France

Prevalence of natural hazards

Due to its diverse topography and distinct climates, France is exposed to a wide range of natural hazards. Mainland France is surrounded by long coastlines, major river systems such as the Seine and the Rhône as well as mountain ranges, including the Pyrenees and the Alps, characterise France’s territory. The overseas regions and departments (régions d’outre-mer ROM and départements d’outre-mer, DOM)1 are characterised by their tropical climate, with some of them home to active volcanoes (French Antilles, la Réunion) (OECD, 2017).

Types of natural hazards to which France is exposed

Natural hazard category

Types of natural hazards

Geophysical

Earthquakes, tsunamis, volcanic activity (French Antilles, La Réunion)

Hydrological

Floods; storm surge; landslides; avalanches

Meteorological

Storms; hurricanes, extreme temperatures

Climatological

Droughts; forest fires

Source: EM-DAT, 2017; OECD Survey response.

Major natural disasters in France since 1980

Disaster event/location

Year

Fatalities

People Affected

Estimated damage (in USD) billion

Storms Martin and Lothar & subsequent landslides/ South-western and Western France

1999

92

> 3 400 000

8.5

Storms Xynthia/ South-western France

2010

53

500 079

4.2

Storms Daria/ Western and North-Eastern France

1990

10

-

4

Flood/ Ile-de-France and North-eastern France

2016

5

-

2.4

Hurricanes Irma and Maria/ French Antilles

2017

13

-

2.4

Heat wave/ mainland France

2003

19 490

1.5

Rhône Floods/ South-eastern France

2003

-

> 32 000

1.8

Source: EM-DAT, 2017; OECD Survey response; CCR, 2017.

Storms and hurricanes threaten both metropolitan France and the overseas territories. Storm Lothar in 1999 caused around USD 8 billion in damages and left 88 people dead. Storm Xynthia caused 53 casualties and USD 4.2 billion in damages (EM-DAT, 2017).

Floods occur throughout the year, and often follow major storms. The 2016 floods that affected the Paris region and North-Eastern France resulted in an estimated USD 2.4 billion in damages. The 2003 Rhône floods were geographically more limited, but nonetheless resulted in damages of around USD 1.8 billion (OECD, 2017).

Although not as frequent as floods and storms, heatwaves and earthquakes pose a significant threat. The 2003 European heatwave, for instance, struck France particularly strongly, resulting in an estimated 19,000 casualties. While no major earthquake has occurred in recent years, seismic risk in the region of Provence-Alpes-Côte d’Azur is high (OECD, 2017).

Past fiscal impact of disasters

Annual average losses caused by disasters are estimated at USD 1.24 million, corresponding to 0.05% of annual GDP between 1980 and 20162 (EM-DAT, 2017). For hazards with a 500-year return period, the overall maximum probable loss has been estimated at USD 23.5 billion, with a 500-year earthquake alone expected to cause USD 20 billion in damages, and a 500-year storm USD 3.5 billion (PreventionWeb, 2017).

Since its creation in 1982, the CATNAT (Catastrophes Naturelles) public-private insurance partnership scheme, paid out annually, on average, around USD 1.2 billion to compensate for disaster damages (CCR, 2016a). To ensure liquidity in case of a major disaster the CATNAT is backed by a state guarantee. So far, the government only had to step in once, in 2000, when the government injected about USD 250 million3 to meet outstanding payment requests in response to storms Martin and Lothar from the previous year.

In addition to the CATNAT scheme, several disaster assistance and emergency response programmes financed by the central government are in place. Following the 2016 Seine and Loire floods, for instance, affected households, businesses and subnational governments across eight affected departments received a total of around USD 100 million (EUR 81 million) through the solidarity provisions for local authorities, the emergency relief fund as well as assistance for the private sector, and the subnational emergency rehousing fund4 (Perrin et al., 2017).

Public assistance following the 2016 Seine and Loire floods
Public assistance following the 2016 Seine and Loire floods

Note: Data has been compiled by the DGSCGC and completed by prefectures. Data for Paris, which was also affected by the 2016 Seine floods, was not available.

Source: Perrin et al. 2017.

To enable the recovery from hurricanes Maria and Irma in late 2017, the central government provided an estimated USD 625 million in assistance, including via the relief fund for overseas territories (Fonds de secours pour l'Outre-mer, FSOM) through which USD 24 million were channelled to affected households (Cour de Comptes, 2017). One third of the assistance was provided in the form of emergency assistance, the remainder was earmarked for disaster reconstruction (USD 100 million in reconstruction loans) and economic support (Government of France, 2018). Following the decision of an inter-ministerial committee for the reconstruction of the affected islands, an additional about USD 170 million was provided to affected businesses and households. Much of this was spent via the special unemployment assistance (Activité partielle) scheme, with up to USD 12,500 available to individual businesses making use of this scheme (USD 3.4 millions). In addition, the maximum hours eligible for support under the special unemployment assistance scheme were increased by 60 percent to 1600 hours, which along with vocational trainings offered to affected employees at full salary totals up to around USD 57 to 94 million in additional costs to the French government. To further support business recovery, the government allowed companies to pause tax and social debt payments for several months, and put employers' social security contributions on hold until November 2018, with the possibility of abandoning claims and staggering payment for 5 years starting 2020 (summing up to USD 56 million). Households were eligible for exceptional public assistance, such as USD 63 per child/ total of USD 250 per family, and 4200 households on Saint-Martin and Saint-Barthélemy received cash cards of about USD 375 per adult and USD 125 per child, summing up to USD 2.5 million in costs to the French government. To support sub-national authorities in the recovery efforts, the central government provided around USD 80 million in financial assistance to the two affected overseas local governments5 (Le Monde, 2018; Government of France, 2018).

In France, subnational governments have an important role in supporting households and businesses affected by disasters in their recovery. Subnational governments may directly make assistance to households and businesses available, for instance through welfare payments from Community Centres for Social Action (Centres communal d'action sociale, CCAS). County councils (conseils départementaux) and regional councils (conseils régionaux) may also provide assistance for the recovery of affected individuals, as has been the case in the aftermath of the 2016 Seine and Loire floods: The Loir-et-Cher department council, for instance, provided USD 619,000 to municipalities, who then disbursed the assistance to affected households. An additional USD 250,000 was provided to Romorantin-Lantehnay, a particularly affected commune in Loir-et-Cher (Perrin et al., 2017). On the other hand, sub-national authorities channel the above-mentioned assistance from central government sources to affected households and businesses (Perrin et al., 2017).

While public spending for disaster recovery and reconstruction for some major disasters, such as hurricanes Maria and Irma, may at times be considerable, central and sub-national governments have also engaged substantial resources in ex ante disaster risk management. The Fund for the Prevention of Major Natural Hazards (Fonds de Prévention des Risques Naturels Majeurs, FPRNM) or short Barnier Fund (Fonds Barnier) is the principal instrument for co-funding disaster risk prevention measures. Central government co-funding generally ranges between 100% for non-structural measures to 40-50% for structural measures. The Barnier Fund has consistently retained about USD 220 million for disaster risk prevention, but disbursement varies in line with prevention policy priorities and disaster recovery and reconstruction needs. For 2018, available funding has been reduced to about USD 162 million, down from around USD 245 million in 2017 (Sénat, 2018a). Budgetary programme 181 foresees an additional USD 270 million in central government financing for ex ante disaster risk management measures in 2018, representing a 1.5 percent increase from 2017 to 2018 (Sénat, 2018b).

Barnier Fund budget and forecast, 2008-2015
Barnier Fund budget and forecast, 2008-2015

Note: Outlays do not include management fees. 2016 outlays include a compensation of EUR 55 million in 2016 and EUR 70 million in 2017 to the state budget.

Source: Sénat, 2018b.

Overall detailed disaster risk prevention investment records are difficult to establish, but a one-off study from 2009 shows that the central government provided around USD 407 million for ex ante disaster risk management in that year. Flood-related expenditures accounted for nearly half of that. Co-financing from sub-national governments provided an additional USD 292 million in 2009. Records for sub-national investments into measures that did not receive central government co-financing are not regularly compiled, but the draft budget for 2018 suggests that sub-national governments have earmarked around USD 1.2 million for flood risk management measures without co-funding in 2018 (Nicklaus et al., 2013; Sénat, 2018a).

2009 Central government ex ante disaster management spending

Hazards

Central government expenditure (in EUR million)

% of total expenditure

Floods

155

46

Earthquakes

62

18

Forest fires

41

12

Avalanches

5

1

Multi-risks

77

23

Source: Nicklaus et al., 2013.

Managing disaster-related contingent liabilities

Identification of disaster-related contingent liabilities

Explicit contingent liabilities

Explicit contingent liabilities arise from payment obligations that are based on laws, or clear policy commitments that could fall due in the event of a disaster. Even though various public recovery assistance instruments are available in France, the authorities noted few explicit obligations related to disaster response and recovery.

Explicit central government obligations for post-disaster financial assistance in France

Commitment to finance…

Yes

No

… post-disaster response and recovery

… a share of the costs incurred by subnational governments for post-disaster response and recovery

… reconstruction and maintenance of central government-owned public assets

… rehabilitation and reconstruction of private assets

X

… other expenses incurred by subnational governments (e.g. payments to businesses or individuals)

… government guarantees for disaster losses incurred by public corporations and public-private partnerships

Source: OECD Survey; Collectivités locales, 2017a, b.

The CATNAT insurance scheme is a key element of France’s disaster recovery financing framework. To prevent illiquidity in case a major disaster triggers insurance pay-outs beyond available reserves, the central government provides a state guarantee sourced from the general budget. If claims exceed 90% of the special reserve and annually defined equalisation reserves, the government is required to step in (OECD, 2017; CCR, 2015; Grislain-Letrémy and Calvet, 2012).

CATNAT insurance scheme – a public-private partnership for disaster compensation & prevention

CATNAT is a public-private mutual-based insurance scheme inscribed in France’s constitutional principle of solidarity. The CATNAT scheme was established in 1982 to offset shortcomings of the insurance market by providing insurance for all individuals and businesses against hazards otherwise considered ‘uninsurable’, i.e. hazards concentrated on a limited area, such as flooding, avalanches, volcanic activity or earthquakes.

Funding for the CATNAT comes from an additional premium at mandatory uniform state-fixed rate for all property insurance policies as well as for motor vehicle insurances, irrespective of its exposure to natural hazards. Initially established at 5.5%, the premium has now risen to 12% for all-risk home and business insurance and 6% for motor vehicle insurances. The proceeds go to the CATNAT reserve.

To prevent illiquidity in case a major disaster triggers insurance pay-outs beyond available reserves, the central government provides a state guarantee sourced from the general budget. The state guarantee given to the CCR turns the CATNAT insurance scheme into an explicit disaster-related liability. If claims exceed 90% of the special reserve and annually defined equalisation reserves, the government is required to step in.

While the insurance premiums do not take risk levels, nor prevention efforts by policyholders into account, the scheme serves as a key funding source for the Barnier Fund. A fixed percentage of sums collected is retained to provide funding for disaster risk prevention, decoupling the Barnier Fund from direct state budget resources.

Source: Grislain-Letrémy and Peinturier, 2012; Grislain-Letrémy and Calvet, 2012; CCR, 2015; OECD, 2017

In addition to the CATNAT scheme, a range of disaster assistance programmes are in place at central government level in France, hinging on the principle of solidarity. The programmes at central government level complement assistance provided by sub-national governments, which are first in line for assisting households and businesses in the aftermath of disasters in France. This includes disaster response and relief measures, such as the provision of necessities and welfare payments. In addition, sub-national governments have a key role in financing disaster response, as well as the recovery of sub-nationally owned public assets (OECD, 2017; General Local Authorities Code (Article R1424)).

Overview of public disaster recovery instruments

Legal Basis

Description

Beneficiaries

CATNAT insurance scheme

Law n° 82-600

Insurance scheme backed by a state-guarantee covering natural hazards

Insured households, businesses, public assets following the declaration of a state of emergency

Solidarity provisions for local authorities (Dotation de solidarité pour les collectivités locales et leurs groupements)6

General Local Authorities Code (Article 1613)

Central government assistance for the reconstruction of uninsurable sub-national assets damaged by natural hazards

Local authorities

Emergency relief fund (fonds de secours d’extrême urgence)

Ministry of Interior (Bulletin NOR: INTE1719314C)

Central government assistance for immediate disaster relief (purchase of basic necessities; e.g. food, clothing, accommodation)

Affected individuals

Emergency relocation fond (fonds de relogement d’urgence, FARU)

General Local Authorities Code (Article L2335-15)

Central government assistance to facilitate emergency housing or temporary rehousing in case of premises that pose a danger to residential health or safety

Local authorities, competent local public institutions, or public interest groups

Relief fund for overseas territories

(Fonds de secours pour l'Outre-mer, FSOM)

Ministry of Interior (Bulletin 76-72 of 6 February 1976); ad hoc bulletins for individual disaster events

Central government assistance for the reconstruction of uninsured private assets, uninsurable subnational assets, and for immediate disaster relief (purchase of basic necessities)

Households and small businesses, local authorities

National guarantee fund for agricultural disasters (Fonds national de gestion des risques en agriculture, FNGRA)

Law no. 2010-874 on the modernisation of agriculture and fishery

Central government compensation for uninsurable crop losses due to natural hazards or disease outbreak

Agricultural producers

Special unemployment assistance (Activité partielle) scheme

Labour Ministry (Bulletin no 2013-12 of July 12, 2013)

Central government compensation for employees’ loss of income caused by business disruptions

Employees via employers

Source: Collectivités locales, 2017a, b; Perrin et al., 2017; Ministère de l'Intérieur et Ministère de l'action et des comptes publics, 2017; Services de l'État en Guadeloupe, 2017; CCR, 2016b; Ministère du travail, 2018.

To assist subnational authorities with financing the recovery of public assets following a disaster declaration, the Ministry of Interior (Ministère de l’Intérieur) put the solidarity provisions for local authorities in place. Through the solidarity provisions subnational governments can receive financial assistance for shouldering the costs of recovering subnationally owned assets. The solidarity provisions foresee that central government assistance for a reconstruction of damaged assets to their pre-disaster state can be requested, if damages to uninsurable assets caused by weather-related or geological hazards exceed USD 180,000 (EUR 150,000) in a given commune. The assistance is funded from budgetary appropriations from budgetary programme 122 ‘specific competitions and administration’ (Concours spécifiques et administration) (Collectivités locales, 2017b, Grislain-Letrémy and Peinturier, 2012).

Upon ministerial decision, the emergency relief fund (Fonds de secours d’extrême urgence) maintained by the Ministry of Interior can be accessed to support local authorities in providing relief to the affected population in the immediate aftermath of a hazardous event (man-made or natural). The total available assistance is capped at EUR 300 (USD 370) per affected adult and EUR 100 (USD 120) per affected child and may only be used for the purchase of basic necessities. Businesses cannot benefit from the emergency relief fund. Financing for the emergency relief fund is obtained from budgetary programme 161 ‘Emergency appropriations’ (crédits d'extrême urgence) (Ministère de l'Intérieur et Ministère de l'Action et des Comptes Publics, 2017). In addition, the Minister of the Interior may provide financial assistance from the Emergency Relocation Fund (fonds de relogement d’urgence, FARU) to support local authorities, competent local public institutions, or public interest groups providing emergency housing or temporary housing to occupants of premises that pose a danger to residential health or safety (Collectivités locales, 2017a).

In light of the high exposure of France’s overseas territories and the comparatively low CATNAT insurance penetration7, the relief fund for overseas territories (Fonds de secours pour l'Outre-mer, FSOM) has been established. It can be activated in addition to the above-mentioned funds. Administered by the Ministry of Overseas Territories (Ministère des Outre-Mer) the FSOM has two pillars: disaster relief support to affected households in meeting basic needs in the aftermath of a major disaster, and assistance for disaster reconstruction of uninsured private and subnational public assets. The exact eligibility criteria depend on the disaster in question, which makes the FSOM a flexible instrument, but could lead to “charity hazard”. To avoid this, the fund has limited the relative compensation of damages. For example, following hurricane Maria in September 2017, the business recovery via the FSOM was limited to 20-30% of the damages incurred by uninsured, small or family-owned enterprises that suffered substantial damages disrupting business continuity (DIECCTE Guadeloupe, 2017). Financing for the FSOM is obtained through budgetary appropriations from budgetary programme 123 ‘overseas territories living standards’ (conditions de vie Outre-mer) (Grislain-Letrémy and Peinturier, 2012).

In case agricultural businesses suffer uninsurable losses due to natural hazards or disease outbreak, compensation from the national fund for the management of agricultural risks (Fonds National de Gestion des Risques en Agriculture, FNGRA) may become available. Damages to standing or stored crops, cultivations, farmland and livestock are considered insurable, and thus excluded from compensation via the FNGRA. The fund is sourced from a mandatory premium for agricultural insurance policies, stocked up by a central government contribution. On average, the central government provides about one third of the resources for this fund, with significant year-to-year fluctuations (Ministère de l’Agriculture et de l’Alimentation, 2015; Grislain-Letrémy and Peinturier, 2012; Lidsky et al., 2017).

Budget of the National Fund for the Management of Agricultural Risks in Mio EUR, 2010-2016

Year

2010

2011

2012

2013

2014

2015

2016

Premium for agricultural insurance policies

110,8

101,4

113,3

120,0

122,5

119,5

58,6

Government contribution

32,8

9,2

111,8

22,2

19,2

25,4

81,0

Source: Lidsky et al., 2017.

To support businesses in paying wages during business disruption, the Labour Ministry (Ministère du travail) has established the unemployment assistance (Activité partielle) scheme. Not limited to disaster-related business disruptions, this scheme allows employers to request public compensation for paying salaries in case of disaster-related business disruptions. This assistance is limited to 1000 hours per year and employee (Ministère du Travail, 2018).

Implicit contingent liabilities

Extraordinary disasters, such as hurricanes Maria and Irma in fall 2017 or the 2016 Seine floods, where the scale of damages, but also the public’s attention in France have been particularly high, have in the past resulted in decisions in favour of providing additional assistance beyond the disaster assistance mechanisms outlined above.

Following hurricanes Maria and Irma that struck the French Antilles in late 2017, the Ministry of Overseas Territories implemented a series of measures to support the recovery of the affected areas. This included exceptional assistance for business recovery (aide exceptionnelle pour le redémarrage des entreprises sinistrées) ranging from EUR 1000 to 10 000 per business, depending on the duration of the business disruption (DIECCTE Guadeloupe, 2017). Similarly, the 2016 Seine floods resulted in the provision of exceptional assistance for the private sector, with the Minister of the Economy, Industry and Digital Affairs (Ministre de l'Économie, de l'Industrie et du Numérique) reactivating the business continuity programme (cellule de continuité économique,) first launched following the 2015 Paris attacks. Through the ad hoc business continuity programme, nearly 500 affected small and medium sized businesses located in areas affected by the floods received a total of around USD 1.55 million in recovery support. The maximum recovery support per business was capped at USD 3,680, with up to USD 12,270 available in severe cases (Perrin et al., 2017).

Estimation of insurance pay-outs

Owing to the CATNAT insurance scheme described in the box above, overall hazard insurance penetration is very high in metropolitan France (99%). At 52%, the coverage in France’s overseas territories is much lower, in part explainable by the high prevalence of vulnerable building structures that do not follow the building code, a prerequisite to insurability (Grislain-Letrémy and Peinturier, 2012).

Public assets can be covered under the CATNAT scheme, including central and sub-national public assets, as well as state-owned enterprises’ assets, such as railroads. Much of France’s public service infrastructure, such as hospitals, education facilities and government buildings, are protected by insurance under the CATNAT scheme, as are most sub-national public assets. Museums and other cultural heritage assets do not fall under this scheme, but benefit from the principle of self-insurance applicable to government assets (Grislain-Letrémy and Peinturier, 2012).

The CCR regularly prepares overviews of annual damage sums to be expected under the CATNAT scheme, and uses this information in modelling future expected damages and insurance pay-outs. The damage estimates and modelling results are used to inform the annual adjustment of the state guarantee (OECD, 2017; Grislain-Letrémy and Calvet, 2012).

Quantification of disaster-related contingent liabilities

Currently, disaster-related contingent liabilities are not quantified ex ante in France, but some data that could be used to do so is available. For public assistance from one of the various disaster recovery and relief funds and programmes (see Table 4), the respective line ministries managing these keep the records. Although such records are available, there is no standardised process to compile the information in a centralized overview of government relief and recovery payments to quantify the overall disaster-related contingent liabilities arising from them. In some cases, such as after major events like the 2016 Seine and Loire floods, the Ministry of the Ecology and the Ministry of Interior put together overviews of assistance made available from the various programmes, drawing on records kept by the respective line ministries and sub-national governments (Perrin et al., 2017).

Types of information from previous events available to calculate disaster-related contingent liabilities

Type of disaster-related expenditure

What gets recorded

Relief spending

Records for relief payments via public assistance programmes kept by responsible ministries.

Spending for the reconstruction of damaged public infrastructure and assets

Payment records via the CATNAT scheme for compensated damages to insured public assets

Spending for the reconstruction of damaged private assets

Payment records via the CATNAT scheme for compensated damages to insured private assets

Spending on increased social transfers due to a post-disaster economic slowdown

Payment records for social transfer schemes, such as FARU and the special unemployment assistance

Expenditures due to guarantees issued to public or private entities suffering disaster losses

State guarantee to the CCR quantified each year and published in general government budget

Post-disaster payments to subnational governments

Records for payments via public assistance programmes (e.g. solidarity provisions for local governments) kept by responsible ministries.

Reduced tax collections

Not available

Disrupted operations of public corporations

Not available

Disrupted operations of private corporations

Special unemployment assistance as provided by the Ministry of Labour

Deterioration in the terms at which the government can in the short term refinance public debt or raise additional debt

Not available

Source: OECD Survey response.

Payment records via the CATNAT scheme are comprehensive and published in the CCR’s annual activity report, distinguishing compensated damages to public and private insured assets. The CCR uses the payment records in modelling the cost of disasters that might require an activation of the state guarantee, such as a 100-year Seine flood, a 7-8 Richter scale earthquake in the Côte d’Azur, a 500-year heatwave, or a category 5 cyclone. The models are updated each year, and inform the definition of the state guarantee threshold. The state guarantee to the CCR itself is quantified each year and published in the general government budget (République Française, 2017).

Estimation of fiscal impacts of disaster-related contingent liabilities and their integration in overall fiscal forecasting

French authorities noted that disaster-related contingent liabilities are not considered a fiscal risk, if below the threshold for activation of the state guarantee to the CATNAT scheme. In turn, liabilities resulting from the various other public assistance schemes in place across ministries are thus not seen as a fiscal risk.

Although data on past public spending for disaster recovery and reconstruction purposes is not used to approximate future disaster-related contingent liabilities by default, the debt management agency, Agence France Trésor (AFT), has started to consider external events among the fiscal risks facing public finances. To keep track of these, an incidents database that accounts losses resulting from external events, which may include disasters, as well as from inadequate or failed internal processes, has been put in place. In addition, macro-financial scenarios prepared by the AFT are starting to consider disasters. The scenarios are used to inform the central government’s debt management strategy (AFT, 2018). Sensitivity analyses to estimate the impact of contingent liabilities on the fiscal balance are not used.

Implementation arrangements for providing post-disaster financial assistance

In France, subnational governments are first in line for financing disaster response and supporting household and business recovery from hazardous events. They are also in the driver’s seat for financing the recovery of sub-nationally owned public assets outside the CATNAT scheme. To assist subnational governments in carrying out their responsibilities in terms of providing disaster relief and recovery, the central government may make additional assistance available, with implementation arrangements differing from programme to programme.

The Ministry of Interior’s solidarity provisions for local authorities have different implementation arrangements depending on the damage sum weather-related or geological hazards have inflicted upon sub-national assets. Once damages to sub-national assets exceed EUR 150,000 (USD 180,000) subnational recipients may file for recovery assistance within two months of the disaster. The ministerial representative responsible for the department verifies the damage estimates submitted by affected sub-national authorities, with the General Commissariat for Ecology and Sustainable Development (Commissariat Général à l’Ecologie et au Développement Durable, CGEDD) providing support when requested. If damages to sub-national assets exceed EUR 1 million (USD 1.2 million), or if damages spread across multiple departments, the CGEDD is required to participate in the damage evaluation and confirm the results. In case of damages to sub-national assets exceeding EUR 6 million, an inter-ministerial inspection has to assess the damages and decide the amount of public assistance made available. Maximum available central government support may range between 30-60% of the total sum of damages to sub-national assets, with the remainder to be paid by the affected subnational government. As a last step, the prefect transfers the agreed level of public assistance to the affected local authorities (Collectivités locales, 2017b).

Solidarity provisions: implementation arrangements

Damages to sub-national assets

Procedure

≥ USD 180,000

subnational recipients may file for recovery assistance; request needs to be verified by ministerial representative responsible for the department

≥ USD 1.2 million or damages spreading across multiple departments

General Commissariat for Ecology and Sustainable Development required to participate in damage evaluation

≥ USD 7.4 million

Inter-ministerial inspection required to assess the damages; maximum support capped at 60% of total damages

Source: Collectivités locales, 2017b.

To support individual victims of man-made or natural hazardous events in their recovery, the Minister of Interior may also open access to the emergency relief fund – independent of the declaration of a state of disaster. The prefect is charged with assembling information on relief needs in the affected municipalities, building on information received from the affected municipalities, the CCAS and from relevant central government services at department level (Direction Départementale des Finances Publiques, DDFiP, and Direction Régionale des Finances Publiques, DRFiP). The estimated sum, along with information on beneficiaries, is submitted to the Ministry of the Interior, which transfers the agreed assistance to the respective prefects, who then provide the assistance to beneficiaries in the affected area (Ministère de l'Intérieur and Ministère de l'action et des comptes publics, 2017).

In the overseas territories, the FSOM may be activated by a decision of the Minister of Overseas Territories. The FSOM can be used to provide disaster relief to affected households, as well as assistance for the reconstruction of damaged uninsured private and subnational public assets. An interministerial committee decides on the level of compensation based on reports received by local authorities. The exact eligibility criteria depend on the disaster in question, making the FSOM a flexible financing instrument (Ministère de la Transition écologique et solidaire, 2014).

In case an exceptional weather event results in substantial crop losses or disease outbreak, the prefect of the affected department may submit a request to activate the FNGRA to the Ministry of Agriculture (Ministère de l’Agriculture et Alimentation), following consultation with the National Committee for Agricultural Risk Management (Comité national de gestion des risques en agriculture, CNGRA). The fund can be used to provide compensation to farmers that suffered uninsurable losses due to an exceptional weather event or disease outbreak, e.g. losses to fodder crops due to hail or crop losses due to drought, if these sum up to at least 30% of crop losses, or at least 13% in value losses, and are specified in the respective ministerial decree activating the FNGRA. Since 1980, more than 62% of the compensation provided was due to droughts. Damages to standing or stored crops, cultivations, farmland and livestock are considered insurable, and thus excluded from compensation via the FNGRA. Upon activation by ministerial decree affected farmers may send their compensation claims and the necessary supporting documents to the respective departmental directorate for territories (and the sea) (Direction départementale des Territoires (et de la Mer), DDT (M)) for evaluation and compensation (Ministère de l’agriculture et de l’alimentation, 2015; Lidsky et al., 2017).

The application of special unemployment assistance (Activité partielle) is decided by the Ministry of Labour, which receives requests from employers via its subnational representations, the deconcentrated government services (services déconcentrés de l’État, DIRECCTE). The decision on whether support will be made available should respect a 30 days time-limit after the hazardous event. In case a business submits another request within the 36 months following its initial request, the decision regarding this assistance will be made following consultation with the business (Ministère du travail, 2018).

In addition to the public assistance programmes available at central government level, the public-private CATNAT insurance scheme can be activated in case of disaster. The scheme comes into effect following a disaster declaration by the municipality, confirmed by an interministerial decree as the legal criteria for activation. Compensation is available to all insurance policy holders in the affected municipalities, as outlined in the decree. In case a disaster triggers insurance pay-outs beyond available reserves, the central government provides a state guarantee sourced from the general budget. If claims exceed 90% of the special reserve and annually defined equalisation reserves, the government is required to step in (OECD, 2017; CCR, 2015; Grislain-Letrémy and Calvet, 2012).

Mitigating disaster-related contingent liabilities and financing residual risks

To mitigate the previously identified, quantified and disclosed disaster-related contingent liabilities need to be managed, and decide on how to provision for the residual risk.

The CATNAT system is the key pillar for mitigating disaster-related contingent liabilities in France. While the annually set state guarantee for the system means that CATNAT constitutes a disaster-related contingent liability, the affordable uniform rate means that penetration rates are high. In light of the broad coverage of both private and public assets, it reduces the need for public assistance via the available schemes, while setting clear thresholds and limits for government intervention. However, as hazard insurance premiums do not take hazard exposure, nor self-protection measures into account, incentives for reducing disaster risks are slightly skewed, which may in part explain the low levels of private ex ante investments in disaster risk management8 (DREAL, 2013).

Consistent investments in the construction and maintenance of disaster risk prevention are another important pillar in limiting potential disaster-related contingent liabilities upfront. The central-government fund for the prevention of major natural hazards, the Barnier Fund (FPRNM) is the key financing instrument for co-funding disaster risk prevention. It receives its funding from the CATNAT insurance scheme, with the fixed percentage of sums retained currently at 12% (up from an initial 2.5% until 2003). The central government portion sourced from the Barnier Fund generally ranges between 100% for non-structural measures to 40-50% for structural measures, with annual spending averaging to aboutUSD 220 million per year. For 2018, available funding has been reduced to USD 162 million, down from around USD 245 million in 2017 (Sénat, 2018). About USD 14 million of that are usually earmarked for drawing-up disaster risk prevention plans (Prevention Plans against Natural Risks, PPRNs). An additional USD 44 million for ex ante disaster risk management measures is added from budgetary programme 181 in 2018, with much of this earmarked for flood risk management purposes (OECD, 2017; Sénat, 2018). Sub-national co-financing for disaster risk prevention averages to an additional 40%, summing up to around USD 292 million in 2009, with the central government providing about USD 407 million for ex ante disaster risk management in that year (Nicklaus et al., 2013). In 2018, it is expected that subnational governments will invest an additional USD 1.2 million for flood risk management projects that do not receive co-funding from the Barnier Fund (Sénat, 2018a).

References

AFT (2018), Le contrôle des risques > Risques couverts [Risk Control > Risks covered], www.aft.gouv.fr/rubriques/covered-risks_126_lng1.html.

CCR (2015). Natural disasters compensation scheme, www.ccr.fr/-/indemnisation-des-catastrophes-naturelles-en-france.

CCR (2016a). Les Catastrophes Naturelles en France. Bilan 1982 – 2016 [Natural disasters in France. Overview 1982 - 2016], https://erisk.ccr.fr/publications/BilanCatNat2017_en_ligne.pdf.

CCR (2016b). CCR is responsible for the accounting and financial management of public funds on behalf of the State, www.ccr.fr/fonds-publics.

CCR (2017). Sécheresse de 2003 en France [2003 drought in France], Caisse Centrale de Réassurance , https://erisk.ccr.fr/faces/erisk-evenement-detail.xhtml?i6event=001621.

Collectivités locales (2017a). Le fonds d’aide au relogement d’urgence (FARU) [Emergency rehousing funds], www.collectivites-locales.gouv.fr/fonds-daide-au-relogement-durgence-faru.

Collectivités locales (2017b). Aide aux collectivités territoriales victimes de catastrophes naturelles [Assistance for regional and local authorities affected by natural disasters], www.collectivites-locales.gouv.fr/aide-aux-collectivites-territoriales-victimes-catastrophes-naturelles Cour de Comptes (2017). Note d’analyse de l’exécution budgétaire 2017 [Note on the use of the 2017 budget], www.ccomptes.fr/sites/default/files/2018-05/NEB-2017-Outre-Mer.pdf.

DIECCTE Guadeloupe (2017). Ouragans - Les dispositifs d’accompagnement de l’État pour les îles du Nord [Hurricanes - Government support for the Northern Islands], http://guadeloupe.dieccte.gouv.fr/ouragans-les-dispositifs-d-accompagnement-de-l-etat-pour-les-iles-du-nord.

DREAL Rhône-Alpes (2013), Perception des Risques d’Inondation par les Riverains du Rhône de la Frontiére Suisse à la Mer [Flood risk perception by residents of the Rhône and the frontier from Switzerland to the sea], www.planrhone.fr/content/download/1431/10992/file/DREAL_Sondage2013_plaquette_BD.pdf.

Government of France (2018). IRMA,1 an après Bilan de l’action de l’État Dossier de presse [Irma – one year later. Report on state measures – press information], www.gouvernement.fr/sites/default/files/contenu/piece-jointe/2018/09/dp_irma_-_bilan_1_an.pdf.

Grislain-Letrémy, C., and C. Peinturier (2012), L'indemnisation des risques naturels en France: implication de l'Etat, enjeux et perspectives (Compensation of Natural Disasters in France: State Involvement, Problems and Prospects), Gestion des risques naturels : Leçons de la tempête Xynthia [Disaster risk management : Lessons from the storm Xynthia] – Chapter 10, https://ssrn.com/abstract=2646518.

Grislain-Letrémy, C., and L. Calvet (2012), L’assurance habitation dans les départements d’Outre-mer: une faible souscription [Building insurance in overseas territories: A weak subscription], http://basepub.dauphine.fr/bitstream/handle/123456789/11676/ES447C.pdf?sequen.

LeMonde (2018), Le coût du passage d’Irma sur Saint-Martin et Saint-Barthélemy dépasse les 3 milliards d’euros [Damages from hurricanes Irma and Maria exceed EUR 3 billion], www.lemonde.fr/climat/article/2018/03/13/le-cout-du-passage-d-irma-sur-saint-martin-et-saint-barthelemy-depasse-les-3-milliards-d-euros_5269868_1652612.html.

Lidsky, V., Maudet, C. Malpel, G.-P., Gerster, F., Helfter, M., Lejeune, H. and F.-G. Le Theule (2017), Les outils de gestion des risques en agriculture [Instruments for agricultural risk management], Inspection générale des finances and Conseil général de l’alimentation, de l’agriculture et des espaces ruraux, http://agriculture.gouv.fr/telecharger/86809?token=c25a23e886cdbe9e595ed5ec2202173a

Lumbroso, D.M. and F. Viner (2011), A comparison of the causes, effects and aftermaths of the coastal flooding of England in 1953 and France in 2010, Natural Hazards Earth System Sciences, 10.5194/nhess-11-2321-2011.

Ministère de l’agriculture et de l’alimentation (2015), La mobilisation du fonds national de gestion des risques agricoles [Activating the national agricultural risk management fund], http://agriculture.gouv.fr/la-mobilisation-du-fonds-national-de-gestion-des-risques-agricoles.

Ministère de la Transition écologique et solidaire (2014). Fonds de secours pour l’Outre-mer [Relief fund for overseas territories]. www.reunion.developpement-durable.gouv.fr/fonds-de-secours-pour-l-outre-mer-a394.html.

Ministère de l'Intérieur et Ministère de l'action et des comptes publics (2017). NOR: INTE1719314C - Circulaire relative aux conditions et modalités de versement des secours d'extrême urgence aux victimes d'accident, de sinistre ou de catastrophe de grande ampleur [NOR: INTE1719314C - Bulletin on the terms and conditions for the transfer of emergency relief to victims of accidents, hazardous events or major disasters]. http://circulaire.legifrance.gouv.fr/pdf/2017/07/cir_42424.pdf.

Ministère du travail (2018), Activité partielle [Special unemployment assistance], http://travail-emploi.gouv.fr/emploi/accompagnement-des-mutations-economiques/activite-partielle/emploi/accompagnement-des-mutations-economiques/activite-partielle.

Nicklaus, D., Chaillou, D., Crespin, N. and C. Peinturier (2013). Les dépenses publiques et les bénéfices de la prévention des risques naturels. [Public expenditure and beneficiaries of disaster risk prevention], Studies & Documents n.97, September 2013. Commissariat Général au Développement Durable, http://temis.documentation.developpement-durable.gouv.fr/docs/Temis/0079/Temis-0079105/20910.pdf.

OCDE (2014), Seine Basin, Île-de-France, 2014: Resilience to Major Floods, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264208728-en.

OECD (2017), Boosting Disaster Prevention through Innovative Risk Governance: Insights from Austria, France and Switzerland, OECD Reviews of Risk Management Policies, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264281370-en.

Perrin, F., Sauzey, Ph., Menoret, B. and P.-A. Roche (2017). Inondations de mai et juin 2016 dans les bassins moyens de la Seine et de la Loire. Retour de l’expérience. [Overview of the May and June 2016 floods in the Seine and Loire basins], Rapport Conseil Général de l’environnement et du développement durable, www.interieur.gouv.fr/Publications/Rapports-de-l-IGA/Rapports-recents/Inondations-de-mai-et-juin-2016-dans-les-bassins-moyens-de-la-Seine-et-de-la-Loire-retour-d-experience.

Préfecture des Alpes-Maritimes (2016), Risque Séisme DPT 06 -- la connaissance des phénomènes [Seismic Risk DPT 06 – knowing the phenomena], www.alpes-maritimes.gouv.fr/Politiques-publiques/Environnement-risques-naturels-et-technologiques/DDRM-06-Edition-2016/Risques-Naturels-DPT-06/Risque-Seisme-DPT-06/Connaissance-risque-sismique.

PreventionWeb (2017), France - Disaster & Risk Profile, www.preventionweb.net/countries/fra/data/.

République Française (2017), Compte General de l’État 2016 : Annexe au projet de loi de règlement du budget et d’approbation des comptes [General Government Budget for 2016 : Annex to the law setting and approving the budget], www.performance-publique.budget.gouv.fr/sites/performance_publique/files/files/documents/budget/comptes/2016/CGE2016.pdf.

Sénat (2017), Fonds de garantie des risques liés à l'épandage agricole des boues d'épuration urbaines ou industrielles (Guarantee fund for risks linked to spreading of urban or industrial wastewater sludge), www.senat.fr/questions/base/2016/qSEQ160421244.html.

Sénat (2018a), Projet de loi de finances pour 2018 : Prévention des risques [Draft Budget Law for 2018: Risk Prevention], www.senat.fr/rap/a17-113-3/a17-113-33.html.

Sénat (2018b), Mission "Écologie, développement et mobilité durables" - Programmes 113, 181, 174, 345, 217 - CAS "Transition énergétique", "Aides à l'acquisition de véhicules propres" et "Financement des aides aux collectivités pour l'électrification rurales (FACé)" [Mission "Sustainable Ecology, Development and Mobility" - Programs 113, 181, 174, 345, 217 - CAS "Energy Transition", "Support for the Acquisition of Clean Vehicles" and "Financing of Community Support for Rural Electrification" (FACé)"], www.senat.fr/commission/fin/pjlf2018/np/np10a/np10a6.html.

Services de l'État en Guadeloupe (2017), MARIA : comment bénéficier du fonds de secours Outre-mer? [Maria. How to benefit from the relief fund for overseas territories?], www.guadeloupe.pref.gouv.fr/Politiques-publiques/Prevention-securite-des-personnes-et-des-biens/Defense-et-protection-civiles/Saison-cyclonique-et-vigilances-meteo/Le-cyclone-MARIA/MARIA-comment-beneficier-du-fonds-de-secours-Outre-mer#.

Statista (2018). Euro to U.S. dollar monthly exchange rate 2016-2018, www.statista.com/statistics/438061/euro-to-us-dollar-monthly-exchange-rate/.

Notes

← 1. Overseas regions: Guadeloupe, French Guiana, Martinique, Réunion, Mayotte.

Overseas collectivities: French Polynesia, Saint Pierre and Miquelon, Wallis and Futuna, Saint Martin, Saint Barthélemy.

Overseas territories: French Southern and Antarctic Lands.

← 2. Based on the OECD (2017) gross domestic product (GDP) indicator, available at http://dx.doi.org/10.1787/dc2f7aec-en.

← 3. January 2018 EUR-USD exchange rate: 1.25 (Statista, 2018)

← 4. In case local authorities need to carry out emergency resettlements, the prefectures may make support via the emergency rehousing funds (Fonds d’aide au relogement d’urgence, FARU) available for up to six months. Applicable purposes include rehousing in case of structural or health hazards, but also rehousing in case an exceptional event, such as a disaster, has rendered housing uninhabitable. Grants cover between 75% to 100% of accommodation costs incurred by the local authority (Collectivités locales, 2017a).

← 5. Support was earmarked for the reconstruction of school buildings (USD 42 million), sport facilities (USD 1.1 million), electrical grids (ca. USD 18 million), water networks (USD 7 million), social housing (7.5 USD million) and the Saint-Martin hospital (USD 8 million). In addition, the central government provided around USD 22 million for protective measures against natural hazards, such as shelters and early warning systems.

← 6. Dotation de solidarité en faveur de l’équipement des collectivités territoriales et de leurs groupements touchés par des événements climatiques et géologiques [Solidarity grant in support of local authorities affected by climatic and geological events]

← 7. While coverage via the CATNAT scheme is 99% in Metropolitan France, it is only 52% in France’s oversea territories (OECD, 2017; Grislain-Letrémy and Calvet, 2012).

← 8. For instance, surveys conducted by the DREAL Rhône-Alpes in 2006, 2009 and 2013 showed that only 18% of the population in risk zones took self-protection measures in 2013, down from 21% in 2009 (DREAL, 2013).

End of the section – Back to iLibrary publication page