Economic valuation of the cost of disasters ECLAC/CEPAL Distance Learning Programme

ECLAC The losses: The losses:  Lives (due to the physical collapse of infrastructure and the collapse of services and equipment, instruments, medical attention)  Infrastructure and supplies (Investment, capital, medicines)  Attention and response capabilities With mitigation you save: With mitigation you save:  Lives (by maintaining services and the resilience of infrastructure)  Investment capacity (you do not lose the opportunity cost of new investment which must be channelled to reconstruction)  Prevention capacity in contrast to passive curative interventions Is there any positive outcome of disasters? Is there any positive outcome of disasters?  Increase resilience  Provide an opportunity for reduction of vulnerability in the face of menaces and risk What is the impact of disasters, both positive and negative?

Distance Learning Programme ECLAC Save LivesSave infrastructure (investment) Maintain function (services operating) High priority Priority Low Priority Incorporated in function Mitigation Criteria that have to be negotiated

Distance Learning Programme ECLAC Maintain function (remain operational) Save infrastructure Save lives Supply side health response Demand oriented response Overall policy Specific instruments Management procedures Financial resources Requirements to fulfill objectives (systemic character of disaster mitigation)

Distance Learning Programme ECLAC MITIGATION DEMAND SIDE BeneficiariesBeneficiaries Service providers Service providers SUPPLY SIDE MultidisciplinaryMultidisciplinary Academics and scholars Academics and scholars Technical and professional Technical and professionalassociations Policy and decision makers Policy and decision makersFINANCIAL PublicPublic PrivatePrivate International NGOs International NGOs Actors: may be public or private, central or local

Distance Learning Programme ECLAC Maintain services operational (disaster prevention) Incorporate in the profitability analysis (economic and social benefit) Include in project formulation Incorporating mitigation in the project cycle

Distance Learning Programme ECLAC INDIRECT EFFECTS Loss of services: Supply / demand mismatch Imbalance, inadequacy / resilience Technical criteria Management criteria Assessment of health network (sanitary system) 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) DIRECT DAMAGE Goods, equipment, Budget changes (cost / investment) INTERVENTION: Prevention and mitigation plan Preparation of technical dossier Operational phase, an evaluation: Updating, revision, prevention reinforcement and mitigation (update and maintenance of technological edge) Operational maintenance Training in use of methodology conservation Prediction Prevention Restoration of service Impact assessment

Distance Learning Programme ECLAC Design: evaluation Demand / Supply balance Maintain operational services / resilience Technical criteria Managerial criteria Assessment of the health network (sanitary system) Pre investment and investment phase: Calculate mitigation investment requirements Impact analysis (opportunity cost, Cost-benefit, cost-profit) Goods, equipment, Budget changes (cost / investment) Implementation phase: Prevention and mitigation plan Preparation of technical dossier Operational phase, an evaluation: Updating, revision, prevention reinforcement and mitigation (update and maintenance of technological edge) Operational maintenance Training in use of methodology conservation Prediction Prevention Restoration of service Mitigation

Distance Learning Programme ECLAC Some things are easier to measure than others IT IS DIFFICULT TO DETERMINE 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 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

Distance Learning Programme ECLAC Determine the situation caused by the disaster 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.)

Distance Learning Programme ECLAC FUTURE DEVELOPMENTS VULNERABILITY AND DEVELOPMENT (1) Subject of analysis: relation of size, development and vulnerability: “resilience” (strengthening and preparedness) in the face of:  shocks (internal, environmental, climatic, external)  Dependency and diversification  Integration and productive/competitive linkages  Analytical-mathematical formulation Global (trans border, regional) impact of disaster  Economic, social, environmental  Effects on the donor/relief community  Effects on private sector (trans national corporations, FDI, financial markets, etc.)

Distance Learning Programme ECLAC FUTURE DEVELOPMENTS VULNERABILITY AND DEVELOPMENT (2) Lessons from Mitch, droughts and earthquakes in 2001, climatic variability and 30 years of disaster valuation: “revisit” and appraise reconstruction process Broadening methodology to social and environmental valuation Enhance current methodology with consideration of prospective alternative scenarios and macroeconomic models Train national authorities in the areas of economics and planning Promote mitigation and risk managements policies beyond prevention and response

Distance Learning Programme ECLAC Disasters, conflict and crisis management How to approach the different interventions required: conceptual aspects, definition problems and purpose of the interventions Are they different sides of the same coin: crisis managements associated with disasters and / or conflict? Conceptual quagmire Methodological problems: needs assessments vs. Causal analysis Operational problems: setting priorities and differentiating emergency from urgency: simultaneity and sequencing Policy problems: positive vs. negative intervention; resource allocation vs. policy change promotion

Distance Learning Programme ECLAC Internal policies: Include vulnerability reduction as an objective of development plans alongside goals of: Competitive growth Competitive growth Equitable development Equitable development Sustainable and sustained development Sustainable and sustained development Social participation Social participation External policies: Introduce risk management as part of the regional international agenda, alongside: External competitive insertion External competitive insertion Benefiting from the globalization process Benefiting from the globalization process Inclusive regional insertion Inclusive regional insertion Sectoral components: Monitoring, analysis and climate forecasting, including forest fires Monitoring, analysis and climate forecasting, including forest fires Contingency plans in key sectors, for example: Contingency plans in key sectors, for example: Agriculture, cattle raising, Agriculture, cattle raising, rural poverty, rural poverty, energy and baselines energy and baselines Water and health Water and health Interconnected systems Interconnected systems Regulation of basic services with sponsorship of private enterprise Regulation of basic services with sponsorship of private enterprise Focalized plans for vulnerable groups, including employment, food availability and nutrition Focalized plans for vulnerable groups, including employment, food availability and nutrition Education to reduce vulnerability Education to reduce vulnerability Diagnosis and monitoring of vulnerability at the local level Diagnosis and monitoring of vulnerability at the local level Proposed courses of action Restore economic and social fabric Restore and strengthen productive linkages (upstream/downstream) Reduce internal / external vulnerability

HANDBOOK FOR ESTIMATING SOCIO-ECONOMIC AND ENVIRONMENTAL EFFECTS OF DISASTERS Coordination: Focal Point for the Evaluation of Disasters Subregional Headquarters in Mexico www:eclac.cl/mexico

Economic valuation of the cost of disasters www:eclac.cl/mexico Issues in Economic Analysis for DCPP chapters and Chapter Guidance Ricardo Zapata-Martí (UN México) DISEASE CONTROL PRIORITIES PROJECT PERSONAL HEALTH SERVICES WORKSHOP 23 – 25 JULY 2003 CHURCH HOUSE, LONDON, UK

Economic valuation of the cost of disasters www:eclac.cl/mexico Issues in Economic Analysis for DCPP chapters and Chapter Guidance Ricardo Zapata-Martí (UN México) DISEASE CONTROL PRIORITIES PROJECT PERSONAL HEALTH SERVICES WORKSHOP 23 – 25 JULY 2003 CHURCH HOUSE, LONDON, UK