Due to its geographic location and geotectonic features, Costa Rica is highly exposed to geophysical and hydrometeorological phenomena. Disasters connected to these kinds of natural events have a social, economic and financial impact, with 77.9% of the population and 80.1% of the country’s economic activity concentrated in areas of high disaster risk. According to the risk profiles available for Costa Rica, floods, tropical cyclones and earth quakes have been identified as the most frequent and severe hazards. By 2030, annual losses associated with the aforementioned hazards, amongst others, could exceed USD 7 billion, and could reach almost USD 30 billion by 2050 (both figures adjusted to 2006 constant dollars).

Such losses would have important repercussions on Costa Rica’s economic and social development. Based on consultations conducted as part of the Global Shield against Climate Risks In-Country Process in Costa Rica, the following sectors were prioritised as the most vulnerable to the impacts of climate change: (1) critical infrastructure, (2) agriculture and fishing, (3) natural capital and (4) tourism. In Costa Rica’s infrastructure sector, for example, the annual cost of repairing and rebuilding infrastructure affected by floods, storms and droughts went from approximately USD 17.2 million in 1988 to USD 392.5 million in 2010, representing 1.01% of the country’s GDP in the latter.

To date, the information available has not allowed the current financial protection gap to be quantified. The Stocktake and Gap Analysis Report presents a stocktake of the information available on risk, the enabling environment in Costa Rica and existing protection in each of the three layers of financial risk management. Based on the stocktake, an extensive analysis of the existing gaps and barriers was conducted, as well as the opportunities and necessary interventions to close the financial protection gap.