametric insurance—already in use in the region—enable rapid access to liquidity after emergencies, supporting faster and more resilient rebuilding efforts.
Under SICA’s leadership, the Regional Strategy for Financial Management of Disaster Risk Reduction, developed by CEPREDENAC and COSEFIN, represents a major step forward in integrating resilience financing across Central America and the Dominican Republic. This strategy promotes innovative funding mechanisms, shared tools, and stronger governance, with international partners like UNDRR, the World Bank, IDB, and CAF supporting implementation. Through initiatives such as UNDRR’s Financing Frameworks for Disaster Risk Reduction, the World Bank’s Contingent Liability Management, IDB’s Prepared and Resilient Initiative, and CAF’s Co-investment Platform in Early Warning Systems, the region is enhancing its capacity to anticipate and mitigate risk.
Together, these coordinated efforts mark a significant transformation in the region’s approach to sustainable development. By aligning financial systems, governance structures, and infrastructure investments with resilience goals, Central America and the Dominican Republic are demonstrating that every dollar invested in prevention not only saves lives and livelihoods but also builds a more secure and sustainable future for generations to come.
