Knowledge Note

Mexico is vulnerable to a number of natural hazards, including hurricanes, large earthquakes, floods, and volcanic eruptions. In 1985, two earthquakes of magnitudes 8.0 and 7.5, respectively, killed more than 10,000 people and destroyed 100,000 housing units in the country. When such natural disasters occurred, the government had to shift budgetary resources away from planned public infrastructure expenses into reconstruction efforts. To avoid this problem, in 1996 the government created a fund for natural disasters — FONDEN — to which it transfers budgetary funds for disaster relief and reconstruction efforts. In addition, Mexico developed an institutional framework for disaster preparedness involving risk assessment, risk reduction, the promotion of a culture of prevention, and insurance. With these initiatives, Mexico moved from an ex-post response to natural disasters to an ex-ante preparedness approach.

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TRE