Applications of the ECLAC methodology in Latin America and Asia

Applications of the ECLAC methodology in Latin America and Asia Review of the progress and adaptations in light of recent experiences Ricardo Zapata, Focal Point for Disaster Evaluation ECLAC Evaluation 2 1

Evaluation 3 There are different approaches to risk: Living in it Living with it What is impossible is to ignore it. Not measuring the impact of unattended built risk is precisely ignoring it: Quantifying and making it visible to decision makers is the first step A healthy approach is to reduce it and, by appropriating it, transferring it. Other development goals and major strategies for poverty reduction must live wit risk: appropriate it and discount it as part of the investment strategy and programme and project planning Evaluation 4 2

The importance of economic assessment of damage and needs Have a record on damage caused by past events Establish link between level of damage and magnitude or strength of a certain category of event Value losses to quantify needs for rehabilitation and reconstruction Put in evidence the benefits of mitigation and reduction Make information available to potentially affected or exposed communities (stakeholders) Evaluation 5 Evaluation 6 3

Evaluation 7 The CEPAL/ ECLAC experience First a thank you note: To bilateral cooperation: Italy, the Netherlands, individually affected countries IFIS (World Bank and IDB) and UNDP Experts and UN agencies (PAHO, ILO, FAO, UNEP, UNFPA, etc.) Researchers and consultants (ADPC for example) Secondly: Where we are at present: the data and the research Increasingly complex assessments Examples of adaptation: Mexico, Gujarat, case by case emphasis, ESCAP/UNDP/ECLAC project Collaboration in identifying disaster risk indicators Link disaster s s impact to development processes, climate change and MDGs Evaluation 8 4

The vision and the mission: economic assessment reduces vulnerability VISION Development is a systemic process, integrated and integrating, sustainable if comprehensive, participative and inclujsive. Basic pillars of ECLAC s s vision are: Competitiviness Equity Governance Sustainability Sustainability (both in the envronmental and economic sense: equilibria of macro variables coupled with growth and appropriate use of natural resources preserving inter- generational equity) Resilience (by facing and reducing vulnerability in socioeconomic, environmental and political terms, providing better response mechanisms in the face of external shocks, physical, economic, internal and external) MISSION Follow up, analyze and interpret the socioeconomic, environmental and political process in the countries in the region (improve comparative analysis and promote dialogue) Provide technical assistance in policy formulation and contribute to the debate on development paradigms Promote studies that focus on development issues and advance the MDGs Promote diaologue among the different stakeholders in the decision making process (private sector, public officials, academia, NGOs, etc.) Collaborate with other agencies and organizations in the UN family and donor community in common goals and in assistance to countries Promote cooperation and integration initiatives at the national, sub regional and regional levels Evaluation 9 Impacts, development and adaptation: reduce risk by managing vulnerability and assessing adaptation needs and costs PROCESSES (DRIVERS) Globalization, poverty, urbanization, demographic movements (aging, migration, etc.) VULNERABILITIES (RESPONSES) Built infrastructure, settlements, economic and other human activities, habitats and ecosystems CLIMATE AND OTHER NATURAL STRESSORS Scientific information and modelling: from past data to forecasting COPING CAPACITY: awareness, cost/benefit, market and non-market instruments SENSITIVITY: resources and capital (human, social, economic) EXPOSURES: multi- hazard and change over time Evaluation 10 5

Discussions points: Present achievements A longstanding methodology for assessing the (direct) losses and (indirect) damages that compile the impact of a major natural disaster Developed by the Economic Commission for Latin America and the Caribbean (ECLAC), seen as both a fund raising instrument to present to the donor community and a planning tool for recovery is increasingly systematically applied by the World Bank and regional development banks to provide the basis and / or justification for multilateral loans for reconstruction accepted by governments, donors, the IFIs and the UN system and capacities have been developed at all levels for its application following disasters. A cross-cutting, cutting, multisectoral, inteinstitutional tool A major drawback: it is demand driven, so depends on whether governments see the need to use it or not. Does not allow for a systematic, ongoing data gathering process Evaluation 11 Discussion points: Gaps or perceived needs towards a standardized methodology Define what is it for Determine differenced between damage /losses assessments from needs assessments See successive assessments as complementary not competitive tools Not to overwhelm governments in time of crisis with repetitive questions and assessment missions Governments give an uneven response to these initiatives and local or national capacities have not been developed in high risk countries. There is a lack of consensus as to how to fill the gap: Within the UN system, or amongst a cadre of experts The questions remains: how to apply such a methodology in practice ce Need to standardize criteria / definitions Reinforce pre-disaster base line data collection Train relevant national officials / institutions Evaluation 12 6

Main Concepts Damage (Stocks) Impact on assets Infrastructure Capital Stocks Occur immediately during or after the phenomenon that caused the disaster Losses (Flows) Effects on flows Production Reduced income and increased expenses Are perceived after the phenomenon, for a time- period that can last from weeks to months, till recuperation occurs Evaluation 13 Decomposition of total damage Direct damage Indirect effects Reconstruction costs Effects on the economy Asset losses Production costs Cost increases Income reduction Primary damage Secondary effects Tertiary impact Public sector Private sector Public investment Projects Private and investment resource fund raising Evaluation 14 7

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 Evaluation 15 ΔD D = Va Vb Where Va is the initial condition expected for a variable (sectoral, weighed) and Vb is the discounted effect of the disaster. Δ K = Ka Kb Measures the capital (assets) lost, estimated by compiling direct damages computed sector by sector. DY = Ya Yb Measures the production/income losses The capital/income-production production ratio is generally assumed not to vary substantively as a result of the disaster Evaluation 16 8

Measuring the cost of impact (and mitigation or adaptation) Baseline situation (ex ante) Historical trend (without climate change) based on past performance of economy Measurement of impacts Direct and indirect Over the preexisting situation (baseline, historical trend, by sector) Carried into the national accounts as effect on value added and estimated for alternative scenarios as the gap between trend and scenario results. Scenarios reflect on the one hand impact cost and on the other mitigation m / adaptation investment Cimate change (ex post) To include expected or desired investment Evaluation 17 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 Evaluation 18 9

IMPACT OF DISASTERS IN LATIN AMERICA AND THE CARIBBEAN 1972-2005 2005 (based on ECLAC assessments) PERIOD AFFECTED POPULATION Deaths Directly affected population TOTAL IMPACT (CONSTANT 2004 VALUE) TOTAL DAMAGE (to assets) LOSSES (in flows) External impact 1972-2005 2005 115,176 35,463,890 232,259.4 150,335.0 80,424.3 77,221.0 YEARLY AVERAGE (on the basis of ECLAC assessed disasters in Latin America and the Caribbean) 3,490 1,074,663 7,038.2 4,555.6 2,437.1 2,340.0 Evaluation 19 DIFFERENT IMPACTS OF DIFFERENT EVENTS (as observed in ECLAC assessments, 1972-2005) 2005) AFFECTED POPULATION Deaths Directly affected population TOTAL TOTAL IMPACT (constant 2004 prices) DAMAGE (to assets) LOSSES (in flows) External sector impact METEOROLOGICAL (CLIMATIC) EVENTS 50,424 24,945,145 118,926 73,382 43,304 35,600 GEOMORPHOLOGICAL (SISMIC, VOLCANIC) EVENTS 64,752 10,518,745 113,334 76,953 37,120 41,621 Droughts 35 2,200,000 10,599 5,888 4,712 3,141 TOTAL ASSESSED EVENTS 115,176 35,463,890 232,259.4 150,335.0 80,424.3 77,221.0 Meteorological as % of total 44% 70% 51% 49% 54% 46% Droughts as % of total 0.07% 8.82% 8.91% 8.02% 10.88% 8.82% Damage composition Meteorological or climatic total Non-climatic Droughts 64.7% 61.7% 67.9% 55.5% 34.6% 36.4% 32.8% 44.5% 33.2% 29.9% 36.7% 29.6% Evaluation 20 10

Future requirements: the road not taken Have a systematic comparable data base over time and geographically comparable Currently different organizations and agencies collect data independently at different periods and at different scales, duplicating efforts and hampering data integration. Little synergy between the data collection efforts during the emergency ergency phase either by UN system, NGOs, IFRC and government agencies, and a data collected during IFI assessment missions. Lack of explicit difference between perception of needs: By donors to define humanitarian and recovery interventions By UN agencies to fund projects By IFIS to provide emergency / recovery / regular loans or to reprogramme, reorient existing loans There is an undeniable turf battle over disaster management, response and recovery and not enough concern about mitigation, effective preventgion,, and adaptation (a.k.a. reinforcement and resilience) Evaluation 21 HUMAN -Health -Education SOCIAL -Social networks (security and solidarity) -Family ties and extended family -Violence and security NATURAL -Clean water -Clean air -Biodiversity and ecosystem (microclimate) PHYSICAL -Type and quality of settlement and housing FINANCIAL -Access to credit -Land tenure and ownership 11

HUMAN 100 PHYSICAL 10 1 SOCIAL FINANCIAL NATURAL Past Current Mid-term Long term Evaluation 24 12

El Niño o 97-98 98 effects in the main economic variables of Andean countries GDP DECREASE IN 1998 EXPORT DECREASE IN 1998 0-1 % -2-3 Bolivia Colombia Ecuador Perú Venezuela 0 % -20-40 Bolivia Colombia Ecuador Perú Venezuela PREVENTION AND EMERGENCY EXPENDITURE VS. FISCAL BUDGET IN 1998 ECUADOR ANNUAL INFLATION RATE 10 % 5 0 40 Bolivia Colombia 30 Ecuador % 20 Perú 10 Venezuela 0 1994 1995 1996 1997 1998 Evaluation 25 Macroeconomic effect: decreased national growth rates caused by Mitch 0-2 -4-0.3-0.3-1.4-0.9 % -6-8 -10 GDP decrease in 1998-9 -9.0 Costa Rica El Salvador Guatemala Honduras Nicaragua Evaluation 26 13

Global dynamic effects Macroeconomic effects Repercussions are felt in the national, local or regional economy as a consequence of the disaster (natural event) It may last for several years after the disaster, depending on the characteristics of the event, its magnitude and the sectors / activities affected Are measurable as Growth rate and level of GDP Performance of the external sector (imports, exports, transfers and investment) Performance of public finances Price variations and inflation Year rate GDP GROWTH RATE 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 9 10-1 -2-3 ]Before disaster After disaster Evaluation 27 CUMULATIVE IMPACT of successive disasters on gross capital formation GROSS CAPITAL FORMATION * DISASTER * DISASTER POTENTIAL GROWTH PATH ACTUAL CAPITAL FORMATION * * * TIME Evaluation 28 14

6.0 Impact of disasters on GDP growth in Honduras 5.0 4.0 MITCH 3.0 DROUGHT 2.0 1.0 0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004-1.0-2.0 Growth without Mitch or drought Growth with Mitch and drought Evaluation 29 Impact of disasters on Nicaragua s GDP 8.0 7.0 6.0 5.0 4.0 3.0 2.0 DROUGHT 1.0 0.0-1.0 MITCH 1996 1997 1998 1999 2000 2001 2002 2003 2004 Growth without Mitch or drought Growth with Mitch and drought Evaluation 30 15

Disasters Impact on El Salvador s GDP 5.0 4.5 4.0 MITCH 3.5 3.0 STAN 2.5 DROUGHT 2.0 1.5 EARTHQUAKE 1.0 0.5 0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Growth without disasters Growth with Mitch, earthquakes, drought and hurricane Stan Evaluation 31 Impact of disasters on Costa Rica s GDP 12.0 10.0 8.0 6.0 MITCH 4.0 DROUGHT 2.0 0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 Growth without disasters Growth with Mitch and drought Evaluation 32 16

Impact of disasters on Guatemala s GDP 6.0 5.0 MITCH STAN 4.0 DROUGHT 3.0 2.0 1.0 0.0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Growth without disasters Growth with Mitch and drought Evaluation 33 Gujarat (INDIA): Total Damage from disasters and Calamity fund budgeted resources (Crores of Rupees) 3500.00 3000.00 2500.00 2000.00 1500.00 1000.00 500.00 0.00 90-91 91-92 92-93 1993-94 1994-95 1995-96 97-98 1998 1999 99-2000 2000-01 2001-02 2002-03 Total Damage (Crores) Calamity Relief Fund (from Finance Commision, Delhi) Amount spent on calamity relief and rehabilitation buy State Govt. 2004 2005 Evaluation 34 17

25 Impact of disasters on GDP: State of Gujarat, India 20 15 10 5 0 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 -5 SGDP with disasters Logarítmica (Potential growth without disastrs) Potential growth without disastrs Logarítmica (SGDP with disasters) Evaluation 35 KEY VULNERABILITIES Size, level of development and development path matters: Impact to GDP ratio: co-relation to size Diversification of economic activities: alternative response mechanisms Economic and natural cycles interact Evaluation 36 18

Summary of 2004 Indian Ocean tsunami, by country Country Damage Losses Total Impact Magnitude, Impact/GDP India Indonesia 575 2,920 649 1,531 1,224 4,451 0.2 2.0 Maldives 450 153 603 83.6 Sri Lanka Thailand 1,144 508 310 1,690 1,454 2,198 7.6 1.4 Total Region 5,597 4,367 9,963 1.0 Evaluation 37 Breakdown of 2004 Tsunami impact Infrastructure 18% Social 29% Productive 53% Evaluation 38 19

Absolute and relative impact of 2004 Indian Ocean tsunami on main affected countries 12,000 10,000 8,000 6,000 4,000 83.6 90.0 80.0 70.0 60.0 50.0 40.0 30.0 2,000 0 7.6 0.2 2.0 1.4 1.0 India Indonesia Maldives Sri Lanka Thailand Total Total Impact Magnitude, Impact/GDP Region 20.0 10.0 0.0 Evaluation 39 2004 Tsunami impact in India: Absolute and relative value of damage and losses by affected states 1,200.0 1,000.0 800.0 600.0 400.0 200.0 0.0 73.0 0.15% Andhra Pradesh 545.0 0.83% 1,057.0 2.45% 4.02% 94.0 Kerala Tamil Nadu Pondichery 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% US$ million Total damage and losses as percentage of GSDP Evaluation 40 20

Tsunami impact: Gap between forecasted and actual GDP growth in 2004-2005 2005 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 India Indonesia Maldives Sri Lanka Thailand Pre-Disaster forecasted GDP Growth, % Post-disaster estimated GDP growth Evaluation 41 Hurricane Stan in El Salvador: Breakdown of damage and losses Sector and sub sector Damage, Millions US$ Losses, Millions US$ TOTAL Social Housing Education Health Productive Agriculture Industry Commerce Tourism Infrastructure Water and sanitation Electricity Transport Environment Emergency and relief TOTAL 48.0 36.0 4.9 7.1 21.7 21.6 --- --- 0.1 105.5 8.5 0.8 96.2 21.0 --- 196.2 101.5 77.1 12.2 12.2 34.4 27.1 3.1 4.3 4.1 8.1 3.3-1.2 6.8 0.9 10.6 159.5 149.5 113.1 17.0 19.3 56.1 48.7 3.1 4.3 4.1 113.5 11.8-1.3 103.0 21.8 10.6 355.6 Evaluation 42 21

Hurricane Stan in Guatemala: Breakdown of damage and losses Sector and sub sector Social Housing Education Health Productive Agriculture Industry Commerce Tourism Infrastructure Water and sanitation Electricity Transport Environment Emergency and relief TOTAL Damage, Millions of Quetzales 629.9 545.2 52.6 29.1 305.9 178.9 75.0 50.0 2.0 1,959.5 46.4 22.1 1,891.0 308.0 --- 3,200.3 Losses, Millions Quetzales 543.2 455.0 9.3 78.9 1,736.1 411.8 355.8 564.9 403.6 1,436.8 43.7 16.3 1,376.8... 594.8 4,310.9 Total,1,170.1 1,000.2 61.9 108.0 2,042.0 590.7 430.8 614.9 405.6 3,396.3 90.1 38.4 3,267.8 308.0 594.8 7,511.2 Evaluation 43 ECONOMIC IMPACT OF THE ATLANTIC 2004 HURRICANE SEASON Island / State Assessed by ECLAC Economic impact Millions of US$ 6,059 Event Ivan, Frances and Jeanne a/ Bahamas Cayman Islands Dominican Republic Granada Haiti Jamaica Florida (a) Cuba (b) Total (including Cuba y Florida) 551 3,432 296 889 296 595 30,000 1,500 37,559 a) Based on information provided by insurance and reinsurance companies (Munich Re) Hurricanes Frances and Jeanne Ivan Tropical storm Jeanne Ivan Jeanne Ivan Jeanne, Charley and Frances Frances b) Official estimates from t he Cuban government, R. Zapata may - Focal not include Point on e losses Disaster Evaluation 44 22

Damage profile in the Caribbean Hurricane 2004 season Composition of damage and losses Emergency and relief 0.4% Environment 1.3% Productive Sectors 35.2% Infrastructure 15.6% Social Sectors 47.5% Evaluation 45 2004 Atlantic Hurricanes: Relative and absolute impact of damage and losses by affected country / state 4,000 1000.00% US $ millions 3,500 3,000 2,500 2,000 1,500 1,000 500 0 10.50% 183.00% 1.70% 212.00% 8.00% 7.30% 551 3,432 296 889 296 595 Hurricanes Hurricane Frances Ivan and Jeanne Tropical Storm Jeanne Hurricane Ivan Hurricane Jeanne Hurricane Ivan 100.00% 10.00% 1.00% Bahamas Cayman Islands Dominican Republic Economic Impact, US$ million Grenada Haiti Jamaica Impact as % of GDP Evaluation 46 23

2005 Atlantic Hurricane season Deaths Directly affected populati on Total impact (millions of USD) Damage (to assets) Loss es (in flows ) Per capita impact on affected population Date Location Type of event Population Total impact (millions of USD) January Guyana Flood due to intense rainfall in December/January period in coastal floodplains in Georgetown and Albion 34 274,774 465.1 418.3 46.8 1,692.7 October Guatemala Torrential rains, tropical storm Stan 1,583 474,821 988.3 421.1 567.2 2,081.4 October El Salvador Torrential rains, tropical storm Stan, and Ilamatepec (Santa Ana) volcano eruption 69 72,141 355.7 196.2 159.5 4,930.6 July-September United States b/ Dennis, Katrina, Rita 1,698 900,000 200,000.0 65,000.0 135,000.0 222,222.2 July-September Mexico b/ Emily, Stan, Wilma, etc. Emily 64 4 2,680,571 63,300 2,200.0 413.2 1,250.0 322.8 950.0 90.4 820.7 6,527.5 August Other events a/ Cuba b/ Dennis 16 1,134 2,500,000 3,474,389 1,400.0 150.0 950.0 100.0 450.0 50.0 560.0 43.2 TOTAL TOTAL (not including United States) TOTAL (IN CLUDING UNITED STATES) Source: ECLAC estimates Nota: Data for Mexico and United States are partial and reflect preliminary estimates. In the case of Mexico the complete assessment ssment is in process by the official technical entities. a/ Includes volcanic eruptions, earthquakes and floods in other countries and are an estimate on the basis of partial data. b/ Based on diverse sources, not official estimates. Assessed by ECLAC 1,690 2,900 4,598 885,036 6,002,307 6,902,307 2,222 5,559 205,559 1,358 3,236 68,236 864 2,174 137,174 2,511.0 926.2 29,781.2 Evaluation 47 Post-disaster needs in a wider context: Extreme events as a driver for change The financial adaptation: the experience of re-insurers The social adaptation: the tsunami and Katrina syndromes The economic adaptation: move public goods into the market domain Evaluation 48 24

Finally where do we want to be: the road to be taken The Kobe conference: from the Hyogo Declaration to effective action De-tsunamize and De-Katrinize disaster management Act on conviction: risk reduction is a developmental and an economic issue Revert the myth on public goods: internalize damage and externalize benefits/profits Act as a united international community, both within the United Nations system, in the donor community, including NGOs and with the private sector Cooperation and sharing vs. turf battling and individual posturing Priority to client needs over supply-driven initiatives (overcome the father knows best syndrome) Recognize diversity and dissension Advance knowledge over advance self-interest Evaluation 49 Appropriation of risk needed to promote risk reduction: Need for institutional and regulatory changes Use of market to value ( price( 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 Evaluation 50 25

Reference materials: ECLAC handbook for the socioeconomic and environmental impact of disasters (www.cepal.org/mexico( www.cepal.org/mexico, desastres ) Disasters and development (IADB/ECLAC publication, 2000 Disaster assessments: 1973 to 2005 (www.cepal.org/mexico),), desastres ) The 2004 Hurricanes in the Caribbean and the Tsunami in the Indian Ocean (ECLAC series ( Estudios( y perspectivas) no.35 Thanks for your attention Evaluation 51 26