5. Approaches in Peru to increased coherence in climate change adaptation and disaster risk reduction

This chapter describes national approaches to policy development and implementation on climate change adaptation and disaster risk reduction in Peru. It outlines the policy context and governance arrangements for these two policy agendas, approaches to implementation of the policies, financing, and monitoring and evaluation, with a special focus on public finance. Drawing on these insights, the chapter offers recommendations for how efforts in the two policy communities by both the government and development co-operation can facilitate greater coherence in efforts to build resilience to climate and disaster risks.

    

Summary and ways forward

In light of its significant vulnerabilities, Peru considers disaster risk management (DRM)1 and climate change adaptation (CCA) as a policy priority in its strategic orientation towards the country’s sustainable development. Its Strategic Vision for 2050 includes building population resilience through the development of a prevention culture and an integrated national system for disaster risk management (CEPLAN, 2019[1]). The recent adoption of the Framework Law on Climate Change in 2018 highlights the national importance of CCA. The on-going development of Peru’s National Adaptation Plan (NAP) has also started to engage representatives from government sectors and institutions working on CCA in light of the NAP’s conceptual model that includes DRM as a key aspect.

This context creates an opportunity to align national and local efforts to strengthen resilience to climate-related risks, making the best use of data and information, financial resources and institutional capabilities. Coherent and mutually reinforcing policies for DRM and CCA will be more efficient and effective than addressing these topics in isolation. Although the need for closer integration is widely recognised, in practice there is scope for improvement to fully benefit from the potential synergies between the two policy areas.

Ways forward to enhance coherence in CCA and DRM in Peru

Peru has stepped up its policy instruments for DRM and CCA in recent years, and invested significantly to develop legislation, institutions, budget tools and implementation processes to strengthen its climate resilience. After six years of implementation, the National System for Disaster Risk Management (SINAGERD) is under review for improvement and the recent climate change law provides new momentum for adaptation. While efforts are made to align policy approaches, there is a clear margin of progress to further develop synergies between these two agendas, avoid redundancies and benefit from opportunities.

Both PCM and MINAM have indicated their willingness to better link their policy approaches, notably through: (1) the ongoing development process of the implementation decree of the climate change law and (2) the update of the National DRM Plan after 2021. These processes could further enhance coherence between DRM and CCA. Furthermore, the emphasis on territorial development with the future creation of a dedicated Office for risk management and territorial planning in PCM could be a good opportunity to elevate the two topics and their key linkage with local development planning

The priority should be on local-level policy implementation, as significant capacity and implementation gaps are challenging the proper strengthening of Peru’s climate resilience on the ground. It is particularly important to align the incentive structure and foster capacity development so that local governments and communities can further engage in resilience. To achieve this objective, ways forward include:

• Use the opportunities of the on-going development of the new policy and plan on DRM, the creation of the by-laws of the climate change law and the creation of a new policy on territorial development to foster horizontal and vertical co-ordination between these two agendas.

• Make use of the new Climate Change Law to call for a review of local-level plans on climate action, developing similar instruments at the municipal level, as well as integrating climate change in the local planning, investment projects and budget. Such review processes may offer ways to enhance synergies in and learn lessons from existing DRM and CCA processes. For instance, a guideline for municipalities on integrating DRM and CCA in planning and budget process could be jointly designed by CENEPRED and MINAM, instead of having separated approaches

• Leverage the on-going NAP process led by MINAM in collaboration with other government agencies and key sectors to strengthen coherence between the ministry’s adaptation work and broader sustainable development agendas including DRM. 

• Increase collaboration between MINAM and PCM, the two lead institutions on climate change and DRM, so that visions, priorities, information, financing and monitoring tools can be aligned and redundancies avoided.

• Further develop linkages between risk assessment processes and information systems: CENEPRED, SENAMIH and ANA together with other technical institutions should adopt common definition standards for climate risk information and analysis, and make sure their information systems are fully interoperable. Existing guidelines for risk assessment should also incorporate climate change.

• Develop guidelines on how to integrate DRM in a context of climate change in public investments across the various sectors so that the public investment system invierte.pe contributes to climate resilience. The model of the health sector could be utilised by others in this respect.

• Take the opportunities of climate financing to mobilise additional resources for climate change adaptation and support implementation of the Climate Change Framework Law.

• Learn lessons from the difficulties to integrate DRM and CCA in the post El Niño reconstruction process with the process of the Authority for Reconstruction with Changes so that Build Back Better processes contribute best to climate resilience.

Peru profile

Climate change and risks

Peru is highly exposed to disaster risks caused by natural hazards. In 2017, it was one of 10 most affected countries by those disasters worldwide in terms of economic damages, estimated at USD 3.2 billion (EM-DAT, 2018[2]). This was mainly due to the extreme weather events influenced by the El Niño climate phenomena, which affected 1.7 million people (see Box 5.1). According to national statistics, 50 000 disasters impacted Peru between 2003 and 2015, causing 2 125 deaths and affecting more than 12 million people (PCM, 2019[3]). Beyond their impacts on human lives, public health and livelihoods, these events damaged and destroyed housing, infrastructure and agriculture, with consequences in most economic sectors. In this period, hydro-meteorological hazards have triggered 57% of emergencies at the national level. Heavy rainfalls, high winds, low temperatures and floods have affected all regions, from its densely populated coastal areas, to isolated communities in the Andean mountainous regions, or in the tropical forest. This high percentage demonstrates the importance of climate-related risks in Peru, in addition to the geological hazards that can affect this earthquake-prone country.

Peru’s significant exposure to natural hazards is exacerbated by physical and socio-economic vulnerabilities. These range from inadequate asset protection, poor design and construction of buildings, rapid urbanization and building in risk prone areas, deforestation and land degradation among others. Taken together, this makes disaster risk management a pressing issue for the sustainable development of the country.

Climate change is exacerbating these large exposures and vulnerabilities to natural hazards, as it affects their magnitude, frequency and duration. Precipitation is projected to increase on average in the coastal areas and in the northern mountains, which are flood prone. According to the Peruvian Hydro-Meteorological Service SENAMHI, average temperature will increase between two and three degrees by the end of the century for emission scenarios RCP4.5 and RCP8.5 (SENAMHI, 2014[4]). Such a temperature increase will lead to more intense heatwaves and droughts, with impacts on public health and agriculture, as well as to a larger prevalence of tropical diseases.

Beyond its impact on extreme events, slow onset changes due to climate change are also critical to consider for their potential consequences on disaster risks, in addition to other losses and damages, as well as severe distortions. Glacier melt is accelerating rapidly in Peru, which concentrates 71% of the world’s tropical glacier, representing one of the main water resources for the country (MINAM, 2016[5]). This could also have consequences on the risk of floods and increase the risk of the glacier’s lake outburst. Sea level rise is increasing risks for the urban coastal populations (58% of the country population lives along the coast). Biodiversity losses and increased desertification will negatively affect ecosystems, which in turn will increase societal vulnerabilities. With a projected adverse impact on economic growth of 6.8% by 2030 compared to a baseline growth scenario, and many sectors of the economy at risk, climate change has the potential to affect overall the economic and social resilience of the country to disaster risks, which demonstrates the importance of tackling these two policy issues with a coherent approach.

Objective and outline

The objective of this case study on Peru is to present its national and sub-national approaches to policy development and implementation on climate change adaptation and disaster risk reduction in the country. The section also explores the extent to which they build resilience to climate-related risks by leveraging coherent and mutually reinforcing approaches. Drawing on these insights, the section offers some ways forward on how efforts in the two policy communities by both national government officials and development co-operation partners can facilitate greater coherence in strengthening resilience to climate-related risks, building on current efforts.

This case study first outlines the policy context and governance arrangements for climate change adaptation (CCA) and disaster risk management (DRM) in Peru, approaches to implementation, financing and monitoring and evaluation. The case study also has a dedicated discussion to the country’s approach to public finance for CCA and DRM. Finally, the case study outlines the role of developing co-operation in supporting domestic efforts to manage climate risks and build resilience.

Box 5.1. Impact of El Niño Costero Phenomenon in 2017 on the health sector

In 2017, the impact of the El Niño Southern Oscillation (ENSO) was particularly severe for Peru. Occurring on average every four years, this climatic phenomenon usually causes increased rainfall associated with extreme events on the Peruvian coastal areas. Between January and April 2017, more than 1.7 million people were affected by this event, with the greatest impact in the northern region of the country. While there is not a definitive figure of the total damages, some estimates to damages to infrastructure and housing equalled USD 4 billion.

The 2017 El Niño event was also revealing possible consequences on public health that disasters can have in Peru, as it increased the prevalence of infectious diseases in the country and also significantly damaged health infrastructure. As a result of the rains, infectious diseases started to spread in the country, including dengue fever, chikungunya, zika and leptospirosis. In particular, a high transmission of cases of dengue was reported mainly in the regions of Piura, Ica, La Libertad and Lambayeque. According to the Ministry of Health, 64,777 cases of dengue were reported in all of Peru, which is a threefold increase compared to the same period in 2016. In this same period, 56 people died of dengue fever.

This was intensified by the fact that 937 health facilities were impacted by the floods. Among them, 61 collapsed, affecting the capacity of health services to respond to the increasing demands due to the emergency, as well as to the longer term need for health services in the region due to the long reconstruction process. This demonstrates the importance of building safe and resilient health infrastructure to reduce the public health consequences of disasters.

Source: (Chávez Cresta, Burbano and Villalobos, 2018[6]).

National approaches to CCA and DRM

Governance arrangements and policy frameworks for CCA and DRM

In light of its significant vulnerabilities to extreme hydro-meteorological events now and in the future, Peru has developed governance arrangements and ambitious policies for both DRM and CCA. The mature DRM policy presents a set of regulations, co-ordination mechanisms, budgetary and financial toosl. Despite considerable progress already made, the focus on climate change adaptation is more recent, with the adoption of the Framework Law on Climate Change in 2018. While both approaches have made mainstreaming a priority, there is an opportunity to better align those two policy domains and to strengthen coherence and co-ordination in the future.

Governance arrangement

Regarding the governance arrangement for DRM at the national level, in 2012, Peru established the National Disaster Risk Management System (SINAGERD), which governs nationwide efforts to strengthen resilience against disaster risks. With the overall objective to reduce the vulnerability of populations and livelihoods to disaster risks, SINAGERD co-ordinates the efforts for DRM of all three levels of government (national, regional and local). The overall co-ordination is ensured by the Centre of Government, the Presidency of the Council of Minister (PCM), through the Deputy Ministry of Territorial Governance and the National DRM Council chaired by the President (see Figure 5.1). This is a clear signal of the country’s political commitment towards DRM as well as the intention of achieving a whole-of-government engagement in the area.

SINARGERD is supported by two dedicated institutions, the National Centre for Disaster Risk Estimation, Prevention and Reduction, CENEPRED and the Civil Defence Institute, INDECI which supports national efforts respectively in prevention or corrective management for the former and emergency preparedness and response activities or reactive management for the latter. The Ministry of Economy and Finance is tasked with the disaster risk financing strategy and the National Centre for Strategic Planning CEPLAN to support the incorporation of DRM in planning at the national, regional and local levels. This institutional framework covers the entire risk management cycle with clear roles and responsibilities assigned to the main stakeholders, although some redundancies exist for instance between INDECI and CENEPRED, and the need to better articulate the functions of these two institutions is clear to many stakeholders in Peru.

Figure 5.1. Articulation and co-ordination between entities in SINAGERD (Law 29664)

Source: Adopted from (PCM, 2018[7])

Local governments have key responsibilities in both DRM and CCA legal frameworks, reflecting the multi-level governance system of the country and its strong regulatory framework (Table 5.1). The on-going implementation of PLANAGERD reveals how gaps in local capacities and limited levels of vertical co-ordination are impeding progress in this area. These challenges are also exacerbated by the unfinished decentralisation process (OECD, 2016[8]).

Table 5.1. Main regional and local government responsibilities according to SINAGERD and Framework Law on Climate Change
Responsibility	Disaster Risk Management SINAGERD law N° 29 664 and its by-law	Framework Law on Climate Change N° 30 754
Policy management	 Design, management, implementation and monitoring of disaster risk management related plans and processes, such as disaster risk reduction plans, contingencies plans, prevention plans.	 Implementation of national public policies in CC.  Design, implementation and monitoring of regional strategies in CC.
Harmonization and articulation with other plans	 Articulation between territorial planning and the National Policy in DRM.	 Incorporate adaptation measures in their Territorial, Regional and Local Development Plans, Strategic Institutional Plan, Operative Institutional Plan, Budget Programs and investment tools.
Reporting to	 Presidency of Council of Ministries (PCM),	 Ministry of Environment (MINAM).
Production of technical and scientific information	 Production of technical and scientific information regarding risk and vulnerabilities in their territories.  Integration of the produced information into SIGRID (the DRM Information System).	 Promotion of the development of comprehensive vulnerability and adaptation studies for the identification of vulnerable zones,  Promotion of scientific research and technological development for adaptation to CC, considering indigenous traditional knowledge.
Creation of technical offices	 Municipal Civil Defence Office	 Designate a focal point on climate change (usually in Municipal Environmental Office)
Co-ordination mechanisms	 Creation of DRM Working Groups	 Creation of Working Groups to develop regional strategies in CC integrating public, private and civil society actors.
Source: Author’s elaboration based on (PCM, 2018[7]) and (MINAM, 2019[9]).

SINAGERD requires regional and local governments to develop DRM plans and to integrate DRM in their local planning and budget processes. The prevention focus of PLANAGERD 2014-2021 has translated into regulations mandating all the local governments to develop Disaster Risk Prevention and Reduction Plans (Plan de Prevencion y Reduccion de Riesgo de Desastre - PPRRD). In addition, both the local Concerted Development Plan (Plan de Desarollo Concertado) and Budget (Plan Presupestal) need to incorporate DRM as well. CENEPRED provides guidelines and trainings for the development of these plans to the local governments and the budget programme 0068 can incentivise their development by local governments.

Despite this well-designed scheme to foster local DRM implementation, there is still a large number of municipalities in Peru which have not yet developed such local plans, and where plans have been developed, their quality varies. Over the last few years, local governments made progress to establish Working Groups on Disaster Risk Management across the country – 72% of municipalities had established such groups in 2016 (INEI, 2016[10]) – but CENEPRED reports that in 2017, out of the 1869 municipalities, only 70 had indicated having PPRRD in place, 665 did not, while the others did not respond (CENEPRED, 2017[11]). Furthermore, even fewer municipalities have integrated DRM in their Concerted Development Plans and in their budgets. This demonstrates that municipalities in Peru are just starting to incorporate the prevention focus of SINAGERD. On the contrary, on the reactive side, a larger number have developed contingency and emergency response plans. While guidance and incentive mechanisms are good tools to support local policy implementation, the lack of stronger enforcement mechanisms, as well as significant local capacity gaps are major issues to mainstream further DRM in Peru at the local level (see further discussion below). This is also revealing the low political priority given to DRM at the local level.

Table 5.2. Entities with prevention and disaster risk reduction plans in Peru
Type of entity	Entities with Disaster prevention and risk reduction plans				Total entities
Yes	No	Did not respond	Did not participate
Regional government	8	13	4	0	25
Municipalities	70	665	497	637	1869
Total	78	678	501	637	1894
Source: Adopted from (CENEPRED, 2017[11])

Regarding climate change adaptation, the regional level has been a preferred scale for action up until now. According to MINAM, 23 out of the 25 regions of the country have advanced on the development of regional climate change strategies and their implementation plans in recent years. MINAM supports the development of these regional strategies through guidance and advisory services. The new Climate Change Law will call for a review of these plans, developing similar instruments at the municipal level, as well as integrating climate change in the local planning, investment projects and budget. However, there could be ways to find synergies and learn lessons from both existing DRM and CCA processes to facilitate the local uptake of these two policies.

Given the large number of guidance documents and insufficient capacities at the local level in applying them, creating linkages between the various instruments at the right scales would be particularly relevant. For instance, a guideline for municipalities on integrating DRM and CCA in planning and budget process could be jointly designed by CENEPRED and MINAM, instead of having separated approaches. On non-DRM related topics of CCA, the regional scale appears as a preferred level of action compared to the municipal level, at least in a first approach, given the good results obtained for the regional strategies. The guidelines under development by MINAM for the regional governments are an opportunity to better integrate DRM in these regional strategies. In doing so, the new momentum on climate change adaptation could serve as a way to strengthen DRM implementation at the local level, and CCA implementation would benefit from instruments that are becoming more largely utilised for DRM.

Beyond government, engaging the civil society and the private sector in DRM and CCA is essential to foster a whole-of-society effort towards climate resilience. In Peru, this need for an open and inclusive approach to policy-making and implementation is well recognised by the main co-ordinators of PCM and MINAM. Most stakeholders of the national government indicated that public awareness on climate risks was amongst the first priorities to develop a culture of prevention and facilitate behaviour changes towards resilience.

Regarding policy-making, an extensive consultation process led to the development of the climate change adaptation policy, through the “Dialoguemos” that is a participatory space of MINAM. More than 2000 people from civil society, indigenous communities, academia, youth and the private sector contributed to this process, during the development of the Climate Change Law and the NDC, among others (MINAM, 2019[9]).

This good practice in CCA could inspire the development of the next plan of action for Disaster Risk Management. While there is no dedicated multi-stakeholder group on DRM, PCM has organised national dialogues on DRM in the context of the National Roundtable on Poverty Reduction, which conveys national unions, women’s organisations, federations of businesses and development cooperation partners, among others. This is promising for the development of the future plan of action, to ensure that all voices are heard in the development of this priority policy. Making sure that those platforms address both DRM and CCA during these multi stakeholder dialogues would be a good way to identify synergies in a bottom-up approach early on in the policy development process.

In addition to consultations, key policies on CCA and DRM recognise increasing awareness of climate risks among stakeholders as one of their strategic lines of actions. For instance, PLANAGERD strategic objective 6 promotes strengthening population and civil society participation for the development of a prevention culture and the climate change law makes also ample references to societal engagement, including with the private sector. In practice, however, there are limited examples of actions where NGOs and the private sector are engaged as partners for climate resilience. Local NGOs, such as “Soluciones Practicas” met during the mission work on DRM projects with communities and development cooperation partners. But, except some insurance services in the agriculture sector developed in partnership between the Ministry of Agriculture and private insurers, there are no real incentives or partnerships in place for the private sector to engage in climate resilience efforts. The new climate change law should offer an opportunity to strengthen economic resilience and climate finance.

Box 5.2. “Dialoguemos” participatory space

To foster multi-stakeholder participation and inclusion in climate change policy-making, the Ministry of the Peruvian Ministry of the Environment MINAM created a specific participatory process named “Dialoguemos”. More than 2000 people from the civil society, indigenous communities, academia, youth organisations and private sector were convened to discuss the development of the Peruvian NDC, the by-laws of the climate change framework law or other topics of interest. With various formats from large forums to working groups or high-level dialogues, this participatory process was much welcome by the participants and civil society organisations. MINAM prepared specific didactic documents to foster a good understanding of the issues in discussion and shares the results of these dialogues in its website. Dialoguemos is a good practice of open government favouring inclusiveness and transparency in policy-making, and responds well to the participatory approach called for on the Framework Climate Change law. According to participants, the organisation, format and information provided were instrumental to support a meaningful exchange of opinions and hear the voices that are not always heard in policy-making.

Source: Based on interview during fact-finding mission (2019), MINAM brochure on NDC (2019) http://www.minam.gob.pe/cambioclimatico/wp-content/uploads/sites/127/2019/01/Memoria-de-Dialoguemos-sobre-las-NDC.pdf, MINAM website http://www.minam.gob.pe/cambioclimatico/dialoguemos/ (consulted 20 July 2019).

Policy context

With a comprehensive, decentralised and multi-sectoral approach, the National Policy for Disaster Risk Management represented a shift from emergency response towards integrating resilience to disasters in the development process of the country, with a focus on prevention. SINAGERD is supported by a strong regulatory framework, as the National Policy for DRM is of mandatory compliance for all public entities, and is one of the 35 national policies of Peru National Agreement, which reorganised the structure of the government in 2002.

The 7-year National Plan for Disaster Risk Management 2014-2021 (PLANAGERD) delineates priority actions for all the public entities around six strategic objectives: risk knowledge, risk reduction, risk culture, emergency preparedness, recovery/reconstruction and capacity-building, which are well aligned with the Sendai Framework.

Regarding CCA, the adoption of the Framework Law on Climate Change (Ley Marco sobre Cambio Climatico) in 2018 provides momentum for ambitious action on CCA. This law demonstrates important political support to advance the adaptation agenda, making it mandatory for all levels of government to incorporate climate change into development planning, as it is for disaster risk management. In addition, the law recognises the importance of climate-related risks. As the national authority for implementation, the Ministry of the Environment – Ministerio del Ambiente MINAM - is developing by-laws, to complement this legal instrument with relevant policy tools for effective implementation as of 2019. The law also established the High Level Commission on Climate Change, chaired by PCM and composed by all Ministers, which provides a good opportunity for co-ordination with DRM.

MINAM also led the development of a large multi-sectoral process to develop the National Determined Contribution (NDC), which highlights not only mitigation but also adaptation. Among the climate change adaptation measures prioritised nationwide, 25% of them are related to DRM. As the momentum on CCA is more recent than DRM, it would be important to build on what already exists and avoid duplication.

Nonetheless, there still exist greater opportunities for PCM and MINAM to work on DRM and CCA in a more coherent manner to maximise synergies between the two policy agendas. As of the middle of 2019, PCM had not participated in the multi-sectoral working group for the development of the NDC. Similarly, climate change is not amongst the priorities of PLANAGERD 2014-2021, even though it is mentioned as one of the risk factors for Peru. However, both PCM and MINAM have indicated their willingness to better connect their policy approaches, notably through: (1) the ongoing development process of the implementation decree of the climate change law and (2) the update of the National DRM Plan after 2021. These processes could further enhance coherence between DRM and CCA. Furthermore, the emphasis on territorial development with the future creation of a dedicated Office for risk management and territorial planning in PCM could be a good opportunity to elevate the two topics and their key linkage with local development planning.

Most sectors that met for this case study indicated a great level of awareness and technical understanding of the importance of both DRM and CCA. Ministries and agencies in charge of Water, Health, Agriculture, Housing and Public Works, for instance, are all members of the SINAGERD, and contributed to the development of the section on CCA of Peru’s NDC. According to SINAGERD, all sectors are responsible for promoting, implementing, articulating and monitoring DRM within their areas of competencies and jurisdictions. Similarly, the Climate Change Law promotes a whole-of-government approach to climate change adaptation.

The large planning process governing the activities of sectorial ministries is used as an opportunity to integrate DRM across these various sectors, and a similar process could be set up for climate change adaptation as well. The National Center for Strategic Planning (CEPLAN) provides guidelines for the integration of DRM in the Institutional Strategic Plan and Operational Strategic Plan (CEPLAN, 2019[12]) that all public entities must develop. CENEPRED provides more detailed guides for the development of sectoral plans on Disaster Risk Management (CENEPRED, 2016[13]). Despite this regulation, an evaluation of PLANAGERD conducted by CENEPRED in 2017 indicated that only a few of the sectors had developed such plans in practice (CENEPRED, 2017[11]). This implementation gap raises concerns on the effectiveness of such large mandatory planning process to mainstream DRM in sectoral planning.

DRM mainstreaming across sectors is also facilitated in Peru through the budget process. As many OECD countries, Peru has developed a result-based budgetary process, which has a dedicated budget line for “Vulnerability Reduction and Disaster Response”, called budget programme 0068 (PCM, 2019[3]). This programme, co-ordinated by PCM together with the Ministry of Economy and Finance (MEF), is a multi-sectoral program that aims to finance DRM activities across sectors and levels of governments, with objectives aligned to those of PLANAGERD. This integrated budget programme is considered by most of the stakeholders as a useful tool to integrate different sectoral initiatives under a common, concrete and measurable framework. PCM is tasked with the priority-setting and monitoring of this budget programme, which reinforces its co-ordination role on DRM with all the different sectors. As implementing the climate change adaptation policy will require financial resources, there would be benefits from learning lessons or seeking synergies with this programme 0068 in the future.

Engaging sectors in a co-ordinated CCA process is more recent. In 2018, the development of Peru’s NDC, a key contribution to the Paris Agreement, was used strategically by MINAM to foster multi-stakeholder engagement and strengthen its co-ordination role in CCA. 13 ministries have been working together to identify five key thematic areas for adaptation (agriculture, forests, water, health and fisheries and aquaculture), and 91 specific measures. The quality of this inter-ministerial process was underlined by all the Ministries and therefore enabled the strengthening of co-ordination between sectors on CCA, and the consolidation of MINAM’s leadership. Going forward, MINAM’s added value in facilitating access to financial resources for the implementation of these measures will be essential to maintaining the momentum (see below). The on-going development of Peru’s National Adaptation Plan (NAP) has also started to engage representatives from government sectors and institutions working on CCA in light of the NAP’s conceptual model that includes DRM as a key aspect (MINAM, 2019[14]).

In the NDC, 25% of the measures are related to Disaster Risk Management, which demonstrates the potential for synergies between the two agendas. As indicated earlier, PCM has not participated in their design. Nevertheless, some of the sectors have already developed integrated approaches to CCA and DRM, such as in the agriculture sector with the Plan on Risk Management and Climate Change Adaptation 2012 – 2021 or in the water sector with the National Strategy on water resources which has a dedicated pillar on Climate Change Adaptation and Extreme events.

Many stakeholders highlighted the importance of these initiatives in the integration of both the DRM and the CCA agendas, despite some differences in their dynamics. The co-ordination of DRM actions is led by the Centre of Government, which reflects a high-level political commitment to advance this agenda. The co-ordination of CCA is carried on by a line ministry (MINAM), which might generate greater challenges to influence the CCA agenda across government.

Data and information

Understanding climate-related risks in terms of their likelihood and potential impacts is essential to define the priorities of a DRM and CCA policy at the national level and to design resilience measures at the local level. Peru has good scientific and technical capacities for climate risk assessment, and has seen significant progress in this domain in recent years. In Peru, capacities of scientific and technical institutions to monitor, collect and analyse climate-related risks are well advanced at the national level. The hydro-meteorological service SENAMIH has a large monitoring network, historic databases with information related to meteorological events and capabilities to make tailored products supporting risk analysis. The National Water Agency (ANA) also collects hydrological information from the River Basin Organisations, and the National Institute of Civil Defence (INDECI) has a database on disasters impacts and losses. Furthermore, Peru can count on other specialised agencies, such as the National Glacier and Mountain Ecosystem Institute (INAIGEM), the Sea Institute (SIMARPE), the Mining and Metallurgical Geological Institute (INGEMMET) and the Peruvian Geophysical Institute (IGP). Such collaboration can benefit the government’s effort to collect complementary information for hazard analysis. The National Statistical Institute and the National Planning Commission could also further provide data and information on exposure and vulnerability.

CENEPRED, the main technical arm of the country for risk assessment, has produced a state-of-the-art methodology for risk assessment compiling all this wealth of information to produce a risk index. This methodology is based on a matrix combining hazard, exposure and vulnerability analysis (CENEPRED, 2014[15]).The mapping of this index at the national and territorial levels allows to characterise risk zones with four levels of risks (i.e. low, medium, high or very high). CENEPRED’s technical guidelines and its advisory services, as well as the financing from the Budget programme PP0068 for risk analysis, support the implementation of this risk assessment programme from the national to the local levels, aligned with Objective 1 of PLANAGERD to improve risk knowledge. For instance, CENEPRED has elaborated 162 risk assessments for the risk of El Niño Costero in 2018. There are also some other agencies responsible for risk assessments. For example, ANA has mapped the critical points for flooding nationwide, although this mapping exercise dates back to 2008 and appears now outdated given the rapid urban development in the last decade.

Regarding climate change, in 2012-2013, SENAMHI produced climate scenarios for 2030-2050 for the Third National Communication to UNFCCC, at the national level and in selected regions and river basins, and is enhancing its climate modelling capabilities. Using IPCC reference scenarios, these downscaled climate projections of the main meteorological variables are very useful for adaptation policies, as well as for DRM. If this analysis made an interesting focus on public health impacts of climate change, they have not included a dedicated analysis on extreme events. Furthermore, the integration of climate change in hazard, exposure and vulnerability analysis is not taken into consideration in CENEPRED guidelines and products. This is an area to be improved for the future, with a potential for synergies between DRM and CCA, which could build on the on-going strengthening of SENAMIH’s capacities, supported by PP 0068 and development co-operation. In this respect, it will be important to build consensus on the main definitions of vulnerability and exposure, which can differ between MINAM and CENEPRED. Reaching a common understanding would be particularly useful for synergies to be effective.

Developing partnerships for user-driven climate services has also been a priority in Peru’s approaches to enhancing climate data and information. Aligned with Peru open data policy, risk-related data sets and information are made available on web-based information platforms, in order to facilitate access and dissemination and support decision-making. According to SINAGERD law, all the information produced by regional and local governments must be systematised in the Disaster Risk Management Information System (SIGRID), managed by CENEPRED. With an interactive geospatial map, SIGRID integrates all disaster related information. Similarly, SENAMHI is developing an interactive open-source web-platform that allows dissemination of climate information to decision-makers and the population - the Spatial Data Infrastructure (IDESE) - developed in the context of the Global Framework for Climate Services of the World Meteorological Organization (WMO).

Despite the availability of data and information, many local governments have not yet undertaken their risk assessment. While hazard information is largely available, information on exposure and vulnerability is less accessible, and the well-elaborated risk assessment methodology can be too complex for many local governments with limited capacities to use.

The multiplicity of information platforms to disseminate data and information can also create confusion, as these are not always using the same formats and standards. For instance, while the abovementioned platforms (SIGRID and IDESE) are proven to be useful, they are not layered with each other.

Peru has all the technical ingredients and capacities to better develop climate risk information tailored to the needs of decision-makers from the national to the local levels, from the different sectors. There is, however, potential for more a joined-up approach to best leverage this expertise, finalise the coverage of the territory and further promote user-driven services for climate resilience. Specifically, the country would benefit from further efforts to develop synergies between its technical institutions. In particular, enhanced co-ordination between CENEPRED, SENAMIH and ANA in provision and dissemination of climate services should be a priority for the next PLANAGERD and can be a good example of DRM and CCA coherence.

One approach to enhancing such a synergy would be to develop common standards and approaches, so that information systems and associated risk analysis are fully interoperable. There are already emerging good practices in such technical co-operation. The Technical Committee on early warning systems meets regularly to define a common approach to warning citizens for disaster risks. Similarly, the National Multi-sectoral Commission on the Study of El Niño (EFEN) also meets regularly to assess the strength of El Niño season. SENAMHI’s project to support climate change management is a good example, as it will lead to updates of the climate scenario and its impact on public health and water availability with MINSA and ANA.

Table 5.3. Main risk data and information system in Peru
Institution	Main risk data and information	Information system
CENEPRED	Disaster risk analysis Risk scenarios	Integrated disaster risk management system SIGRID
INDECI	Data and information on disaster occurrence and damages	National Information System for Response and Rehabilitation - SINPAD
SENAMHI	Hydro-meteorological hazards database Climate scenarios	Spatial data infrastructure portal IDEP
ANA	Identification of flood critical points Flood extension maps	Official water information system - SOFIA
Source: Author’s own

Implementing measures

Once risks are properly assessed, there are a range of measures governments can implement to address existing and future exposure and vulnerabilities to climate-related risks. In Peru, these measures are more advanced on DRM, given the now well-established SINAGERD. However, the on-going development of CCA measures, the modernised public investment programme and the focus on nature-based solutions and territorial development provide opportunities for increased synergies.

Resilient territorial and urban planning a priority for the future

Land-use and territorial planning are a fundamental element to build climate resilience in practice beyond the specific DRM and CCA measures. In the context of the rapid urban development taking place in Peru, avoiding construction in risk-prone areas is a major challenge. As in many OECD countries, territorial planning is a key responsibility of local governments. While both CCA and DRM legal frameworks call for the integration of climate resilience in the municipal concerted development plans, there is still limited implementation of these provisions: according to CENEPRED, only 3.52% of municipalities have integrated DRM into their development plans in 2017 following the specific guidelines for municipalities (CENEPRED, 2017[11]). Despite the on-going efforts supported by CENEPRED, many stakeholders consider the lack of precise risk information at the right scale for urban and territorial planning to be a key reason for this low rate. In addition, the absence of enforcement mechanisms combined with the lack of political support are also key to understanding why limited progress has been achieved so far.

The most powerful existing instrument in Peru is on resettlement for risk prone areas. The specific law on “population relocation in very high and non-mitigatable risk zones” N° 29869 provides the legal framework for resettlement. Local governments should develop a resettlement plan in these zones after a detailed technical analysis supervised by CENEPRED. The plans need to be approved by the Ministry of Housing, Public Works and Sanitation. While this legal instrument has been reinforced after El Niño Costero in 2017, there is limited evidence on the size of these resettlement processes in the country.

Several complementary instruments exist at the national level to support a climate resilient territorial and urban planning. However, different sectoral ministries and levels of governments manage these instruments (some examples are outlined below). This creates gaps in policy coherence and reduces their effectiveness in practice.

• First, the public investment system also applies to local governments, and has requirements on DRM and CCA that must be applied to access to public funds.

• Second, MINAM supports the development of environmental and economic zoning of the country at the regional level to guide sustainable development. 15 out of the 24 regions of the country have developed this zoning under MINAM guidance, which covers 52% of the national territory. Zoning is just a guiding instrument without a real enforcement mechanism.

• Third, the National Water Agency (ANA) has identified, mapped and delineated with watermarks buffer zones along the main water resources of the country, and regulates settlements within these risk-prone areas.

In this context, the national government recently decided to strengthen its territorial planning policy, by creating a new undersecretary within PCM dedicated to territorial planning. This would be a good opportunity to strengthen multi-sectoral co-ordination and better link territorial planning with DRM and CCA.

The lack of co-ordination between central and national governments and the mismatch of responsibilities between sectors make it particularly complex to operationalise in land-use and territorial planning policies (OECD, 2016[16]). Better articulating the various existing instruments with clear objectives and standards on DRM and CCA, would greatly help improve climate resilience in Peru. The on-going update of the national cadastral information financed through PP 0068 will provide the necessary basic information for this purpose.

The potential of nature-based solutions for increased synergies between DRM and CCA

Nature-based solutions, which involve working with nature to enhance ecosystem services (such as the flood retention capacity of forests), can provide effective ways to increase resilience and appear as an area of convergence between CCA and DRM in Peru. As one of the most ecologically diverse countries in the world, Peru can therefore benefit from their rich natural heritage in addressing climate resilience challenges. Measures such as the reforestation of upper water catchment and riverine flood control through the development of riparian buffers or wetlands can provide cost effective and multi-beneficial complements or alternatives to traditional grey infrastructures. The flexibility and greater adaptation capability to change is also a strong argument to favour these types of solutions.

In order to promote the use of those measures, MINAM, as the lead ministry supporting nature-based solutions, has been particularly attentive to their incorporation into CCA and DRM policy instruments. There is specific reference to the use of nature-based solutions in the NDC across the various sectors, which provides a good basis for further implementation of such measures.

PCM also recognises that this area would be a major domain for co-operation with MINAM, and has adopted a specific DRM-related budget line to nature-based solutions. Similarly, MINAM has co-operated with the MEF so that the public investment programme invierte.pe recognises the importance of nature-based solutions to achieve greater social benefits, and the multipurpose nature of these green solutions was a good fit with promotion of multipurpose approaches under invierte.pe. According to the MEF project bank, between 2015 and 2018, public investment projects in nature-based solutions reached USD 300 million in Peru in 209 projects. MINAM guidelines on Public investment in biodiversity and ecosystem services proved to be particularly useful to foster the development of those projects. The upcoming PLANAGERD should also ideally further promote these types of approaches as a domain for important synergies with CCA.

Post-disaster reconstruction, an opportunity to reinforce climate resilience

In the aftermath of disasters, the reconstruction process, if properly conducted, can provide an important opportunity to strengthen resilience, commonly known as “Build Back Better” that is also reflected in the Sendai Framework. Peru provides an interesting example of such an approach as it created in 2017 the Authority for Reconstruction with Changes (ARRC) to implement a resilient reconstruction process in the aftermath of the damaging 2017 El Niño costero. Created as an autonomous authority under PCM to implement comprehensive reconstruction plans in the 13 regions affected by this climate-related disaster, ARRC was allocated a specific – and significant - budget of USD 7.8 billion to rebuild public infrastructure and housing as well as to finance risk mitigation measures. The reconstruction plan identified more than 12 000 interventions, 73% corresponding to the reconstruction of infrastructure, 21% to disaster risk prevention and 4% for housing (PCM, 2019[17]). This represents a significant amount of investment in prevention overall, which was mostly used to implement comprehensive flood control projects in 19 coastal rivers.

Despite the adoption of the process, implementation gaps have so far limited this positive impact on resilience. Time delays, political pressures and capacity gaps have not allowed a comprehensive analysis of where and how to rebuild in a more resilient way. The identification of very high and non-mitigatable risk zones was particularly difficult given the impact it would have on population having to move to new neighbourhoods. The disbursement has been particularly slow - with only 36% of the allocated budget transferred by the middle of 2019, leading to doubts among stakeholders about its effectiveness and integrity.

Given the high public expectations for a rapid reconstruction process, the ARRC could indeed operate with a simplified investment process, outside of invierte.pe. The direct control of the General Comptroller of the Republic of Peru as well as participatory oversight with the affected population under the process “we monitor the reconstruction with you” have contributed to reinforced transparency and accountability. Nevertheless, there remain inherent tensions between rapid recovery needs and thorough risk analyses for the formulation of resilient projects in reconstruction processes. While the 2017 El Niño was particularly damaging, necessitating the creation of this ad-hoc structure bypassing existing institutions and regulations, lessons should be learned so that future reconstruction processes have clearer rules of engagement and favour resilience not only through specific DRM projects, but more broadly in the overall reconstruction plan.

Monitoring and Evaluation in DRM and CCA

Peru has established a thorough monitoring and evaluation system with the aim of supporting implementation of DRM policies, but there is limited evidence on how monitoring and evaluation results are used in practice to inform improvement of the policies. The development of the next DRM plan of action is an opportunity to make best use of the monitoring and evaluation process for its main aim: to improve policies.

From the onset, the PLANAGERD 2014-2021 defined short, medium and long term indicators to monitor the implementation of the overall action plan and its six national objectives and PCM conducted a baseline analysis to measure these indicators in 2012 (see Table 5.4). A dedicated monitoring information system, called SIMSE, is managed by CENEPRED. It conducts a yearly survey on the implementation of the DRM policies by the three levels of governments, monitoring all the actions with 91 indicators. The survey process is well designed and receives in general a good response rate – 1 309 public entities, out of 1 964, responded to the survey in 2017. However, the quality of the responses received and the lack of evidence behind it create challenges to obtaining meaningful information.

The results of the yearly survey are demonstrating the large gap between national objectives and local level implementation, with for instance only a few local governments having integrated DRM in their local development or budget plans, or performed risk assessments. In addition to this survey, the budget programme for results also has its set of indicators, but these are more linked to outputs than outcomes. In this respect, while this elaborated monitoring system has strengths, it is unclear how it is used in practice to inform priority setting.

Table 5.4. Peru’s DRM objectives and indicators
DRM Objective	Indicator	2012 Baseline
Overall objective
Reduce the vulnerability of the population and their livelihoods to disaster risk	% of the population in vulnerability conditions	61%
Strategic objective
Develop risk knowledge	% of SINAGERD entities that generate and register information and risk studies in the National Information System	0%
Prevent and reduce risk conditions of the population livelihoods with a territorial approach	% of SINAGERD entities that implement structural and non-structural measures for risk reduction	8,2%
Develop response capacity to emergency and disasters	% SINAGERD entities that implements preparedness measures	7,8%
Strengthen rehabilitation and physical, social and economic recovery capacities	% SINAGERD entities that implements recovery measures	0%
Strengthen institutional capacities for DRM	% SINAGERD entities that includes DRM in their organisations and roles.	3,2%
Strengthen the participation of the population and civil society for the development of a prevention culture	% of population that participates in DRM activities	3%
Source: Authors’ elaboration based on (PCM, 2018[7])

Development of a monitoring and evaluation system for CCA measures is still under way as of July 2019, but could offer an opportunity to enhance coherence between CCA and DRM. Peru is currently working on its National Adaptation Plan and the last phase of its road map concerns the development of a monitoring and evaluation system. This phase has been completed with the development of 151 indicators, goals and baselines. 151 indicators related to the 91 adaptation measures contribute to the overall objective of “increasing the State, population and economic agents’ awareness and adaptive capacity of action to the adverse effects and opportunities of climate change”. Each of the overall outcome-based indicators foreseen has a DRM component, which shows how much CCA actions can be linked to DRM. MINAM is about to adopt the indicators and establish a monitoring system as part of the Environment Information National System (SINIA). At the same time it will be important to build on indicators under the Disaster Risk Management Information System (SIGRID) and its reporting process to avoid redundancies, which would have benefits for the implementation of both policies. Efforts should also be made to align this monitoring system with the SDGs reporting process under development by the National Institute of Statistics and Informatics (INEI).

Focus on public finance for DRM and CCA

Prioritisation of investments in DRM and CCA measures

With specific budget line on “Disaster vulnerability reduction and emergency preparedness” of the Peruvian budget programme for results (called PP0068), Peru has a comprehensive tool to allocate DRM budget priorities established in PLANAGERD across different levels of the government (see Figure 5.2). For projects to be financed through PP0068, they need to follow PLANAGERD priorities and feed in the various project categories promoting structural and non-structural measures across the DRM cycle. These measures include: risk assessment, protective measures and early warning systems, among others. Under the co-ordination of PCM, the Multi-sectoral Commission of the programme defines for each budget cycle the priorities for DRM public investments and activities based on the results obtained in PLANAGERD implementation and the identification of problems in each thematic area.

Since its creation in 2012, this budget programme has allocated 18 billion Peruvian soles (USD 5.4 billion) on average or 2.25 billion soles per year (USD 675 million). According to PCM, out of this programme, 67.9% of the financing goes to ex-ante prevention and preparedness measures compared to post-disaster response. The share of these DRM investments and activities devoted to climate-related risks compared to other types of natural hazards is not directly accessible and many of these projects have a multi-risks approach. Nevertheless, climate-related risks constitute a significant part. For instance, in 2017, with the El Niño Costero event, a large part of the programme was devoted to structural protective measures against floods and heavy rains. There is no evidence that those structural projects integrated climate change uncertainties. This is a significant missed opportunity to strengthen the resilience of these investments to future climate impacts.

Figure 5.2. Alignment of PLANAGERD objectives with the activities and products of PP 0068

Source: Authors’ elaboration based on (PCM, 2019[3]).

Access to this fund is also contingent on the existence of DRM strategies and plans, based on risk assessments. This is a powerful incentive for the development of risk knowledge and planning, which can also be financed through this programme.

Regarding climate change, the priority adaptation actions identified through the NDC Working Group on the five priority sectors (water, forestry, agriculture, fisheries and health) include around 25% of DRM-related activities. Complementary to the PP0068 actions, these activities have brought additional types of actions in sectors that have not received much attention of PLANAGERD, such as the fishery sector, which is key to the Peruvian economy. The prioritisation process followed a methodology based on the public value chain from problem identification to addressing their root causes and effects. In addition, the NDC development process undertook economic evaluations, demonstrating the social profitability of adaptation measures and the avoided losses they would generate. Such evaluations could be further implemented in the context of other DRM projects and of PP0068.

Finance allocated through PP 0068 has steadily increased since its creation in 2012 (Figure 5.3). Yearly budget discussions are informed by the results obtained in the previous year, as well as by risk scenarios for the year to come, particularly regarding the forecasted strength of the El Niño phenomena. For instance, in 2016, the initial budget was doubled compared to the previous year, reaching 2.1 billion Peruvian soles, to prepare for the intense El Niño predictions. There is some flexibility to adjust to the needs throughout the year and reallocate funding towards emergency responses and disaster management once a disaster has occurred, as shown by the important difference that can be noticed between the initial budget allocation and the modified budget. All in all, this ex-ante funding for DRM in Peru amounting a yearly average of USD 675 million appears significant and reflects the national DRM priority. However, with an estimated average disaster loss valued at USD 4 billion in Peru (PreventionWeb, 2014[18]), there might be a need to continue increasing this budget if risk reduction goals are to be achieved.

Figure 5.3. Allocation of initial and modified budget of Programme 0068 (2011 – 2019)

Note: PIA is the initial budget, PIM is the modified budget – in million Peruvian soles

Source: Based on information provided in (PCM, 2019[17]).

Public investment system invierte.pe

In 2017, Peru revised its public investment policy to simplify the process of accessing funds and focus on citizen-centred service delivery. This standardised public investment system, co-ordinated by the MEF, applies a project life cycle approach from multi-year programming, project formulation and evaluation, execution and operational stage.

As a result of the reform, Peru has created invierte.pe that has a series of innovative features outlined below, which potentially favour investments in DRM and CCA measures:

• it applies a social discount rate that takes into consideration long term benefits of investment projects, such as those of improved climate resilience;

• it incentivises multi-purpose investments so projects integrating a DRM or CCA purpose in addition to targeting other social benefits can be positively ranked;

• it makes ex-post evaluation a priority, which can favour resilient projects given the high-risk exposure of the country – as non-resilient projects may have been affected by disasters compared to non-resilient ones; and,

• it considers nature-based solutions amongst the types of projects for public investments

While the innovations within invierte.pe are a positive step for DRM and CCA, the simplification process has lowered the level of expectations related to pre-investment risk analysis. As highlighted by UNDDR, since 2011, the previous public investment system was specifically mentioning minimum DRM and CCA requirements in its guidelines for pre investment and feasibility studies. Risk analysis had to be conducted for all projects with attention to hazard, vulnerability and exposure, levels of resilience and risk management measures (UNDRR, 2015[19]). These requirements were increasingly taken into consideration – the number of public investment projects having identified hazards in the project area increased from 8% to 13% between 2012 and 2014.

In comparison, while invierte.pe refers to DRM in a climate change context in its specifications, this is very generic and, two years after its creation, there are no dedicated guidelines yet for project formulation units. Guidelines could help bridge capacity gaps to some extent while there remains the need for enhancing the capacity in project development of these units. While in this new system the responsibility has been transferred to the line Ministries to produce such guidelines that are specific to their sector, these documents have not been developed yet. While a key objective of developing invierte.pe was to reduce time for, and cost of, project formulation and assessment, climate resilience should remain an important element of the system, and developing these sectoral guidelines should therefore be a priority. In this regard, the health sector is a model to follow (Box 5.2), as the Ministry of Health has collaborated with MINAM and CENEPRED to develop these guidelines. This demonstrates that the joint work on climate change conducted by MINAM has generated practical results towards better coherence between CCA and DRM in the priority sectors for adaptation, such as the health sector.

Box 5.2. Incorporating risk management in a climate change context in the health sector

Health consequences of disasters and climate change impact on public health are important issues in Peru, as demonstrated by El Niño Costero in 2017. Significant efforts are underway in the health sector to strengthen climate resilience, in areas such as the resilience of health infrastructure to disasters, the development of early warning systems in partnership with SENAMIH for heatwaves and infectious diseases and by dedicating sectoral budget for identified adaptation measures.

The Ministry of Health has drafted a guideline that incorporates DRM in a context of climate change in the process of formulating public investment projects. These guidelines highlight particular issues that allow the alignment between DRM and CCA, such as: investment sustainability for DRM in CCA, climate change risks and health, risk analysis for corrective and prospective management, risk management in climate change and recommendations to risk management in a climate change context in health establishment.

Furthermore, the Ministry of Health is implementing a programme named Safe Hospitals “Hospitales Seguros” aimed at supporting the resilience of health institutions with a dedicated work programme for the period 2017-2021.

Source: (MINSA, 2017[20])

A comprehensive strategy for financial protection against disasters

In the context of SINAGERD, Peru developed a comprehensive strategy for financial protection against disasters in co-operation with the World Bank, Switzerland and other development partners (World Bank and Ministry of Economy and Finance, 2016[21]). The strategy includes dedicated instruments covering the entire risk management cycle from ex-ante investment in prevention and preparedness to ex post recovery and reconstruction. The strategy is managed by the Ministry of Economy and Finance (MEF) together with PCM. It also combines budget allocations through the PP0068, public investments under invierte.pe, sub-national-level budgets and ex-post financing through contingency reserves and credit lines. In addition, the MEF intends to develop climate risk transfer instruments in the context of the Pacific Alliance, which Peru formed with Mexico and Colombia. As for climate change adaptation, there is not yet a dedicated financial strategy, but the identification of potential funding sources and mechanisms done during the NDC process provides avenues for synergies with DRM.

Regarding ex-post financing and beyond budget reallocations, Peru can count on a contingency reserve, the use of the Fiscal Stabilisation Fund, as well as contingent credit lines, which demonstrates the abovementioned comprehensive financing strategy for disasters. The contingency reserve managed by the Institute of Civil Defence (INDECI) has quick disbursement channels to finance emergency recovery and immediate preparedness for major disasters, and has disbursed around USD 12 million on average per year since 2003 (OECD/The World Bank, 2019[22]). The Fiscal Stabilisation Fund can be used when a major emergency is declared and a macroeconomic assessment demonstrates the impact on the country’s fiscal stability (World Bank, 2016[23]).

The diversity of financial coverage tools available in Peru in case of disasters reflects its strategic approach to DRM financing, but it appears to be based more on opportunities than on a robust assessment of explicit and implicit contingent liabilities. A thorough multi-hazard probabilistic risk analysis would better support the tailoring of these various instruments to the country’s needs, especially if climate change is to be taken into consideration. The creation of the “Intervention Fund against the occurrence of natural disasters (FONDES)” to better manage and allocate these diverse financial resources is a promising way for streamlining and strengthening the coherence of these financial instruments.

Regarding adaptation to climate change, there is not yet a financial strategy in place nor a specific budget programme, implying a potential challenge ahead for implementation. However, the working group on the NDC identified a series of financial tools which could be mobilised to finance adaptation measures in each of the different priority sectors. As the tools identified include the various DRM financing instruments just described, from PP 0068 to FONIPREL and FONDES, there is a clear potential for synergies between these instruments in areas of common interest. In the on-going reflections for the by-law of the framework law on climate change, whether a dedicated budget programme for climate change will be needed has both pros and cons. While it would certainly support the good dynamic on climate change policy in Peru at the moment and reinforce MINAM as its co-ordinator, there is a risk when it comes to synergies with DRM to increase the complexity of the instruments available for financing both policies. There would be benefits to consolidate the existing DRM financing tools by incorporating further climate change adaptation to best ensure synergies. For instance, it would be important to integrate the long term perspective of climate change impacts in the design of the disaster risk financing instruments, so that Peru best prepares itself to the climate shocks foreseen in the future and has a more forward looking financing strategy for their management. The on-going development of a pilot climate financing strategy for one of the targeted sectors in 2020 will be a good opportunity to further explore those synergies.

Another interesting area for convergence relates to the development of the insurance market for climate-related risks. In Peru, a subsidised programme, called the Catastrophic Agriculture Insurance (SAC), is a partnership between the Ministry of Agriculture and the private insurer La Positiva. The SAC does not cover all costs of production or the total estimated losses which may be caused by a catastrophic event. Its objective is to provide a basic compensation that increases the capacity of the more vulnerable farmers to cope with the negative impacts of an extreme weather event, in concrete, which allows them to replant and recover the potential income of their agricultural work. From 2009 to 2015, the SAC has been implemented in eight departments and has insured on average 425,300 hectares of farm land (MINAGRI, 2015[24]). There are further prospects to develop climate risk insurance in the different sectors of the country, with the association of Peruvian insurers APESEG, but there has not been major progress up to now.

The role of development co-operation

Peru has engaged with development co-operation partners in various areas that relate to coherence between CCA and DRM, for instance, developing DRM and CCA policies, enhancing capacity of national and local governments, establishing disaster risk finance mechanisms, piloting innovative approaches and exchanging good practices. Bilateral and multilateral development co-operation providers have been active in this area as climate resilience is high in their strategic priority for the country. Peru, Switzerland, the World Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR) collaborated to develop a comprehensive strategy for financial protection against disasters (World Bank and Ministry of Economy and Finance, 2016[21]).

Complementing various national financial mechanisms put in place, several multilateral and bilateral providers of development finance have extended contingent credit lines to Peru against disasters (Table 5.5). The committed volume amounted to a total of USD 4 billion between 2016 and 2019, providing liquidity in the event of a disaster. The World Bank also worked with the Ministry of Economy and Finance on developing risk transfer instruments in the context of the disaster initiative of the Pacific Alliance. A first parametric cat-bond for earthquakes was issued in 2018 for USD 200 million, and there is a potential to develop a similar product for extreme-weather events. The roles of the World Bank in developing and applying these market-based financial instruments include leveraging its high credit rating (e.g. AAA rating for the IBRD) to attract a greater number of investors and lower premium rates (World Bank, 2019[25]).

Table 5.5. Peru’s contingent credit lines
Lending institution/ issue date/ loan type	Loan amount (million USD)	Expiration
Inter-American Development (IDB) 2015 - Catastrophe Deferred Drawdown Option (CAT DDO)	300	2018
World Bank 2016 – human capital (DDO)	1 250	2019
World Bank 2016 – fiscal risk (DDO)	1 250	2019
World Bank 2010 – risk management (CAT DDO)	100	2016
CAF–Development Bank of Latin America 2013 – natural disasters	300	2016
IDB 2013 – natural disaster emergencies	300	2019
Japan International Cooperation Agency (JICA) 2014 – natural disasters	100	2017
World Bank 2015 – risk management (CAT DDO)	400	2018
TOTAL	4 000
Source: (OECD/The World Bank, 2019[22])

Over the period from 2013 to 2017, bilateral and multilateral providers committed USD 2.86 billion of climate-related development finance to Peru, according to data reported to the OECD CRS. Of the total climate-related development finance, 21.6% (or USD 619 million) targeted adaptation measures and 11.5% (USD 330 million) targeted both mitigation and adaptation. USD 204 million (or 22.5%) of adaptation-related development finance was committed to three sub-sectors related to DRM, namely: disaster prevention and preparedness (4.9% of the total adaptation finance), flood prevention and control (6.7%) and reconstruction relief and rehabilitation (9.9%) (OECD, n.d.[26]).

The co-ordinating role of MINAM in CCA, and PCM in DRM, has been key to facilitate alignment between development co-operation and Peru’s national priorities for DRM and CCA. The Integral Management of Climate Change, for example, consists of multiple arrangements for implementation of Peru’s NDC, including promotion of engagement with development co-operation, the private sector, indigenous people, civil society, academia and other actors. Another example is the roundtable to fight poverty as a forum where both development co-operation partners and the different sectors of the government met to ensure proper alignment and co-ordination.

Co-ordination and alignment between development co-operation and the national priorities remain more challenging at the local level where the diversity of development co-operation projects has not always been tracked comprehensively by the national government. The Ministry of the Economy and Finance is initiating the development of a monitoring and evaluation system for development co-operation projects, which could contribute to a clearer view and greater co-ordination of their support. There are also challenges related to coherence between the DRM and CCA agendas within development co-ordination providers. Their initiatives on DRM and CCA are not always co-ordinated or aligned in their approach among themselves, which could favour the existing separated approaches in the country.

Development co-operation fosters the use of innovative approaches in Peru, such as to nature-based solutions for CCA and DRM, or climate resilient infrastructure as part of their co-operation approach, in order to demonstrate their value and transfer knowledge and know-how.

Going forward to best leverage development cooperation support to a climate resilient Peru, fostering the exchange of knowledge and access to international development finance from the Green Climate Fund and private sector investment appear as key approaches. As an upper-middle income country, Peru needs to further explore ways in which it can more wisely use development finance for CCA and DRM. Promoting DRM and CCA in public investment projects as in cooperation projects would be an area of joint learning for development cooperation partners and the Peruvian DRM and CCA stakeholders.

Annex 5.A. Stakeholders interviewed

Ministry of the Environment
Presidency of the Council of Ministers
Ministry of the Economy and Finance
National Centre for Disaster Assessment, Prevention and Reduction
National Institute of Civil Defence
Ministry of Health
Ministry of Housing, Sanitation and Public Works
Ministry of Agriculture
Ministry of Education
Ministry of Energy and Mining
National Water Agency
National Service of Meteorology and Hydrology
National Institute of Glaciology and Mountainous Ecosystems
National Forestry Service
National Nature Conservation Service
World Bank
Swiss Development Cooperation
GIZ
Japanese International Cooperation Agency
United Nations development Programme

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[17] PCM (2019), Plan Integral para la Reconstrucción con Cambios (PIRCC), Presidencia del Consejo de Ministros (PCM), Lima, http://www.rcc.gob.pe/plan-integral-de-la-reconstruccion-con-cambios/ (accessed 17 March 2020).

[3] PCM (2019), Programa Presupuestal de reduccion de la Vulnerabilidad y Atencion de Emergencias por Desastres -PREVAED- Contenidos Minimos, Presidencia del Consejo de Ministros (PCM), Lima.

[7] PCM (2018), Estrategia de Implementación del Plan Nacional de Gestión del Riesgo de Desastres – PLANAGERD 2014-2021, PCM, Lima, http://www.pcm.gob.pe/wp-content/uploads/2018/07/TEXTO-ESTRATEGIA-IMPLEMENTACION-PLANAGERD.pdf (accessed 17 March 2020).

[18] PreventionWeb (2014), Peru Basic Country Statistics and Indicators (2014), https://www.preventionweb.net/english/hyogo/gar/2015/en/home/data.php?iso=PER (accessed 17 March 2020).

[4] SENAMHI (2014), Regionalización Estadística de Escenarios Climáticos en Perú, Servicio Nacional de Meteorología e Hidrología del Perú (SENAMHI), Lima, http://www.fao.org/3/a-bt558s.pdf (accessed 17 March 2020).

[19] UNDRR (2015), Review of Peru Interim Report: Working Paper on Public Investment Planning and Financing Strategy for Disaster Risk Reduction, United Nations Office for Disaster Risk Reduction (UNDRR), Geneva, https://www.undrr.org/publication/unisdr-working-papers-public-investment-planning-and-financing-strategy-disaster-risk-1 (accessed 17 March 2020).

[25] World Bank (2019), Super-sized Catastrophe Bond for Earthquake Risk in Latin America Background, World Bank Group, Lima, http://pubdocs.worldbank.org/en/192341554318525877/case-study-financial-products-Pacific-Alliance-final-4-1-2019.pdf (accessed on 13 November 2019).

[23] World Bank (2016), Perú: Estrategia Integral De Protección Financiera Ante El Riesgo De Desastres Asociados a Fenómenos Naturales, World Bank Group, Washington DC, http://documents.worldbank.org/curated/en/770641470123157437/pdf/107353-WP-PUBLIC-SPANISH.pdf (accessed 17 March 2020).

[21] World Bank and Ministry of Economy and Finance (2016), Peru: a Comprehensive Strategy for Financial Protection against Natural Disasters, World Bank Group, Washington DC, http://documents.worldbank.org/curated/en/718281475183108912/Peru-a-comprehensive-strategy-for-financial-protection-against-natural-disasters (accessed 17 March 2020).

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← 1. Disaster risk management (DRM) is used in this chapter rather than disaster risk reduction (DRR) used in Part I since DRM is better aligned with the terminology used in relevant policy documents in Peru as demonstrated by the National Disaster Risk Management System (SINAGERD).