The paper proposes five market-based parametric insurance pilot schemes to enhance the PRC’s public finance capacity for disaster risk response, to soften budget shocks, and to bolster long-term fiscal stability and resilience. The paper highlights the inadequacy of public finance instruments—such as fiscal reserves, contingent credit arrangements, and traditional indemnity insurance—to manage the contingent liabilities that disasters represent. It also discusses the effects of disasters on economies, societies, and global supply chains, particularly in the context of climate change.
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