Transcript CBSL

Assessment of the Impact of
Natural Disasters
Current Practice
D.M. Rupasinghe
Senior Economist
Central Bank of Sri Lanka
What are the common natural disasters in
Sri Lanka ?
(a) Droughts
(b) Floods
(c) Landslides/earthslips
(d) Cyclonic winds - followed by torrential
Why Assesses Damages?
Impact on the livelihood of the
To quantify the losses
To quantify the rehabilitation and
reconstruction cost.
To measure the macroeconomic
Environmental impact
To identify required relief measures
To provide details to donor
Areas of Macroeconomic Impact
Real sector
External sector
Fiscal sector
Monetary sector
Reporting Procedure
Part I : Introduction
Part II : Evaluation of the impact on
property, economic activity and prices.
Part III : Brief account of relief measures
and donor assistance
Evaluation of the impact on property,
economic activity and prices (focusing
Impact on Human life
Number Missing
1. Impact on Private and Public property
(a) Private property
houses, business centres,
factories, bank branches etc.
(b) Public property
schools, medical institutions,
post offices, and other
government buildings.
(2) Economic Infrastructure ;
Energy - electricity, petroleum
Transport : Roads, bridges, rail roads
and transport equipments
Irrigation facilities
(3) Health, education and other social
stock damage
(b) Cost on disease control
(c)Water and Sanitation
Education :
Use schools for displaced families
damages to the other facilities
Cost of re-opening
Relief payments
(4) Impact on Economic
4.1 Agricultural Sector
Agriculture, forestry
and fishing
Other field crops
4.2 Impact on the Industrial Sector
Mining and quarrying (Gem mining )
Processing of plantation crops
Factory industry
Small industry
4.3 Construction
Reconstruction of roads,
building and
other infrastructure.
4.4 Impact on the services sector
Electricity, water and gas
Electricity - Loss of electricity supply
Water - Decline of water production
Petroleum- Drop of Sales
Transport, storage and communication
- Interruption to transport services
- Interruption to communication services
- Port services
Banking, insurance and real estate
- Impact on banking service
- Possible credit loss
- Impact on insurance industry
Impact on prices
(a) Due to loss of production
(b) Disruption to distribution network
(c) Demand pressure
(d) Disturbances to Market operations
(6) Impact on Balance of Payment
Exports, imports and services
Foreign financial assistance
(7) Government Finance
Impact on government expenditure
a) Emergency Relief
b) Rehabilitation and resettlement
c) Reconstruction cost
Impact on government revenue
Impact on tax revenue
loss of economic activities,
change in consumption,
exemption of import
duties etc.
What is not covered ?
Indirect losses (Possible to quantify)
a) High operational cost due to
destruction to physical infrastructure
and inventories
b) Diminished productivity in other
sectors due to the total or partial
paralysis of activities.
c) Additional cost on alternative means
of production.
d) Cost on budgetary re-alignment.
e) Income reduction due to non-
availability of public utilities
f) Cost incurred by third parties involved
in attending affected people
g) Additional cost on dealing with the
new situation
h) Loss of production due to backward
and forward linkages
Indirect Losses (Impossible to quantify)
Certain Environmental impact
Social impact
Impact on well being and quality of life
Certain opportunity costs
Quality of services providers
Loss of productivity
Change of development priorities
Report on the Impact of Floods in
May 2003
Torrential rains commencing on 16 May,
coupled with the cyclonic winds, resulted in
heavy flooding and landslides in various parts
of the country, the worst-ever since 1947,
with an extreme impact on the districts of
Ratnapura, Matara, Galle, Kalutara and
2. Damages
 This resulted in a severe damage to both
human and physical capital in the country.
Provisional estimates show a loss of output of
about Rs.2.5 billion at 1996 prices (0.27 per
cent of GDP), i.e., about 0.3 percentage
points decline in GDP growth for 2003, with
hardly any impact on consumer prices in May
 The biggest damage was to human life, with
the death toll amounting to 265, and about
500 people believed to be missing. About
188,000 families have been displaced in the
five districts.
3. Social and economic infrastructure
Social and economic infrastructure has been
devastated with heavy damage to schools, power
distribution, telecommunication network, and
transport facilities. Overall health conditions in the
districts could deteriorate due to the non
availability of clean water and sanitary facilities,
infrastructure such as roads, electricity and
telecommunication facilities are being restored
4. Economic Activities
The adverse impact on economic
activity in those districts, as well as in
the rest of the country, is estimated to
require a downward adjustment in the
GDP growth rate from 5.5 per cent to
about 5.2 per cent. The worst hit
sectors are agriculture, industry and
some services. Exports will have a
marginal negative impact, and the
import requirement will increase.
The Agriculture sector is likely to show
an overall decline of 0.9 percentage
points mainly due to the decline in the
production of tea, rubber, paddy and
other field crops. The overall contribution
to the decline in GDP growth from
agriculture is around 57 per cent.
Industrial Sector
The Industrial sector accounts for about 16
per cent of the decline. The impact on the
industrial sector is seen mainly in gem mining
and processing of tea and rubber. Gem
mining will show a serious decline,
contributing about 32 per cent of the overall
change in GDP. Factory industry is unlikely to
show any significant impact, as factories
located in the flooded areas have not
seriously been affected.
Service Sector
The contribution of the services sector to the
overall decline in GDP growth will be around
27 per cent, with telecommunications,
transport, exports, internal trade and banking
services showing a decline, while imports
show an improvement. The Construction is
also likely to grow by an extra 1.5 percentage
points, compensating about 36 per cent of
the reduction in GDP growth.
5. Prices
The impact on overall prices, in May, thus far,
appears to be minimal in the main markets
outside the flood affected areas. Prices in
June may rise more than the seasonal
increase. However, with the positive impact
of overall price declines in the early part of
the year and anticipated favourable fuel
prices, annual inflation may remain within the
earlier estimate of 7.5 per cent for 2003.
6. Unemployment
Damage to physical property and
But, the rapid
rebuilding work may increase labour
absorption and unemployment would
only be a short-term problem.
7. Balance of Payment
The Overall Balance of Payments
situation may not change adversely,
though there could be an increase in
trade gap. Aid inflows may effectively
compensate a large part of this
8. Fiscal expenditure
Fiscal expenditure will rise mainly due to the
provision of social services, and restoration of
infrastructure, over and above the aid
received. Government revenue will be
affected along with the reduction in economic
activity. The overall impact on the budget
deficit will be limited as part of additional
expenditures is expected to be covered with
additional foreign assistance.
Thank you.