An Analysis of Policy Frameworks on Business Formulization and Disaster Management to Mitigate Flood Loss and Damage Among Informal Businesses in Sri Lanka

Vindya Hewawasam () and Kenichi Matsui
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Vindya Hewawasam: Faculty of Life and Environmental Sciences, University of Tsukuba, 1-1-1 Tennodai, Tsukuba 305-8577, Japan
Kenichi Matsui: Faculty of Life and Environmental Sciences, University of Tsukuba, 1-1-1 Tennodai, Tsukuba 305-8577, Japan

Social Sciences, 2024, vol. 13, issue 11, 1-12

Abstract: The 27th Conference of the Parties to the United Nations Framework Convention on Climate Change in Egypt made a historical decision on disaster loss and damage for vulnerable countries. Even though parties agreed to salvage vulnerable nations with generous support, a fundamental question remains as to the extent to which these vulnerable countries can accurately identify the most vulnerable communities/areas. In Sri Lanka, informal businesses are particularly vulnerable to floods, but their informal status has limited the extent to which they could receive flood protection, including disaster-resilient infrastructure developments. The main objective of this paper, therefore, is to identify challenges that informal businesses have experienced in dealing with flood disaster risks. In doing so, we analyzed government policies and laws that are related to business formalization and disaster management. We also conducted interviews with key informants to verify our data. Our analysis found that the Sri Lankan government requires informal business owners to follow complicated rules to register their businesses. For these owners, who are not highly educated, these processes and fear of high tax rates discouraged registering their businesses. The central government tends to prioritize flood mitigation actions for formalized business areas. Informal businesses are not usually covered by flood insurance and compensation. In conclusion, we emphasize the need to establish widely available legal and administrative support for informal businesses to register. Adopting business continuity plans (BCPs) and keeping standardized business records also help businesses minimize flood loss and damage.

Keywords: business formalization; disaster management policy; informal businesses; flood loss and damage; flood vulnerability; Sri Lanka (search for similar items in EconPapers)
JEL-codes: A B N P Y80 Z00 (search for similar items in EconPapers)
Date: 2024
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