The demand

The frequency and impact of disasters continues to rise, calling for effective disaster risk management and innovative risk financing solutions.

Disaster Risk Financing (DRF) can increase the ability of national and local governments, homeowners, businesses, agricultural producers, and low-income populations to respond more quickly and resiliently to disasters by strengthening public financial management and promoting market-based disaster risk financing.

However, although the frequency and severity of economic and insured losses caused by, for example, inland flood events have been increasing, the usage of DRF products for flood events is not yet extensive. The main reason for this is that capturing the appropriate triggers and physical properties of a flood event, such as its extent, depth, number of people affected, and/or the affected exposure, is challenging.

Recent improvements in quality and availability of satellite-derived characteristics increased the usability of EO products, allowing for better results and further synergies between actors, potentially expanding the market of Disaster Risk Financing applications.

The project e-Drift (Disaster risk financing and transfer) is financed by ESA and led by CIMA Research Foundation (IT) in the framework of the EO science for society programme through the action line dedicated to enabling business sector initiatives. The project has the aim to improve the performance of the EO products and provide an automated and reproducible way to support risk transfer and insurance. The purpose is to develop and verify innovative analytic capabilities exploiting new ICT, such as, for instance, cloud based processing, supply chain automation, etc. to provide the necessary support capabilities required by industry sectors where the potential to exploit EO based services with such new ICT has not yet been explored and demonstrated.

e-Drift is based on a strong network between providers of value-added services utilizing EO data alongside with in-sector providers of the insurance/re-insurance sector as well as other concerned actors in the field, such as World Bank, with the final goal to create new or improved products and solutions for the insurance sector. The project consortium includes leading companies in the EO value adding, and leading actors in the insurance market and concentrates as a pilot study area in South East Asia, more specifically on Myanmar, Laos and Cambodia.

Enhancing the SEADRIF platform with e-Drift

Developing countries, such as many South-East and South Asia countries with middle-low incomes, typically lack financial protection against the impacts of disasters and rely heavily on ex-post measures, such as donor assistance, in order to meet their financing needs. As such, those countries are among the ones that would benefit the most from DRF products.

Based on this demand, in March 2017, at the request of Cambodia, Laos and Myanmar, the World Bank’s Crisis and Disaster Risk Finance team initiated the development of a system to support rapid response financing to flooding events in the region. The project, named South East Asia flood monitoring and risk assessment for regional DRF mechanism led by Deltares (NL) has resulted in an IT platform (SEADRIF) able to estimate the number of people affected by a flood, by a combination of real-time models, EO data and ground observations. The combination of diverse types of input data for a rapid estimate of flood impact is considered highly innovative and responds to the demand from World Bank country clients to be provided with technical and financial tools and means to manage emergencies and save lives.

The platform has been running pre-operationally at CIMA Research Foundation since the beginning of 2018 and, during the 2018 flood season in southeast Asia (June-August), it was tested for the first time on actual on-going flood events in NRT. The floods that occurred during the 2018 flood season in Laos were not automatically detected by the platform: floods were caused by a dam break and the hydraulic model was not designed to simulate such event, plus the extremely poor quality of the satellite observations used, mainly based on optical acquisition from MODIS, led to a poor performance of the system.

For the same event, part of the technical team that worked on the SEADRIF platform was triggered by the International Carter on Space and Major Disasters under the coordination of UNOSAT/UNITAR to produce high-resolution flood maps on the area, in support of fast recovering operations. The use of SAR satellite data (Sentinel-1, Radarsat-2, TerraSAR-X) to map the flood extent proved effective to the point that it could have been used to directly estimate the affected population.

 

From that experience an upgrade of the satellite component of the SEADRIF platform was planned with the e-Drift project focusing on the rapid evaluation capacity. The two projects are now working together to fully integrate the effectiveness of EO data within the DRF decision-making application. The schematics that follows highlights the e-Drift services that will be soon integrated pre-operationally into the SEADRIF platform.

All operational aspects will have to be addressed in order to produce a robust and fully operational monitoring system. The specifications of the e-Drift services are based on the operational requirements of the SEADRIF platform and intended users. Therefore, the aim is to connect in a machine-to-machine configuration the e-Drift services and demonstrate their added value as well as their operational parameters. The demonstration phase is expected to deliver operational results in Q3 2019 and will be completed with an implementation phase shortly after.

The Context

Disaster Risk Financing (DRF) represents an effective risk management option, able to complement more traditional Disaster Risk Reduction measures by offering a lean way to unlock resources for a fast and prompt reaction when a disaster occurs. This is particularly important when sovereign risk is considered in countries where the magnitude of flood events often overcomes the response capacity of the institutions. A typical example is South East Asia where extensive monsoon flooding often endures for months and hits large geographical areas.

In this context, EO product developments have provided enhanced detection capacity in support of such applications. This is the case with the services developed by the project e-Drift (Disaster RIsk Financing and Transfer), financed by the ESA EO programme FutureEO and led by the organization CIMA Research Foundation (IT). The project received also an extension from ESA that allowed to increase the readiness level of the products by addressing all suggestions put forward by the users in the first phase of the project (e.g., increased overall detection reliability, increased detection potential in urban areas).

The project is framed in the cooperation between ESA and the World Bank/DRF Initiative1 that provided not only guidance for the service development, but also created the preconditions for its operational use in the context of SEADRIF2: a regional platform that provides participating nations in South East Asia with advisory and financial services to increase preparedness, resilience and cooperation in response to climate and disaster risks.

The Service

eDrift created a processing environment that enables access to seamless EO added value services in support of DRF applications.

In particular, the platform allows the continuous monitoring of an extended Region of Interest (e.g. a full country) taking advantage of the S1 constellation global acquisition capability and of the free and long-term access to data guaranteed by the EU Copernicus services. A flood delineation map can be updated every day with any acquisition that crosses the region of interest, guaranteeing the best possible coverage. The process is fully automated and guarantees a high rate of data fetching.

Thanks to its reliability and high degree of automation the service does not require supervised intervention. Therefore, the same service can also be used to create an exhaustive set of past flood events on the analyzed area by processing the full archive of acquired satellite images. Such product can be translated into historical flood frequency maps that are used to calibrate catastrophe models in support of insurance applications.

The application

A first application that has been tested is parametric insurance to unlock resources for immediate and effective response in the aftermath of a flood event.

The eDrift services feed into a platform created within the project “South East Asia Flood Monitoring and Risk Assessment for Regional DRF Mechanism” (SEADRIF) led by Deltares (NL), company leader in the hydrological modeling applications, in partnership with CIMA Research Foundation (IT), FadeOut SW (IT) and LIST (LU). This project was financed by the World Bank who also acted as a user of the eDrift services in the context of SEADRIF.

The SEADRIF platform combines the EO services provided by eDrift with flood models in order to determine the number of affected people at country level several countries in South East Asia. This output can be used to activate a parametric insurance in support of the countries for response operations.

The Demonstration Phase

After the service development and the establishment of a direct connection with the SEADRIF Client Platform, a pre-operation demonstration was set up for the 2019 monsoon season to better refine the operational setup and assess the eDrift service reliability in contributing to the SEA DRIF application.

On that basis three chains were set up: one over Myanmar automated with daily supervision from an operator at CIMA Research Foundation, one over Cambodia and one over Lao PDR, fully automated and without supervision.

The demonstrations started in June 2019 and ended in September 2019, covering the whole monsoon season 2019. The demonstration assessment protocol was discussed with ESA and agreed with the World Bank, which closely assessed the service performance. Specifically, the World Bank has commissioned an application expert to follow the assessment of the Service Output.

The results were validated both from the operation point of view by assessing reliability of the production chain and content standpoint (e.g. through comparison with alternative data source both from EO and media). An example is shown in Figure 4 where results from the S1 chain are compared with Radarsat-2 acquired over the same area during the 2019 monsoon season.

During the demonstration phase a persistent flood event occurred in Myanmar, mainly along the Irrawaddy river, one of the main river systems in the country. As a result, close to hundred thousand of people were displaced and many more were affected by the flood event3. The Platform detected the event and determined consistent estimates of the affected people during the entire period, monitoring its daily evolution.

A second pre-operation phase in the monsoon season 2020 was also implemented with equally satisfactory results in terms of accuracy and reliability.

Transfer to operation

This successful demonstration paved the way for the operationalimplementation of the service.

JBA Consulting, a leading company in insurance applications, together with CIMA and the other eDrift key partners have been awarded the provision of an operational service that will support the payouts in the SEA countries that adhered to the insurance scheme, triggered by clear and transparent rules. This service is delivered through an independent insurance company set up in Singapore to implement a regional catastrophe risk pool.

The parametric insurance for flood risks is based on the SEADRIF Flood Risk Monitoring Tool, which was the final object of the above-described demonstration.

The SEADRIF Flood Risk Monitoring service entered in operation in February 2021. The EO component of the service is provided by the eDrift and the EO flood mapping service is the first operational service on the market from the eDrift service portfolio.

The operations are envisaged to run for the next two monsoon seasons.