Transcript SUBJECT 2

SUBJECT 2. Valuation of the
impact of disasters
DAMAGE AND
RECONSTRUCTION NEEDS
ASSESSMENT MODULE
DAMAGE AND LOSSES
•
•
•
•
•
EFECTOS DEL TERREMOTO DEL 13 DE ENERO DE 2001 EN EL SALVADOR
Loss of life or injury
Reduced welfare and well being
Material losses and damage
Disruption of “normalcy”
Degrees of affectation
PORCENTAJE DE VIVIENDAS AFECTADAS POR DEPARTAMENTO
(GRAFICO CON DISTRIBUCION DE HOGARES SEGUN MATERIAL DE CONSTRUCCION)
CHALATENANGO
N
SANTA ANA
CABANAS
MORAZAN
SAN MIGUEL
AHUACHAPAN
W
E
S
LA UNION
SONSONATE
LA LIBERTAD
Tipo de material
Concreto
Bahareque y adobe
Otros materiales
SAN SALVADOR
LA PAZ
SAN VICENTE
% Viviendas afectadas
USULUTAN
0.1 - 6.7 %
6.7 - 15.8 %
15.8 - 30.1 %
30.1 - 74.2 %
30
0
30
LA UNION
SAN MIGUEL
60 Kilometers
Fuente: información del COEN al 2 de febrero de 2001
Encuesta de Hogares de Propósitos Multiples 1999. DIGESTYC
Some things are easier to measure
than others
•
IT IS DIFFICULT TO DETERMINE
– The value of lives lost or affected
– The opportunity cost, cost-benefit or
investment / profitability. This is
associated with the lack of adequate
base lines that assess the level,
quality and efficiency / efficacy of
health services provided
– The value and quality of services
provided (both curative and
preventive)
– The duration of the transition /
emergency phase (when field
hospitals and evacuation processes
are operational)
•
IT IS EASIER TO DETERMINE
– The amount of investment required for
reinforcement vs. The potential losses
in equipment and inventories
– The cost of reinforcement as
compared to the reposition cost of
affected infrastructure
– The alternative cost of providing
services when infrastructures
collapse
Some figures on the impact of disasters
in Latin America and the Caribbean
Deaths (1972-2003)
Directly affected population (primary) (thousands)
Total affected population (‘000)
Total Damage (millions of dollars)
110,000
0.02%
15,000
2.68%
160,000
28.57%
65,000
Yearly average amount (millions of dollars)
2,300
As percentage of exports of goods and services
0.55%
As percentage of foreign direct investment
7.92%
Source: ECLAC
Ricardo Zapata
ECLAC / DMF Workshop
26
Main Concepts
Direct damages
• Impact on assets
– Infrastructure
– Capital
– Stocks
• Occur immediately
during or after the
phenomenon that
caused the disaster
Indirect Damages
• Effects on flows
– Production
– Reduced income and
increased expenses
• Are perceived after the
phenomenon, for a timeperiod that can last from
weeks to months, till
recuperation occurs
WHAT IS IT THE VALUATION
METHODOLOGY:
Impact
assessment
INDIRECT EFFECTS
Loss of services:
Supply / demand mismatch
Imbalance, inadequacy / resilience
Rehabilitation and reconstruction stages
Emergency cost estimates (evacuation, field hospitals,
alternative facilities / services)
Impact analysis
(duration of evacuation and / or use of
Alternative facilities vs. opportunity /cost,
Cost/benefit, costs / profits)
INTERVENTION:
Prevention and mitigation plan
Operational phase, an evaluation:
Updating, revision, prevention reinforcement
and mitigation
(update and maintenance of technological edge)
Technical criteria
Management criteria
Assessment of health network
(sanitary system)
DIRECT DAMAGE
Goods, equipment,
Budget changes
(cost / investment)
Preparation of
technical dossier
Operational maintenance
Training in use of methodology
conservation
Prediction
Prevention
Restoration of service
Determine the situation caused
by the disaster
The value we determine
•
•
•
Stemming from sector valuations
assess the value-added changes
expected for every sector in the
short term and for a medium-term
period to be agreed (3-5 years or
more)
Supported by input-output tables
or sector weighing factors
determine the projection of
damages of one sector to the
others
A damage scenario is built (taking
into account the measured losses
at replacement value) : variations
in the main economic gaps is
highlighted: external sector, fiscal
deficit, internal equilibrium
(prices, exchange rate, etc.)
The images we see
SECTOR BY SECTOR VALUATION
METHODOLOGY
• Social Sectors
– Housing
– Health
– Education, culture,
sports
• Infrastructure
– Transport and
communications
– Energy
– Water and sewerage
• Productive sectors
– Goods: agriculture,
industry
– Services: commerce,
tourism, etc.
• Global impact
– On the environment
– Gender perspective
– Employment and
social conditions
– Macroeconomic
assessment
An example: COMPOSITION OF
DAMAGES CAUSED BY MITCH IN
CENTRAL AMERICA
SOCIAL SECTORS
millions of US dollars
3000
2500
INFRASTRUCTURE
SERVICES
2000
1500
PRODUCTIVE
SECTORS
1000
500
0
SECTORS
ENVIRONMENT
(protected areas)
VALUATION CRITERIA
• Valuation of direct damage will depend on the purpose of the
valuation
– For historical record and comparison over time and with other
disasters, present value accounting cost should be used
• For reconstruction planning and mitigation strategies
– Replacement prices should be used.
– Mitigation investment, in terms of reinforcement, redesign,
relocation or vulnerability reduction additional values should be
incorporated.
• Valuation of indirect losses will always be done at current
market prices of:
– Lost production and supply of goods and services
– Additional cost of provision of goods and services under disaster
emerging conditions
– Business losses due to reduced sales and or activity
• When insurance exists, covering assets (infrastructure,
buildings, machinery, stocks, etc.) or business loss, value will
be established on the basis of covered amount, comparing it to
total estimated loss.
MEASURING THE DAMAGE “DELTA” OR
DAMAGE GAP
Pre-existing
conditions (ex ante)
The measure
Of direct and indirect damages
Upon the pre-existing situation
(sector by sector baselines) is aggregated into the
national accounts and determines the resulting disastercaused scenario, as the gap over the expected
performance prior to the event. Several scenarios may
be outlined, based on the assumptions made for the
reconstruction process
Expected
performance (without
disaster) 3-5 years
Disaster impact
(ex post)
3-5 years
VALUATION PROCEDURE
 D = Va – Vb
Where Va is the initial condition expected for a variable (sectoral,
weighed) and Vb is the discounted effect of the disaster.
 K = Ka – Kb
Measures the capital (assets) lost, estimated by compiling direct
damages computed sector by sector.
Y = Ya – Yb
Measures the production/income losses
The capital/income-production ratio is generally
assumed not to vary substantively as a result of the
disaster
Know the pre-existing situation
• Identify the core development factors of the economy
• Identify the main characteristics at the time of the
disaster: face of the economic cycle, seasonal
elements, indebtedness level, domestic savings, FDI
flows, etc.
• Access the macroeconomic data bases from national
authorities, academic analysts and/or consultants and
advisors in the country
• Identify existing econometric models for the local
economy
• Identify if input-output tables are available or determine
weighing factors that indicate inter-sectoral linkages.
THE EFFECT OF SUCCESSIVE DISASTERS ON
CAPITAL FORMATION
GROSS CAPITAL FORMATION
Adapted from Mora, “El impacto de los desastres, aspectos sociales, polítifcos económicos, ambientales
y su relación con el desarrollo de nuestros países (BID, 1999)
*
DISASTER
DEVELOPING COUNTRIIES
INDUSTRIALIZED COUNTRIES
*
*
*
*
TIME
Summary table
SECTOR
DIRECT
Physical
PRODUCTIVE SECTORS
Agriculture (includes cattle raising,
fisheries and forestry)
Industry
Commerce
Services
- Financial and banking
- Tourism
- Personal and other
INFRASTRUCTURE
Water (drinking, irrigation, drainage,
sanitation and sewerage)
Energy (generation, transmission,
distribution)
- Electricity
- Other (petroleum, gas, etc.)
Transport and communications
SOCIAL ASPECTS
Education
Health
Housing
Cultural heritage
Social fabric
ENVIRONMENTAL ASPECTS
TOTAL
GOVERNMENT SECTOR
IMPLICATIONS
- Revenues
- Expenditures
Monetary
estimate
INDIRECT PUBLIC PRIVATE TOTAL
EXTERNAL
IMPACT
Summary of global impact
Ex-ante
situation
(current
III. MACRO / GLOBAL IMPACT (current value) period)
Ex-post
situation Short/medium
(present term projections
period)
(scenarios)
Scenario 1
(Below trend)
1. GDP
External Balance (A+B)
- Exports
- Imports
A - TRADE BALANCE
B - CURRENT AND CAPITAL ACCOUNT
BALANCE
- Net loans (considering service and
repayment)
- Net donations
- Net transfers (private)
- Other net incoming resources (insurance and
reinsurance payments)
2. FISCAL BALANCE
- Revenues
- Expenditures
3. CAPITAL ACCOUNT
- Gross capital formation
- domestic investment
- foreign direct investment
Scenario 2
(Average or
Scenario 3
trend)
("Optimistic")
The question of expected future
performance
Future Scenarios
EL SALVADOR:POSSIBLE RECONSTRUCCION
SCENARIOS, 2001-2003
l 1st. Scenario: damage assessment and event’s impact,
Taking into account no longer the replacement but the reconstruction
costs
l Emerging reconstruction priorities, sector by sector
l The emerging reconstruction strategies in the immediate weeks after
the disaster
l The economy’s absorption capacity of foreign resources
l The economy’s capacity to execute projects
l The performance of key economic variables in the face of an increase
or impending reorientation of resources for reconstruction: interest
rates, indebtedness, inputs and production means availability (raw
materials, capital goods, domestic saving, labour force, etc.)
l
6.0
GDP annual grow th rate
without including reconstruction actions
l Alternative reconstruction scenarios
5.0
5.0
4.0
4.0
3.5
3.0
3.4
3.0
2.0
4.5
4.0
4.0
3.1
3.2
2.0
Pessimistic
1.0
0.0
1999
Probable
2000
2001
2002
Year
ECLAC - 2002
HANDBOOK FOR ESTIMATING THE
IMPACT OF DISASTERS
2003
Optimstic
138
ORGANIZATION OR
PROCEDURAL ASPECTS OF
ASSESSMENT EXERCISES
• Composition of team: multisectoral,
interdisciplinary, interinstitutional
• Timeliness: within the “window of opportunity”, not
interfering with emergency actions
• Ensure full coverage and avoid duplication
• The need for “judgment calls” or the educated
guessing of experts
• Difference between emergency needs and rapid
assessment of need for reconstruction
Summary of basic concepts
• Direct and Indirect effects
• Valuation methods
• The damage “delta” or the gap caused in
performance by the disaster
• Sector by sector evaluation of losses, damage and
indirect effects
• Summation of damage in a non duplicative way
• Valuation of impacts not present in the national
accounting system (environment, gender,
psychological impacts)
• Short and medium term effect on the performance of
the economy
• Modeling alternative scenarios