Because of the lack of insurance, disaster relief is the major input for disaster recovery in many developing countries. After a disaster, the first relief usually is provided by the national government in the form of assistance by the military, the police, and other government services. Often, governments also act as the insurer for uninsured damages in these cases. When the capacity of local disaster relief institutions is exceeded, countries tend to call for help from international institutions. In the period 1992-2000, a yearly average of US$330 million was transferred from country to country for disaster aid (United Nations, 2000).

The institutional setting of international disaster relief is complicated. Presently, 16 UN agencies have a mandate that allows them to work in emergency situations. The UN Office for the Coordination of Humanitarian Affairs (UN-OCHA) is supposed to coordinate efforts in disaster relief. The International Committee of the Red Cross and the International Federation of Red Cross and Red Crescent Societies (IFRC-RCS) have a basis in international law. Médecins sans Frontières (MSF) and OXFAM are examples of internationally operating nongovernmental organizations (NGOs), of which there are hundreds. In addition, all types of local NGOs may be involved in the relief work, along with the national government and local authorities. In a typical disaster situation, one has to cope with a multitude of different agencies (Frerks et al., 1999). Donor governments and agencies as well as international organizations provide the funds; substantial amounts may be raised directly from the public at large.

The large amount of relief amount for cyclones in 1998 was largely a result of Hurricane Mitch, which struck Central America in that year. In the same year, Bangladesh and China were struck by very large flood disasters. The foregoing numbers show that on an annual basis, international relief is in hundreds of millions of dollars. This is a small number compared with total global damage from natural disasters (tens of billions of dollars).

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