Transcript Disaster Risk Management

Disaster Risk Management
Basic Concepts
Disasters and Development
Major natural hazards have larger
consequences in developing countries
than in industrialized nations
Factors related to relatively-lower
development levels contribute to
magnify such consequences
The impact of disasters on long term
development prospects is higher in
developing economies
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Disasters and Development..
In recent years, more than 90 per cent of
deaths caused by disasters in the world
have occurred in developing countries
The effects of major disasters have negatively
affected living conditions and development
prospects in said countries
During the past three decades, disasters have
caused more than US$ 50 billion in damages
and losses in selected countries of the Latin
America and Caribbean region, and caused
lower economic performance and living
conditions
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Disasters and Development...
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Recent, major disasters
have imposed heavy
burdens on the economy
and society of Latin
America and the
Caribbean
As an example, Hurricane
Mitch in Honduras
-
Annual GDP growth, %
-
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Caused damage and losses
that were equivalent to 70% of
GDP in 1998
And economic performance in
1998 and subsequent years
suffered a serious setback
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2
0
1996
1997
1998
1999
2000
2001
2002
-2
-4
-6
-8
Before Mitch
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After Mitch
4
Damage and losses in Central
America 1972-2001
8000
7000
Million US Dollars
6000
5000
4000
3000
2000
1000
0
1972
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1974
1976
1978
1980
1982
1984
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1986
1988
1990
1992
1994
1996
1998
2000
5
Frequency of disasters and magnitude of
damages are increasing
90
600
80
70
60
400
50
300
40
30
200
20
100
10
0
1950
0
1955
1960
1965
1970
1975
Number of Disasters
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1980
1985
1990
1995
Damage and Losses
6
Billion US$
Number of disasters
500
Damage, Losses, and
Macroeconomic Effects
Direct Damages: total or partial destruction
of assets immediately following a disaster
Indirect Losses: Modifications to production
flows or to the provision of essential
services
Macro-Economic Effects: Modifications to
performance of main aggregates of the
affected economy
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Source:
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Hazard, Vulnerability and Risk
Hazard is the probability of occurrence of a
natural event that may cause significant
damages, losses and other economic effects
Vulnerability is the propensity that a community
may have to sustain human losses, physical
damage and economic losses due to the
occurrence of a major natural event
Risk is the probability that damage and losses
may occur as a result of the occurrence of a
natural event of a given magnitude, in a given
time and place
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Risk
Risk is the result of the combination of the
occurrence of a natural hazard and of a
vulnerable human settlement or activity
Natural Hazard
Vulnerability
(With Damage and Loss
Potential)
(Propensity to
Damage and Losses)
RISK
(Probability and Magnitude of
Damage and Losses)
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Disaster Risk Management
Risk management is a process
of analysis and quantification
of the probability that damage
and losses are produced so
that prevention and mitigation
measures can be implemented
to reduce risk
Disaster Risk Management
Risk management involves implementing two
types of activities:
- Planning of vulnerability reduction
- Adoption of protection measures against
potential economic damage and losses
A comprehensive risk management scheme
should include:
- Ex Ante measures undertaken before a
disaster
- Ex Post measures carried after a disaster
occurs
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Disaster Risk Management..
•
•
•
•
Ex Ante
Risk Analysis
Prevention and
Mitigation
Measures
Risk transfer
Emergency
Preparedness
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Ex Post
• Emergency
Response
(Humanitarian
Assistance)
• Rehabilitation
• Reconstruction
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Ex Ante Activities for
Risk Management
Ex Ante Activities for
Risk Management
Natural hazard frequency
analysis using
historical records of
natural events
Vulnerability analysis
• Physical
• Social
• Economic
• Environmental
Risk analysis: potential
damage and losses
under different
scenarios
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Mitigation
• Retrofitting of
infrastructure
• Slope stabilizing
• Environmental
protection
Prevention
• Construction standard
updating
• Public awareness and
education programmes
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Ex Ante Activities for
Risk Management..
Risk Transfer: to
reduce financial
impact of disasters
to levels
commensurate with
country’s capacity
for reconstruction,
when mitigation
and prevention
measures are
unable to avoid
disasters
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Ex Ante financial
sources:
• Without risk
transfer
• With risk transfer
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No Risk-Transfer Financial Schemes
Non-Reimbursable
resources
• Calamity funds
• Reserve funds
• Budgetary resource
allocation
• Development and
Social Funds
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Reimbursable
resources
• Contingency Funds
• Development and
Social Funds
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No Risk-Transfer
Non-Reimbursable resources
Special Calamity Funds Government Budget
set up by governments
Resources that may
to finance mitigation
be reallocated to
and prevention (i.e.
finance prevention
Colombia)
and mitigation
Reserve Funds set up by
Development and
governments to
Social
Funds
that
finance Ex Post
may be used to
activities, that might be
finance Ex Ante
also utilized for Ex
activities
Ante endeavors (i.e.
Mexico’s FONDEN)
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No Risk-Transfer
Reimbursable resources
Contingency Loans (may be tapped
Ex Ante and require payment of
administration costs)
• International (IDB and World Bank)
• Domestic (Public and private banks)
Development and Social Funds (may
also provide contingency financing
to finance prevention and
mitigation)
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Risk-Transfer Financial Schemes
Insurance and Re-Insurance with
Damage and Loss Coverage
Catastrophe Bonds
- Reimbursement on basis of actual
damage and losses
- Reimbursement based on parametric
activation indicators
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Ex Post Activities for
Risk Management
The Three Phases after a Disaster
Rapid
Assessment
Rehabilitation
Emergency
Reconstruction
Int’l
Assistance
Strategic
Assessment
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Facing Reconstruction
Reconstruction requires:
• Diagnosis on direct damages and indirect
losses caused by disaster
• Formulation of strategy and plan for
reconstruction
• Specific sectoral project formulation
• Financing, local and international
Financing of reconstruction usualley
undertaken by drawing on more
immediately available and lower cost
resources
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Ex Post Financial Sources
Non Reimbursable
Funds
• Reallocated
resources from
national or municipal
budget
• Use of Government
monetary reserves
• Donations
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Reimbursable Funds
• Emergency Funds
(IDB’s Emergency
Reconstruction
Facility, World
Bank)
• Reallocation of
existing loans
• Fresh loans
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Who Bears Risk in Latin
America and the Caribbean
at the Present Time
Who Bears Risk
Governments are (non consciously and
for moral reasons) assuming risks
beyond their ownership and, at times,
beyond their financial capacity:
• Infrastructure (roads and bridges, ports
and airports, hospitals and schools,
office buildings, and water and energy
facilities, when not privatized)
• Housing for the poor
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Who Bears Risk..
The private sector normally bears
risk on:
• Property and production, usually
resorting to insurance
• Privatized essential services of
electricity, water supply,
telecommunications
• Housing, except for the lower
income population
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Disaster Risk Management
Decision makers do not perceive the need for
undertaking disaster risk management due
to:
- Difficulties in accurately and reliably
forecasting the possible occurrence of
natural events
- Estimated return periods are longer than
their periods of office
Thus, the need for risk management only
becomes obvious when a major disaster –
having high social, economic, environmental
and political consequences – or when
succesive disasters occur
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Reconstruction Financing
A Recent Example:
El Salvador after the 2001
Earthquakes
El Salvador Earthquakes:
Summary of Damage and Losses
Sector and Subsectors
Damage and Losses,
million US Dollars
Total Direct Indirect
Sectoral Distribution
Public Private
Social Sectors
Education
Health
Housing
617
211
72
334
496
190
56
250
120
20
16
84
238
69
72
96
379
142
--237
Infrastructure
Electricity
Water Supply
Transport
472
16
23
433
97
3
19
75
376
13
4
358
171
3
13
155
301
12
10
278
Production Sectors
Agriculture
Industry, Trade, Tourism
339
93
246
244
38
205
96
55
41
15
13
2
324
80
244
Environment
103
102
1
103
---
73
---
73
40
33
939 665
567
1043
Other Damages
Total
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1604
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Participation in Reconstruction Financing
Million US $
2,000
320
404
363
370
241
302
Reconstruction Costs
GOES
International Grants
Loans, reallocation
Loans, new
Private Sector
Insurance
15%
16%
12%
20%
19%
GOES Funds
Loans, Fresh
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18%
Int'l Grants
Private Sector
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Loans, Reallocated
Insurance
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Results of reconstruction scheme
After completing reconstruction of the 2001
earthquakes -- resorting to fresh and reoriented loans, using monetary reserves,
and having refinanced short-term loans
through long-term ones -- El Salvador has
reached a total debt that is equivalent to
47% of its GDP, or 4.6 billion US Dollars
Source: ECLAC, Balance preliminar de las
economías de América Latina y el Caribe 2003,
December 2003.
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Disaster Risk Management
Basic Concepts