Title: Special lecture: Economic aspects of disasters Ricardo Zapata-Marti Regional Advisor Focal Point for Disaster Evaluation, ECLAC
1Special lecture Economic aspects of
disastersRicardo Zapata-MartiRegional
AdvisorFocal Point for Disaster Evaluation,
ECLAC
- Task Force for Emergency Preparedness
- Second Emergency Management CEO SeminarAugust
12-14 - Lima, Perú
2The bottom line
- Experience over the recent years both in Latin
America and Southeast Asia supports the notion
that a comprehensive socioeconomic and
environmental assessment of disasters leads to a
profiling of disasters that enables the
formulation of reconstruction of affected
infrastructures (including the protection of
critical infrastructures, with particular
reference to public security in sectors such as
health, water and sanitation, food security,
energy, etc.). - A comprehensive analysis of damage (physical
destruction of assets in all sectors of a
society, community or economy valued at
replacement costs) and losses (income lost,
production not realized, employment reduction,
budget deficits associated wih post-event
emergency and recovery expenditures and tax
revenue losses incurred) allows - a perspective on cross-cutting themes such as
gender and disasters, ethics in risk management,
environmental risk and the issues of governance, - risk dialogue and consensus building based on
assessments, and the mobilisation of resources
for risk reduction
3New Gap
An additional deficit is created from the
pre-existing gap between the prevalent situation
vis-à-vis the development goals and the emerging
recovery objectives.
4- HUMAN
- Health
- Education
- Livelihoods
- Housing and shelter
- Cultural identity
- SOCIAL
- Social capital and social networks (solidarity
and equity) - Family ties, gender perspective and extended
family networks and links - Violence, security and rights
- NATURE / ENVIRONMENT
- Clean water, wage disposal and sanitation
- Clean air
- Biodiversity and integrity of ecosystems
- Climate variability and change
- PHYSICAL INFRASTRUCTURE
- Quality and resilience of human built environment
(settlements and rural/urban planning) - Transport and communications, energy and other
basic lifelines - Productive infrastructure
- Other built infrastructure (public services,
government buildings)
- POLITICAL
- Governance
- Transparency
- Participation, inclusion and political rights
- Access to information
- FINANCIAL
- Access to credit
- Land tenure, legal rights
- Compensatory mechanisms and funds
- Insurance and financial protection
5Risk management and adaptation
Damage and costs
MANAGEMENT, TRANSFER AND REDUCTION MITIGATION
ADAPTATION EVOLUTION
HAZARDS Baseline modified by variability
and change
RISK Multi stresses More severely affected by
vulnerability but aggravated by changes in
hazards patterns
VULNERABILITY Diverse, local Sector specific
RESILIENCE
6An integrated framework, a systemic perspective
IMPACTS ON NATURAL NAD HUMAN SYSTEMS Food and
water resources Ecosystems and biodiversity Human
settlements Human health
CLIMATE CHANGE Temperature rise Sea level
rise Precipitation change Droughts and floods
Adaptation
Unwanted evolution
Adaptation and Mitigation
EMISSIONS AND CONCENTRATIONS Greenhouse
gases Pollution (air, water, soil, sea)
Socioeconomic development paths Economic
growth Technology Population Governance
Current paradigm
7Reasons for the increase in natural catastrophes
and natural catastrophe losses
- Global population growth (exponential
development) in 1800, for example, there were
one billion people living on the earth, today
there are 6.3 billion. - The rising standard of living in nearly all
countries of the world produces growing
accumulations of wealth which are hit in the
event of a catastrophe. - Concentration of population and values in
conurbations the emergence of numerous mega
cities - even in exposed regions (e.g. Tokyo 30
million inhabitants) - Settlement and industrialisation of very exposed
regions, especially coasts and river basins,
tourism in danger zones, e.g. Florida - Vulnerability of modern societies and
technologies, structural engineering, devices and
equipment, networks problems involving suppliers
too - Increasing insurance penetration throughout the
world, i.e. the proportion of insured goods is
mounting globally. Consequently, insured losses
are escalating even faster. - Global changes in environmental conditions,
climate change, water scarcity, loss of
biodiversity
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12ECLACs disaster assessments over the years
Period AFFECTED POULATION AFFECTED POULATION TOTAL DAMAGE AND LOSSES
Deaths Primary affected population (millions of US dollars, at 2004 value)
1972-1980 38,042 4,229,260 78,085
1980-1990 34,202 5,442,500 101,251
1990-1999 32,648 2,518,508 31,367
2000-2010 (estimated) 18,032 35,478,470 50,050
1972-2005 122,924 47,668,738 260,753
Yearly average 3,725 1,444,507 7,902
Of which of meteorological or climatic nature 50,067 22,929,198 127,923
Source ECLAC led assessments since 1973 Source ECLAC led assessments since 1973 Source ECLAC led assessments since 1973 Source ECLAC led assessments since 1973
13Total insurance growth, penetration and density
by region
14Appropriation of risk needed to promote risk
reduction
- Need for institutional and regulatory changes
- Use of market to value (price) risk
- Need for social policies for compensation and
promotion (provide gender, age, ethnic sensitive
instruments) - See risk reduction as a business opportunity
- Imperfect or inactive markets require government
action / intervention
15LEVEL OF DISASTER IMPACT
- Indicates coping and adapative capacity
Excedence (residual or excedent risk)
Risk to be covered (financial gap)
Acceptable risk
16ESTABLISHING RISK FINANCING NEEDS
CAT bonds
Probability or return period
Risk type
50-200 years
Parametric coverage
Resource gap
Catastrophic risks
20-30 years
Contingency funds
Budget constraint
2-3 years
Reserve funds
Recurrent multi-hazard risks
17Policy implications
- Exposure to disaster risks is not unlike exposure
to other risks (financial, commercial, social,
political) - Exposure to risk has a positive correlation with
poverty disasters impacts are not distributed
homogeneously neither in location nor in impact - Social impact is regressive direct linkage
between vulnerability and poverty, vulnerability
and marginalization, vulnerability and gender or
ethnicity
18Appropriation to promote reduction of risk (in
the face of extreme events and climate change)
- Need for regulatory and institutional changes
- Markets as clearing houses to price risk (beyond
insurance) - Need for social policies for compensation,
promotion and solidarity - Risk management is an investment / business
opportunity - Imperfect markets require governmental
intervention
19The role of ECLAC in respect of disaster
assessment and risk reduction
- In response to its member countries, has over 35
years assessed disasters socioeconomic impact - Developed a methodological tool for damage and
loss assessment (DALA), now recognized as the
international standard for post-disaster
assessment - Has accumulated quantitative evidence that allows
for economic analysis of risk, which may be
extrapolated for disasters future impact and
could be used to quantify partially the
socioeconomic implications of climate change and
approach the valuation of adaptation costs - Has increased national capabilities and
contributed to policy changes in Latin America
and the Caribbean and in other regions, namely
South East Asia in cooperation with ESCAP and the
World Banks GFDRR
20- Thank you!
- http//www.eclac.org/
- http//gfdrr.org/
- http//www.proventionconsortium.org/
- http//groups.google.com/group/pdna-for-recovery
- http//www.recoveryplatform.org
- http//www.undp.org/cpr/iasc