HANDBOOK FOR ESTIMATING SOCIO-ECONOMIC AND ENVIRONMENTAL EFFECTS OF DISASTERS World Bank / ADPC Workshop "RECONSTRUCTION NEEDS ANALYSIS:PLANNING AND IMPLEMENTATION"

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HANDBOOK FOR ESTIMATING SOCIO-ECONOMIC AND ENVIRONMENTAL EFFECTS OF DISASTERS World Bank / ADPC Workshop "RECONSTRUCTION NEEDS ANALYSIS:PLANNING AND IMPLEMENTATION"

ECLAC’S PRESENTATIONS ADPC-WB Workshop - August 13-15, 2002 / Bangkok, Thailand Session 1: Presentation of ECLAC Methodology Session 1: Presentation of ECLAC Methodology Session 2: Sectoral Revision of Assessment in ECLAC Methodology Session 2: Sectoral Revision of Assessment in ECLAC Methodology Session 2 Cont: Global/Macro Effects of a Disaster in ECLAC Methodology Session 2 Cont: Global/Macro Effects of a Disaster in ECLAC Methodology

Presentation of the ECLAC methodology General considerations General considerations Valuation as a tool for reconstruction, mitigation and planning resilience Valuation as a tool for reconstruction, mitigation and planning resilience Usefulness of historical records Usefulness of historical records Methodological considerations Methodological considerations Definitions: risk, vulnerability, mitigation recurrence, etc. Definitions: risk, vulnerability, mitigation recurrence, etc. Basic concepts: direct (assets/capital), indirect (flows/economical, financial, fiscal) Basic concepts: direct (assets/capital), indirect (flows/economical, financial, fiscal) Valuation criteria Valuation criteria Sources of information: remote, statistical, direct observation, surveys, second hand, etc. Sources of information: remote, statistical, direct observation, surveys, second hand, etc.

WHAT IS IT: A tool for the socio-economic and environmental assessment of disasters A tool for the socio-economic and environmental assessment of disasters Multi-sectoral and multidisciplinary damage evaluation and quantification method for disaster affected sectors Multi-sectoral and multidisciplinary damage evaluation and quantification method for disaster affected sectors Standard sectoral procedures that allows comparability of results Standard sectoral procedures that allows comparability of results Instrument for the decision making process and for policy formulation as it identifies more severely affected sectors, geographical areas and vulnerable groups Instrument for the decision making process and for policy formulation as it identifies more severely affected sectors, geographical areas and vulnerable groups Conceptual improvement for measuring aspects not included in national accounting and assessing specific vulnerability (of social groups, such as women and th environment) Conceptual improvement for measuring aspects not included in national accounting and assessing specific vulnerability (of social groups, such as women and th environment)

WHAT IT DOES: Allows projecting future performance of the affected economy in the short and medium term, and implement the necessary corrective economic policy measures Allows projecting future performance of the affected economy in the short and medium term, and implement the necessary corrective economic policy measures Allows to determine the State’s capacity to face reconstruction tasks and determine needs for cooperation and international financing Allows to determine the State’s capacity to face reconstruction tasks and determine needs for cooperation and international financing Facilitates training in damage valuation and formulation of mitigation strategies Facilitates training in damage valuation and formulation of mitigation strategies Involves affected population with relevant authorities and aid providers Involves affected population with relevant authorities and aid providers Puts in evidence the systemic character of the development process and the interaction among sectors and stakeholders Puts in evidence the systemic character of the development process and the interaction among sectors and stakeholders

Social sectors Infrastructure and services Productive sectors Environment Dynamic interaction between sectors and activities with natural occurrences: Vulnerability and mitigation Mudslides and silt deposits Landslips, avalanches and erosion Groundswells, sea surges and high waves Flooding and rain

Vicious circle: Man, Environment, Disasters Human actions progressively deteriorate the environment Human actions progressively deteriorate the environment Natural phenomena affect the environment (positively / negatively) Natural phenomena affect the environment (positively / negatively) Impact of disasters tends to increase Impact of disasters tends to increase NATURALPHENOMENA HUMANACTIONS ENVIRONMENT

* SOCIAL STABILITY SECURITY (Reduced Vulnerability) GOOD GOVERNANCE ECONOMIC RECOVERY BREAKING THE CYCLE OF CONFLICT AND RESUMING THE PATH OF DEVELOPMENT The World Bank’s Conflict Prevention and Reconstruction Team, SDV

SEQUENCE OF EFFECTS PHENOMENON: Characteristics (physical description, typology and context) EFFECTS:directindirect LINKAGES Menace Vulnerability Risk Impact/Benefit of reconstruction (global, by sector)  Reduce vulnerability  Synergies for reconstruction: “appropriation” of risk by affected/menaced population (community, social group, sector, country)

SOME DEFINITIONS IN DISASTERS PREVENTION PREVENTION the “before” actions the “before” actions Actions (programmes, projects) with the objective of anticipating and counteract the negative consequence an event may have (hydro-meteorological, climatic, seismic, tectonic, geological, even technological, industrial or “complex” Actions (programmes, projects) with the objective of anticipating and counteract the negative consequence an event may have (hydro-meteorological, climatic, seismic, tectonic, geological, even technological, industrial or “complex” It implies namely operational and organisation actions, training of potentially affected groups and population to face a disaster’s consequences. It implies namely operational and organisation actions, training of potentially affected groups and population to face a disaster’s consequences.

SOME DEFINITIONS IN DISASTERS (2) MITIGATION MITIGATION encompasses actions “before”, “during” and “after” encompasses actions “before”, “during” and “after” Actions (programmes, project) with the objective of counteracting (reducing the negative impact) of an occurrence. Actions (programmes, project) with the objective of counteracting (reducing the negative impact) of an occurrence. Includes allocation of resources to reinforce structures, redesign or alter existing elements to reduce vulnerability in addition to training and organisation (including at the community level) Includes allocation of resources to reinforce structures, redesign or alter existing elements to reduce vulnerability in addition to training and organisation (including at the community level)

SOME DEFINITIONS IN DISASTERS (3) VULNERABILITY VULNERABILITY calculation made on the basis or recurrence and severity of disastrous events calculation made on the basis or recurrence and severity of disastrous events Risk factors or exposure to danger of existing physical structures (buildings, houses, etc.) and basic infrastructure (lifelines, transportation and communications, etc.). Risk factors or exposure to danger of existing physical structures (buildings, houses, etc.) and basic infrastructure (lifelines, transportation and communications, etc.). Conditions of human settlements and localisation of productive activities (primary, industrial,l tertiary or services) and their linkage among them and with the environment. Conditions of human settlements and localisation of productive activities (primary, industrial,l tertiary or services) and their linkage among them and with the environment.

SOME DEFINITIONS IN DISASTERS (4) DISASTER REDUCTION DISASTER REDUCTION encompasses actions “before”, “during” and “after” encompasses actions “before”, “during” and “after” Actions (programmes, project) with the objective of reducing vulnerability and exposure to risk in the face of the interaction between human action and natural foreseeable or recurrent events. Actions (programmes, project) with the objective of reducing vulnerability and exposure to risk in the face of the interaction between human action and natural foreseeable or recurrent events. Implies the use (design and enforcement) of construction codes, land-use regulation, space planning, institutional arrangements and community involvement Implies the use (design and enforcement) of construction codes, land-use regulation, space planning, institutional arrangements and community involvement

SOME DEFINITIONS IN DISASTERS (5) RISK MANAGEMENT RISK MANAGEMENT (actions to be carried out “before” with consequences “during” and “after”) (actions to be carried out “before” with consequences “during” and “after”) Pro-active strategy (in contrast to re-active response) to reduce vulnerability and counteract risk factors Pro-active strategy (in contrast to re-active response) to reduce vulnerability and counteract risk factors Its objective is disaster reduction Its objective is disaster reduction Is not a sector action but a global set of actions encompassing all sectors, beginning with sound environmental management Is not a sector action but a global set of actions encompassing all sectors, beginning with sound environmental management Is not a conservation policy per-se but requires sustainability criteria both in terms of natural resources and human intervention. Is not a conservation policy per-se but requires sustainability criteria both in terms of natural resources and human intervention.

SOME DEFINITIONS IN DISASTERS (6) DISASTER MANAGEMENT DISASTER MANAGEMENT actions to be carried “during” and the immediate (short-term) “after” actions to be carried “during” and the immediate (short-term) “after” The response strategy (re-active strategy) to, after the occurrence of a disaster, intends to counteract its more immediate negative impact and prevent more severe effects in the short term. The response strategy (re-active strategy) to, after the occurrence of a disaster, intends to counteract its more immediate negative impact and prevent more severe effects in the short term. Includes emergency actions (search and rescue, immediate assistance, shelter, sanitary and health campaigns, rehabilitation of lifelines, assessment of emergency needs and first appraisal of reconstruction requirements. Includes emergency actions (search and rescue, immediate assistance, shelter, sanitary and health campaigns, rehabilitation of lifelines, assessment of emergency needs and first appraisal of reconstruction requirements.

Type of damage associated with type of disaster Hurricanes Hurricanes More frequent and predictable More frequent and predictable Reinforcement and mitigation are less costly Reinforcement and mitigation are less costly Earthquakes Earthquakes Hard to predict with precision Hard to predict with precision Monitoring is costly Monitoring is costly Adequate reinforcement technology is available Adequate reinforcement technology is available

Type of damage associated with type of disaster Landslides, mudslides, avalanches, slippage Landslides, mudslides, avalanches, slippage Fires Fires Effects are “secondary”, associate with other events Effects are “secondary”, associate with other events Preventable by reinforcement and security measures Preventable by reinforcement and security measures Have severe impact on infrastructure and environment Have severe impact on infrastructure and environment Are related to man’s intervention Are related to man’s intervention

Type of damage associated with type of disaster Tsunamis or sea-swells Tsunamis or sea-swells Less frequent, associated with earth movements or hurricanes or cyclones Less frequent, associated with earth movements or hurricanes or cyclones Flooding Flooding Very frequent, occur seasonally in recurrent manner during rainy season and are made more severe by other natural phenomena (both meteorological or seismic-volcanic) Very frequent, occur seasonally in recurrent manner during rainy season and are made more severe by other natural phenomena (both meteorological or seismic-volcanic) Are preventable through better land use and planning and by proper defence works (embankments, barriers and others)

Type of damage associated with type of disaster Volcanic activity Volcanic activity Tornadoes Tornadoes Recurrent phenomena of a cyclical nature Recurrent phenomena of a cyclical nature Hard to predict Hard to predict Require construction and land use codes Require construction and land use codes Adequate evacuation plans are necessary Adequate evacuation plans are necessary May be “tourist attraction” in themselves May be “tourist attraction” in themselves

Type of damage associated with type of disaster Droughts Droughts Pests and epidemiological threats (vectors of infectious diseases) Pests and epidemiological threats (vectors of infectious diseases) Associated with other events, namely meteorological Associated with other events, namely meteorological Require prevention and close control and monitoring Require prevention and close control and monitoring Affect production cycles (in agriculture) and affect natural environment, flora and fauna, and their cycles Affect production cycles (in agriculture) and affect natural environment, flora and fauna, and their cycles Multisectoral, multidisciplinary actions are required Multisectoral, multidisciplinary actions are required

SEQUENCE OF DISASTER VALUATION

Concepts Direct damages Impact on assets Impact on assets Infrastructure Infrastructure Capital Capital Stocks Stocks Occur immediately during or after the phenomenon that caused the disaster Occur immediately during or after the phenomenon that caused the disaster Indirect Damages Effects on flows Effects on flows Production Production Reduced income and increased expenses Reduced income and increased expenses Are perceived after the phenomenon, for a time- period that can last from weeks to months, till recuperation occurs Are perceived after the phenomenon, for a time- period that can last from weeks to months, till recuperation occurs

Measuring the damage “delta” or damage gap Pre-existing conditions (ex ante) Expected performance (without disaster) 3-5 years Disaster impact (ex post) 3-5 years 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 disaster- caused 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

 D = Va – Vb Where Va es 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

THE “PERVERSE EFFECT” OF DISASTERS ON GROSS CAPITAL FORMATION IN A SMALL ECONOMY Adapted from Mora, “El impacto de los desastres, aspectos sociales, polítifcos económicos, ambientales y su relación con el desarrollo de nuestros países (BID, 1999) * GROSS CAPITAL FORMATION TIME DEVELOPING COUNTRIES INDUSTRIALIZED COUNTRIES *DISASTER

THE EFFECT OF SUCCESSIVE DISASTERS ON 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) y su relación con el desarrollo de nuestros países (BID, 1999) * * * * TIME GROSS CAPITAL FORMATION DEVELOPING COUNTRIIES INDUSTRIALIZED COUNTRIES *DISASTER

Know the pre-existing situation Identify the core development factors of the economy 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. 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 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 existing econometric models for the local economy Identify if input-output tables are available or determine weighing factors that indicate intersectoral linkages. Identify if input-output tables are available or determine weighing factors that indicate intersectoral linkages.

Acknowledge the expected or projected outcome in the absence of disaster Obtain from government, academics and/or advisors and private consultants the existing scenarios or short and medium term projections before the disaster Obtain from government, academics and/or advisors and private consultants the existing scenarios or short and medium term projections before the disaster Build a price table at current value for the disaster period with at least five year projections. There may have been more than one pre-disaster scenario for the main economic variables Build a price table at current value for the disaster period with at least five year projections. There may have been more than one pre-disaster scenario for the main economic variables Build a constant-value (real magnitude) serie for the main variables (using the country’s base year, either in local currency or US dollars Build a constant-value (real magnitude) serie for the main variables (using the country’s base year, either in local currency or US dollars Establish the rate of exchange that will be used for the valuation Establish the rate of exchange that will be used for the valuation

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) 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 setor to the others Supported by input-output tables or sector weighing factors determine the projection of damages of one setor 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.) 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.)

Future Scenarios 1 st. Scenario: damage assessment and event’s impact, without including reconstruction actions 1 st. Scenario: damage assessment and event’s impact, without including reconstruction actions Alternative reconstruction scenarios Alternative reconstruction scenarios Taking into account no longer the replacement but the reconstruction costs Taking into account no longer the replacement but the reconstruction costs Emerging reconstruction priorities, sector by sector Emerging reconstruction priorities, sector by sector The emerging reconstruction strategies in the immediate weeks after the disaster The emerging reconstruction strategies in the immediate weeks after the disaster The economy’s absorption capacity of foreign resources The economy’s absorption capacity of foreign resources The economy’s capacity to execute projects The economy’s capacity to execute projects 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.) 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.)

Sector by sector valuation methodology Social Sectors Social Sectors Housing Housing Health Health Education, culture, sports Education, culture, sports Infrastructure Infrastructure Transport and communications Transport and communications Energy Energy Water and sewerage Water and sewerage Productive sectors Productive sectors Goods: agriculture, industry Goods: agriculture, industry Services: commerce, tourism, etc. Services: commerce, tourism, etc. Global impact Global impact On the environment On the environment Gender perspective Gender perspective Employment and social conditions Employment and social conditions Macroeconomic assessment Macroeconomic assessment