42 K Grove
Pugh 2017; Lewis 2020). EARM, as I demonstrate, intensifies these tragic
dynamics: while the GCD has deployed EARM as part of its efforts to create a space for political autonomy through strategic budgeting (Grove 2021),
donor agency pressures to recalibrate disaster financing around the insurantial logic of EARM is subtly transforming the relation between insurance, the developing state, donors, the public, and a volatile earth in the
Anthropocene. The turn to EARM and its imperative to ‘prepare like an
insurer’ leverages potential catastrophic impacts and further hollows out
developing states’ sovereignty in the Anthropocene.
Defining EARM
Over the past decade, researchers have moved from cautious hints that
insurance might promote more equitable adaptation pathways towards fullthroated pronouncements that insurance can drive pro-poor adaptation
strategies on multiple levels. For proponents, developing states can begin
to ‘prepare like an insurer’ (Clarke & Dercon 2016), combining novel insurance products such as sovereign catastrophe insurance with other EARM
tools such as contingency funds or weather derivatives to strategically plan
for disaster-induced financial disruptions. ‘Thinking like an insurance company’ involves apprehending disasters as events that generate contingent liabilities, expenditures a state will have to make in the aftermath of a disaster.
For example, in many small island developing states (SIDS), disasters often
increase demands for welfare services, which draws on resources from states’
social protection schemes (World Bank 2017). In effect, this mathematises
the state’s post-disaster response, recovery, and reconstruction activities,
subjecting them to a calculative rationality focused on developing the kind
of financial self-sufficiency insurance companies must exercise (Ewald 1991).
To plan for contingent liabilities, insurers rely on a mix of risk retention
and risk transfer tools designed to build their financial capacity. Most insurers typically retain a limited amount of risk financed through their capital
base, and purchase reinsurance to transfer risk to reinsurance markets. This
provides insurers with the capacity to meet their contingent liabilities and
avoid bankruptcy, even in extreme loss events. Clarke and Dercon (2016,
p. 81) extend this strategy to governments: ‘these principles should form
the basis of a financial strategy for a government or an organisation committed to covering particular contingent liabilities.’ Thus, financing disaster response becomes a matter of financing contingent liabilities without
relying on external aid: a government ‘must decide how much risk it will
retain and how much risk it will transfer, and which financial and budgetary
instruments to use for this’ (Clarke & Dercon 2016, p. 8). In this view, strategic budgeting can allow developing states to rationalise disaster financing, and thus become financially self-sufficient and capable of managing the
financial impact of disasters without relying on external relief (LinneroothBayer & Hochrainer-Stigler 2015; Surminski et al. 2016).
Pugh 2017; Lewis 2020). EARM, as I demonstrate, intensifies these tragic
dynamics: while the GCD has deployed EARM as part of its efforts to create a space for political autonomy through strategic budgeting (Grove 2021),
donor agency pressures to recalibrate disaster financing around the insurantial logic of EARM is subtly transforming the relation between insurance, the developing state, donors, the public, and a volatile earth in the
Anthropocene. The turn to EARM and its imperative to ‘prepare like an
insurer’ leverages potential catastrophic impacts and further hollows out
developing states’ sovereignty in the Anthropocene.
Defining EARM
Over the past decade, researchers have moved from cautious hints that
insurance might promote more equitable adaptation pathways towards fullthroated pronouncements that insurance can drive pro-poor adaptation
strategies on multiple levels. For proponents, developing states can begin
to ‘prepare like an insurer’ (Clarke & Dercon 2016), combining novel insurance products such as sovereign catastrophe insurance with other EARM
tools such as contingency funds or weather derivatives to strategically plan
for disaster-induced financial disruptions. ‘Thinking like an insurance company’ involves apprehending disasters as events that generate contingent liabilities, expenditures a state will have to make in the aftermath of a disaster.
For example, in many small island developing states (SIDS), disasters often
increase demands for welfare services, which draws on resources from states’
social protection schemes (World Bank 2017). In effect, this mathematises
the state’s post-disaster response, recovery, and reconstruction activities,
subjecting them to a calculative rationality focused on developing the kind
of financial self-sufficiency insurance companies must exercise (Ewald 1991).
To plan for contingent liabilities, insurers rely on a mix of risk retention
and risk transfer tools designed to build their financial capacity. Most insurers typically retain a limited amount of risk financed through their capital
base, and purchase reinsurance to transfer risk to reinsurance markets. This
provides insurers with the capacity to meet their contingent liabilities and
avoid bankruptcy, even in extreme loss events. Clarke and Dercon (2016,
p. 81) extend this strategy to governments: ‘these principles should form
the basis of a financial strategy for a government or an organisation committed to covering particular contingent liabilities.’ Thus, financing disaster response becomes a matter of financing contingent liabilities without
relying on external aid: a government ‘must decide how much risk it will
retain and how much risk it will transfer, and which financial and budgetary
instruments to use for this’ (Clarke & Dercon 2016, p. 8). In this view, strategic budgeting can allow developing states to rationalise disaster financing, and thus become financially self-sufficient and capable of managing the
financial impact of disasters without relying on external relief (LinneroothBayer & Hochrainer-Stigler 2015; Surminski et al. 2016).