Disaster risk financing and insurance for disaster-proof Sri Lanka tourism

The path from vulnerability to viability

- By Prof. D.A.C. Suranga Silva

Spirited tourists engaged in relief work voluntarily in some of the Ditwah cyclone impacted areas

CLIMATE risks to Sri Lankan tourism are multifaceted and uneven, demanding tailored financial solutions that address the specific vulnerabilities of different industry segments rather than a one-size-fits-all approach.

It also demands a systemic approach against possible climate change impact to develop resilience through financial viability and long-term business development, more specifically against climate change impact affecting the operations of small local businesses besides the well-established national and international tourism business chains.

Furthermore, the impact of climate change on the tourism industry can be more severe to the industry or specific segments of it due to factors beyond geographical and weather changes.

Infrastructure of Sri Lanka tourism is mainly concentrated in two vulnerable areas:

Coastal regions: Approximately 70% of tourism assets lie along the 1,600km coastline, particularly in the southwest (Colombo, Galle, Bentota). These areas face rising sea levels (projected 0.3-0.5m by 2050), accelerating beach erosion, and intensifying cyclones.

The 2004 Tsunami caused $250 million in tourism losses, demonstrating catastrophic vulnerability. Over 1,000 coastal hotels, beaches and coral reefs that attract visitors are directly threatened.

Central highlands: Popular hill country destinations (Nuwara Eliya, Ella, Kandy) face increasing landslide risk from changing monsoon patterns.

The 2016-2017 landslides killed over 200 people and damaged critical tourism infrastructure including the scenic railway and access roads. Projected temperature increases of 1-2°C may alter the region’s signature cool climate and tea landscapes.

Currently, Sri Lanka is facing the worst flooding disaster in over two decades due to the climate change of the world.