Central America and the Dominican Republic face a double challenge: their natural, social, and economic wealth coexists with high vulnerability to disasters and extreme climate events. Earthquakes, hurricanes, volcanic eruptions, and storms have left deep marks on the region, affecting millions of lives and causing billions in economic losses. But beyond these visible tragedies, thousands of smaller-scale emergencies impact the most vulnerable communities every day.
Against this backdrop, a historic opportunity emerges: shifting the disaster management approach. Instead of reacting, it is time to anticipate and invest in resilience. Evidence shows that preventing future damage is not only more effective and cost-efficient, but also more equitable, protecting those who need it most.
This October 13 marked the International Day for Disaster Risk Reduction. It is an opportunity to highlight the significant progress made in advancing this agenda in Central America and the Dominican Republic, with the support of regional entities such as the Coordination Center for the Prevention of Disasters in Central America and the Dominican Republic (CEPREDENAC) and the Council of Ministers of Finance or Treasury of Central America, Panama, and the Dominican Republic (COSEFIN); as well as international organizations like the United Nations Office for Disaster Risk Reduction (UNDRR), the World Bank, the Inter-American Development Bank (IDB), and the Development Bank of Latin America (CAF).
Progress in the Region
In his poem “Central American Union,” Rubén Darío wrote: “Union so that the storms may cease, so that the time of truths may come.” Although storms and disasters remain part of the multi-hazard landscape that characterizes Central America, the regional integration processes led by SICA have helped reduce vulnerability across the region.
With the support of CEPREDENAC and other regional integration bodies, countries have strengthened their public policy frameworks and their national, subnational, and sectoral disaster risk management systems. The Ministries of Finance that form COSEFIN have increasingly incorporated the economic impacts of disasters into financial planning, supported by financial protection instruments that complement emergency funds.
The erratic behavior of climate variables and the accumulation of vulnerability factors are creating increasingly systemic and frequent risk scenarios. In infrastructure alone, the expected annual losses in Central America—estimated through probabilistic risk analysis—reach US$4 billion. This represents 25% of the region’s annual GDP growth and jeopardizes the livelihoods of the most vulnerable populations.
A Paradigm Shift
Reacting is no longer enough: we must anticipate. Shifting from disaster response to risk reduction is more effective, more efficient, and more equitable. This is the message of the International Day for Disaster Risk Reduction: “Financing resilience, not disasters.” With less than 2.5% of national budgets and less than 1% of international cooperation dedicated to this area, the challenge is to place resilience at the center of development financing policies in Latin America and the Caribbean (LAC). Central America has the opportunity to lead by example.
Advancing disaster risk reduction requires action on three fronts:
- Planning resilient infrastructure.
Several countries have incorporated risk criteria into their national public investment systems, including Costa Rica, Guatemala, and the Dominican Republic. Development banks such as the World Bank, IDB, and CAF also require higher standards to ensure that projects are sustainable and resilient. A key challenge is to include and evaluate the costs and benefits of resilience in investment criteria. The objective is to demonstrate a multiplier effect—such as increasing the value of public and private infrastructure, reducing insurance costs, and generating economic, environmental, and social co-benefits. - Strengthening the resilience of existing infrastructure.
Reducing the vulnerability of already-built infrastructure requires sustained investment—difficult in contexts of high debt and limited budgets. This is where innovative financial instruments become essential: debt-for-resilience swaps, resilience bonds that attract capital from the rapidly growing green and sustainable bond markets (which have already mobilized more than US$3.7 trillion), or blended finance schemes that mobilize private resources in key sectors. - Preparing financially to rebuild with resilience.
Reconstruction that integrates resilient infrastructure principles is an opportunity to reduce accumulated risk. Achieving this requires advance planning, financial instruments that ensure timely resources, clear rules, and technical capacity to rebuild better, faster, and more inclusively. The region already uses mechanisms like contingent loans and parametric insurance, which provide immediate liquidity after an emergency and support more resilient reconstruction.
Regional Coordination and Innovative Initiatives
Within the framework of the Central American Integration System (SICA), the Regional Strategy for the Financial Management of Disaster Risk Reduction—led by CEPREDENAC and COSEFIN—represents an important step forward for Central America and the Dominican Republic. Its purpose is clear: to close the gaps that prevent greater and better investment in disaster risk reduction for more resilient development.
The region is promoting the use of shared tools, the mobilization of innovative financing, and stronger governance with the support of international organizations and development banks. Examples include UNDRR’s Disaster Risk Reduction Financing Frameworks, the World Bank’s Contingent Liability Management, the IDB’s Ready and Resilient Americas initiative, and CAF’s Co-investment Platform for Early Warning Systems.
Through these actions, Central American countries and the Dominican Republic are working together and advancing an essential agenda for LAC—one in which every investment is an opportunity to reduce risk, under the principle that there can be no sustainable development without resilience.