Commitment or Compromise? Financing Disaster Risk from Addis to Sevilla
Author: Anna DeGrauw
Seville Prepares For UN Conference on Financing for Development. Photo: Europa Press News
In the midst of a heat wave, more than 10,000 delegates gathered in Sevilla, Spain, to decide how the world would fund the next decade of development. The Fourth International Conference on Financing for Development (FfD4), held from 30 June to 3 July, saw the culmination of a year-long process with the formal adoption of the Compromiso de Sevilla, or the Sevilla Commitment.
It has been ten years since the Addis Ababa Action Agenda was adopted at the last FfD conference, and the economic landscape has shifted. More money is needed to attain the Sustainable Development Goals (SDGs) and climate finance targets, even as governments grapple with high debt burdens, limited fiscal space, and shrinking aid budgets.[1]
The new Compromiso spans policy priorities from the international financial architecture to domestic public resources and debt sustainability. Disasters affect each of these areas, cutting across the themes the Compromiso covers. This raises a critical question: to what extent does the Compromiso de Sevilla reflect real progress in financing disaster risk since Addis, and where does it fall short?
The difference a decade makes
In 2015, the world was still reeling from the 2008 financial crisis. At the point the Addis Agenda was being negotiated, global growth rates were still below pre-crisis levels.
The Addis Agenda acknowledged the growing impact of global shocks - economic crises, disasters, and disease outbreaks - on development. Underpinning the agreement, there was an important inflection point in reforming the international financial and economic system to be accountable and representative. This shift was emphasised by South-South cooperation, including the rise of the BRICS (Brazil, Russia, India, China, South Africa) only a few years before.
Within the course of a year, the UN Agenda 2030 SDGs, the Sendai Framework on Disaster Risk Reduction, and the Paris Agreement would all be adopted. The SDGs established Target 1.5 to build resilience for those in vulnerable situations, thereby reducing their exposure and vulnerability to climate-related extreme events. The Sendai Framework on DRR was agreed to prevent disasters and reduce hazard exposure and vulnerability to disasters. And the Paris Agreement established the famous target of limiting the increase in global temperatures to 2°C above pre-industrial levels, ideally below 1.5°C.
The theoretical underpinning of these successive agreements would be to develop a system of climate-resilient development, taking into consideration how adaptation and mitigation advance sustainable development.
Economic costs of disasters are on the rise
With every increment of global warming, the IPCC is confident that losses and damages from climate change will increase. Last year outpaced 2023 as the hottest year on record, with global average near-surface temperature nearing 1.5°C higher than in the pre-industrial era.
Over the past decade, there have been more than 3,750 disasters. If the covid-19 pandemic is excluded, then the average disaster-related mortality has almost halved from 2014-2023 in comparison to 2005-2014. This conveys hope about how governments are preparing for disasters, but disasters are not experienced equally, due to factors such as hazard exposure, access to essential services, and pre-existing levels of social inequality. The number of people affected by disasters has risen significantly, more than 70%, in part due to a rise in heatwaves.
The economic cost of disasters is also rising, even when adjusted for inflation. This puts fiscal strain on governments - especially those facing high debt burdens - and on communities whose livelihoods are disrupted. Estimates suggest that disasters now exceed $200 billion annually, even before indirect and ecosystem impacts are taken into account. The covid-19 pandemic further compounded this challenge by driving up levels of private and public lending to meet urgent social and fiscal priorities, causing debt servicing burdens to balloon.
Regional and economic intergovernmental forums drive reform
As the UN turns 80 this year, calls to make the international system more representative, accountable, and responsive build on decades of action. Support for UN-based multilateralism[2] is strongest in governments across Latin America and the Caribbean, East Asia and the Pacific, and Sub-Saharan Africa. This finding is consistent with regional and economic fora reforming finance for disaster risk outside of the UN system, too.
A powerful example is the Bridgetown Initiative, which is working to lead a paradigm shift in scaling capital flows and reshaping the financing system to achieve climate action, with key recommendations taken up by international financial institutions. Similarly, the V20 Accra-Marrakech Agenda, alongside other V20 Ministerial Communiques, has advocated for making debt work for climate, revolutionising risk management, and transforming the international and development financial system.
Successive G20 Presidencies - India, Brazil, and South Africa - have each scaled action on disaster risk reduction through the G20 Disaster Risk Reduction Working Group. Initiatives such as the G7-V20 Global Shield Against Climate Risks and Fund for Responding to Loss and Damage have also been operationalised over recent years, and multilateral development banks have significantly expanded their pre-arranged financing toolkit.
So, while the economic cost of disasters has increased and agendas outside of the UN system have sparked reform, how has the Compromiso de Sevilla reflected these shifts?
Compromiso de Sevilla: Commitment or Compromise?
Although the Compromiso de Sevilla translates to ‘commitment’ rather than ‘compromise,’ analysing it through a disaster risk lens reveals elements of both: through its ambitions but also its omissions. Here are three reasons why:
1. The (diluted) links between development and climate change
Recent policy reforms have recognised an undeniable link between climate change and development. While the final version of the Compromiso acknowledges this, it has dialled down the ambition of earlier drafts.
One draft, for instance, highlighted the impact of climate change on sustainable development. It called for urgent action to build resilience against climate impacts, improve access to climate finance, provide new and additional financial resources, and facilitate technology transfer to address climate challenges.
Although the same language does not make it to the final version, climate-related shocks are recognised to impact sovereign debt challenges, presenting one of the greatest obstacles to realising sustainable development. However, the concept of ‘new and additional’ finance, meant to provide additional financing for climate on top of existing development finance commitments, does not appear in the final version. This omission is significant. ‘New and additional’ is a well-established principle under the UNFCCC, and its exclusion is noticeable in a year meant to set a roadmap to deliver $1.3 trillion for a New Collective Quantified Goal on climate finance.
2. Scaling investments in disaster risk reduction and disaster risk financing
In terms of financing disaster risk, the Compromiso has come a long way since its earlier drafts. It now explicitly calls for scaling investment in disaster risk reduction and disaster risk financing to protect development gains.
This could represent a political shift towards aligning risk reduction and preparedness for residual risks at the national policy and instrument level. Broadly, the adoption of these tools by a government is influenced by factors related to its risk profile, policy goals, capital markets, population size, and fiscal space, among others.
Interestingly, this sentiment reflects recent policy agendas by intergovernmental forums outside of the UN. For example, under South Africa’s Presidency, the G20 Disaster Risk Reduction Working Group is currently developing Voluntary High-Level Principles for Financing Disaster Risk Reduction. It so far indicates that a fragmented, instrument-led approach could lead to a fundamental systemic weakness and gaps being overlooked, indicating political will for a more proactive, rather than reactive, approach to disaster risk. It further aligns financing for disaster risk reduction with pre-arranged financing to address residual risk.
3. Uptake of pre-arranged financing
In addition to the Midterm Review of the Sendai Framework in 2023, the Compromiso makes one of the first references to pre-arranged financing in a UN General Assembly Declaration or Outcome Document. Getting new language into UN Declarations is notoriously difficult. The language typically builds on precedent from previous agreements, intended to ensure policies complement and build, rather than contradict or regress priorities.
So, the inclusion of pre-arranged financing, with little precedent, is a negotiator’s feat. It contextualises pre-arranged financing as an approach, rather than an instrument, to ‘reach people and communities more quickly to reduce the cost of action and accelerate recovery’.
Outlining pre-arranged financing in this way encourages an instrument-agnostic approach, building on reforms outside of the UN system over the past decade. Several pre-arranged financing instruments, including micro-insurance, catastrophe bonds, and climate resilience debt clauses, are referenced throughout the Compromiso. Adaptive social protection systems are also recognised.
Under the Sevilla Platform for Action, which brings together 130 initiatives to take forward the commitments in the Compromiso, there are two which directly relate to pre-arranged financing. The first is a new Global Initiative on Pre-arranged Financing, jointly launched by the UK FCDO and Bridgetown Initiative, aiming to increase its scale and quality. The second is the Debt Pause Clause Alliance, which the Centre supported and contributed to through its research, such as the report ‘Debt Pause Clauses Confront Their First Disaster.’
Sevilla as a Premonition
As quiet as the heatwave that framed its adoption, the Compromiso could serve as a premonition of how disasters are considered as part of development finance within the UN system. With five years left on the UN SDGs and Sendai Framework on Disaster Risk Reduction, the Compromiso will extend beyond the lifetime of both agreements and could set the framing for future agreements.
So, the Compromiso can be read both as a compromise and a commitment. But as we near 1.5°C above pre-industrial levels, actions taken forward now are consequential, and the next decade could make all the difference.
The author would like to thank Pankaj Singh, Dulce Pedroso, Chris Kiggell, and Daniel Clarke for their review.
[1] There is a $4 trillion annual gap in SDG financing, while the Baku to Belem Roadmap aims to transform the $300 billion New Collective Quantified Goal into $1.3 trillion by COP30 this year. At the same time, in 2022, 25 emerging economies spent more than 20% of their government revenues on external debt servicing. ODA levels are also far away from the 0.7% gross national product (GNP) commitment the Monterrey Consensus advocated for, with a projected 9-17% global ODA reduction in 2025.
[2] The Index measured six indicators: UN treaty ratification, votes aligned with the majority at the UN General Assembly, membership in UN organisations, not participating in conflicts and militarisation, not using unilateral coercive measures, and contributing to the UN budget.