Testing the Solidarity Fund for Romania and Eastern Europe
This case study examined the EU Solidarity Fund from the perspective of Romania and asked whether money paid after floods and earthquakes could be turned into an instrument that rewards prevention beforehand.
- Region: Romania and Eastern Europe, with the EU as a whole
- Hazards: floods and earthquakes, with landslides, forest fires, storms and droughts also listed
- Period: the EU Solidarity Fund since 2002, its reform in 2014, and stakeholder workshops in 2014 and 2015
- Partners as printed: Bucharest University of Economic Studies (ASE), IIASA (contact, with Stefan Hochrainer), and Europa Re (Europa Reinsurance Facility Ltd); an earlier version also listed UNISDR, Perspectives GmbH, the European Commission’s DG Regio and DG CLIMA, and the World Bank
The EU Solidarity Fund (EUSF) has supported countries after major disasters since 2002, with over EUR 3.7 billion paid across 63 disasters by the time of the study. The case raised a concern about moral hazard: aid that arrives after a disaster can weaken the incentive to prevent one. The team’s proposal was to reorient the EUSF towards a risk-based instrument used before disasters.
It also looked at how the fund might interact with Europa Re, a catastrophe reinsurer based in Switzerland and owned by Albania, FYR Macedonia and Serbia.
For Romania the team built two scenarios:
- one in which risk-reduction measures are taken before a disaster;
- one in which the EUSF intervenes under conditions as they stood.
Progress over the project included flood loss estimates for Romania and the EU, interviews with stakeholders, a public hearing with EU policymakers in January 2014, a workshop in Bucharest with IIASA in October 2014, and a workshop in Brussels planned for 2015.
How the fund works, and how much it has paid out, is covered in the article on EU solidarity in disasters. The other cases are in the case-study atlas.