Costs and Benefits of Hazard Mitigation
for Building and Infrastructure Development:
A Case Study in Small Island Developing States

Keywords: Caribbean, hazard mitigation, infrastructure, cost benefit.

Abstract: Many factors determine the ability of a facility to withstand the effects of natural hazards. Decisions made throughout the life of an infrastructure project or a building—from design and construction through ongoing maintenance—affect the resilience and, consequently, the life span of these investments. To better understand the causes of building and infrastructure failure, the Caribbean Disaster Mitigation Project undertook a retrospective analysis of public and private projects in the Caribbean that have suffered damages from tropical storms. The purpose of this study is to examine the decision making process underlying the design and construction of these facilities, to determine whether the failures could have been prevented by appropriate design and construction principles and by effective use of hazard and vulnerability information in the planning of the project. From this study, it is clear that incorporation of hazard and vulnerability information into the earliest stages of project design or reconstruction is essential to ensure both hazard resilience and the lowest costs over the life of the project.

1. Background

The ongoing public dialogue and academic research on sustainable development focus predominantly on society’s use of non-renewable and renewable resources. Insufficient attention is paid to the manner in which governments, private sector investors and communities handle the threat of natural hazards to their development. Failure of lifeline infrastructure or significant public or private facilities can disrupt economic development and divert resources originally earmarked for new development to the repair or rehabilitation of what was damaged.

Failure of infrastructure due to natural hazards can have a strong, negative impact in small island economies. Due to their small size and population, such islands generally lack redundancy in key lifeline infrastructure. Small islands typically have one harbor, one international airport, one major hospital, one electric power plant. Rough topography imposes serious constraints on the layout of the road network, and the failure of one bridge or the flooding of one section of roadway can cut access to a significant proportion of the national population.

2. Institutional context

A recent report on the state of the infrastructure in the Caribbean (IADB-CDB 1996) notes that much of the infrastructure in the Region suffers from insufficient maintenance, inadequate management practices, tariffs which are too low to support the services, accumulated debt and a history of political interference and discontented customers. Contributing to the precarious state of the infrastructure is the Region’s vulnerability to natural disasters—hurricanes in particular—and the tendency of development decision makers, in the public as well as private sectors, to make decisions concerning major investment projects without due consideration of natural hazard risk.

Small island developing states are highly dependent on external sources for the financing of their economic and social infrastructure. Lending and procurement guidelines introduced by bilateral donors and multi-lateral financing agencies do not necessarily recognize the particular institutional and environmental conditions prevalent in the recipient countries. A financing agency’s priority on achieving economic return can lead to a neglect of the risks inherent in the natural hazards existing in the recipient country and a consequent under-design of the facility. In the Caribbean, there are several known instances of structures that were built using design standards in force in the donor country that are inappropriate to the receiving country.

Furthermore, the institutional and regulatory mechanisms that are meant to set and enforce standards for development and construction are generally weak in small island developing states. Few of these countries have adopted an effective building code or the necessary regulations to enforce one. When a code has been adopted, with the mandated technical standards, the public sector often fails to dedicate sufficient resources—human or institutional—for proper code enforcement. Chronic economic problems of high unemployment and deficits in budget and balance of payment create pressures on the political directorate that can lead to the dilution of standards in public sector investments.

3. Hazard mitigation in design and implementation of infrastructure projects

The best protection against natural hazards is to select project locations that are not hazard prone. It is not always possible, however, to avoid siting facilities in vulnerable areas. The effects of most natural hazards can be avoided or mitigated by applying design principles appropriate to the prevailing hazards. Therefore, the owner must be aware of the vulnerability of the facility at the earliest stage of the project design.

For most infrastructure projects, natural hazard mitigation should be addressed during the conceptual development of the project. The consultant [1] contracted for the conceptual or preliminary design [2] should present to the owner a report containing information on prevalent hazards and on available methods that can be used to avoid or to minimize the effects of the extreme natural events. Since the engineer who will be contracted for the detailed design will typically accept this preliminary design, it is essential that the existence and magnitude of any hazard that may affect the project be established during the preliminary design phase. The factors to be taken into account include:

• Siting of the facility to avoid flooding, soil erosion, exposure to high winds and unstable soils, and to minimize exposure to storm surge and high waves for harbors, docking facilities and coastal buildings;
• Design and shape of the buildings and structural system to minimize effects of high winds and earthquake forces, and, in the case of protection works, to avoid unwanted effects such as beach erosion, accretion, or negative impact on coral reefs and wetlands;
• Construction materials that are corrosion resistant and of appropriate durability and strength.

Throughout the design and implementation process of an infrastructure project, there are several distinct but complementary instances where specific attention needs to be given to natural hazards and appropriate resources need to be dedicated to the necessary investigations. These instances can best be described in the typical project cycle, as shown below. A detailed description of each of these steps can be found in the annex to this paper.

4. Analysis of Infrastructure Failures

The premise of hazard mitigation is that infrastructure failures can be prevented or minimized by addressing hazards in the conceptual planning and preliminary design of the project and by enforcement of appropriate design and construction standards. To test this premise, the Caribbean Disaster Mitigation Project (CDMP) has supported research into how more effective use of hazard mitigation can decrease the likelihood of failure. A first study was carried out in Jamaica and addressed failures of buildings from hurricane Gilbert (September 1998) and from a moderate earthquake centered north of Kingston (January 1993). The study focused on factors in the design stage, the construction stage and in the choice of materials that contributed to the failures and how these factors should be modified to minimize the failures (CDMP–Pereira, 1995).

The subject of this paper is a recently initiated retrospective study of four Caribbean cases in which infrastructure investments suffered significant damages from natural hazards. The study examines the decision making process used in the design and construction, in the financing arrangements and in the selection of consultants for selected major facilities. The CDMP is a technical assistance project funded by the Office of Foreign Disaster Assistance of the US Agency for International Development (USAID) and implemented by the Organization of American States (OAS).

The four cases selected for this study were the deep-seaport in Dominica, bridges in St. Lucia, a university building in Jamaica and a private hotel in the US Virgin Islands[3]. The following criteria were used to select the four cases:

1. projects which have suffered significant damage from hurricanes, earthquakes, heavy rainfall, or high seas;
2. projects for which the basic information—conceptual design, detail design and analysis, construction records, failure mode, choice of design consultants and construction contractors—would be available;
3. projects which are typical of development projects being constructed by Governments in the region;
4. projects which have been planned and executed by the Governments using their own rules of procurement, or projects which have been financed and monitored by a multilateral financing agency and constructed under the rules of that financing agency; and
5. projects with different architecture and engineering challenges.

5. Case Study Findings

At the time of the preparation of this paper, final results were available for two of the four case studies: the Dominica Sea Port and the Norman Manley Library at the campus of the University of the West Indies in Mona, Jamaica.

5.1 Dominica Port

Original Project Description

The Dominica deepwater port is located in Woodbridge Bay just outside the capital city of Roseau. The Government of the Commonwealth of Dominica ("the Government") constructed the facility to handle its exports of bananas more efficiently and to lower the handling costs of imports. Critical to the planning of this project was the requirement that construction and operation costs be covered by the income generated by port operation. An appraisal of the project by the CDB showed that the project as originally conceived could not pay for itself from funds generated by the Port and that both the financial rate of return and the economic rate of return were unacceptable at the time of appraisal. Subsequent to this appraisal, the project was reduced in scope to ensure financial viability. The final configuration of the port consisted of the following principal elements:

1. a wharf for ocean-going vessels and a berthing platform for inter-island schooners;
2. a reclaimed area of about 5 acres (top elevation +9’) with revetment of boulders and a reinforced concrete wall for protecting the reclaimed area; and
3. a transit shed of 10,000 square feet and a banana shed of 30,000 square feet.

Construction of the port started in September 1974 with financing from the Caribbean Development Bank (CDB) and funds supplied by the United States Agency for International Development (USAID) and the Government of Dominica. By March 1976, the wharves, reclaimed area, revetment and approach trestles were completed. The construction of the buildings and other ancillary works was completed in 1978.

Extreme event and damages suffered

Hurricane David, a severe hurricane, passed over or close to the port in August 1979. "David" was classified as a strong category 4 hurricane (wind speeds of 131–155 mph) when it passed over the island. Published reports indicated that David had sustained winds with speeds in excess of 160 mph and wind gusts of 200 mph, which are wind speeds associated with a category 5 hurricane. A portion of the revetment that protected the reclaimed area were severely damaged, as were the port buildings, with the banana shed sustaining more extensive damage than the transit shed. The approach trestles and the other ancillary facilities also experienced significant damage. There was no evidence of any damage to the wharves.

Use of hazard information in original design and in reconstruction

To establish a baseline for hazards for the original port design, the Delft Hydraulics Laboratory (Netherlands) was contracted to analyze the wave conditions in the vicinity of the port site for design. References to the Delft report [4] suggest that some of the hazard conditions identified were:

1. a maximum significant wave height of 5 m (15’) can be expected at the deep end of the wharf;
2. significant wave heights are to be expected about one day every ten years;
3. maximum wave heights of 1.5 m (5’) can be expected in a given year;
4. wave heights associated with squalls will not be greater than 1 m, in general;
5. hurricanes can be expected once every five years; and
6. damage due to hurricane waves has occurred rarely, due to the limited depth in front of the coastline.

Due to poor scheduling of the background studies, the engineering firm contracted to undertake the original engineering and economic feasibility study did not receive a copy of the Delft report until June 1972. This was just after they had completed the feasibility study, which was based on a maximum significant wave height of 6’. It appears that, upon reviewing the Delft report, the preliminary design consultants defended their conceptual designs and found no reason to amend any of the conclusions and recommendations in their just-completed study.

Wind load pressures for the design of the transit shed were determined in accordance with the current Barbados Association of Professional Engineers Wind Code approved by the Caribbean Council of Engineering Organizations. A category 3 hurricane, with wind speeds of 111–130 mph [5], was used as the design storm. For structural resistance to loads generated during earthquakes, the Structural Engineers Association of California (SEAOC) Zone 3 recommendations were used for the seismic engineering designs. The basis for the design of the banana shed, financed by CIDA, could not be ascertained.

Reconstruction

After the passage of David, an assessment of the damage was carried out and, shortly thereafter, designs were completed for the repairs and reconstruction work necessary to make the port functional again. The main restoration work consisted of land fill and shore protection; repairs and modifications to the fender systems; replacement of trestle approach slabs; repairs to the schooner wharf; paving of circulation roadway and open storage area; rehabilitation of port utilities (water supply, electricity, drainage); and construction of temporary revetment and reconstruction of the produce and transit sheds. Four-ton concrete dolos were also added to increase the resistance of the revetment, which protects the reclaimed area against wave attacks.

The CDB estimated the costs for the Port restoration/reconstruction work [6] at US $3,933,000, as shown in the following table. This included an extra amount (estimated at US$1.15 million) for the additional protection of the entire revetment using four-ton dolos, as an alternative to raising the reclamation level above +9’.

Increased investment in studies, engineering and construction needed to avoid the damage

Since the wharves were tested and found to be strong enough to resist David-force impacts, the additional costs for strengthening the rest of the port for a 15’ wave (assuming that this was similar to the ones which developed during David) would therefore require the following:

1. making the revetment more resistant to larger waves;
2. raising the level of the reclamation from +9’ to +15’;
3. raising and strengthening of the approach trestles.

For the buildings to resist David-force winds, they would have had to be designed for greater forces than the code indicated. The increased costs for the "David" design would have been due to increases in both structural and non-structural elements. Assuming no change to the geometric configurations of the buildings, most likely this would have led to the use of larger structural members. The cladding strength would also have had to be increased and/or its supports and fixings placed at closer centers.

Since the design consultants who were appointed in accordance with the CDB procedures did not use the information contained in the original study carried out by Delft, they should have carried out further studies to satisfy themselves and the Government that the design would be adequate to resist the wave forces generated by hurricane winds. The cost of the further studies is estimated at US$30,000 (1975 dollars).

The total increased mitigation costs, in US dollars (1975), would therefore have been as follows:

For the Dominica Port, the cost of reconstruction was relatively high—about 41% of the cost of the original port. Most of this cost could have been avoided if the designs had taken into account the results of the Delft study and if the owner had engaged a review consultant to provide advice on the effectiveness of the design. Using the above estimated cost of mitigation measures, strengthening the facilities to withstand the forces from Hurricane David would have increased the original project cost by10 to 15%.

Lessons learned

The retrospective look at the problems that arose with the failure of the revetment and consequent failure of the ancillary works on the platform were due in large part to the use of incorrect or inadequate hazard information and to the pressure on the designers to maintain the lowest possible construction cost. The consultants who carried out the conceptual design and feasibility study were responsible for determining the wave regime that would affect the port. Proper determination of the wave regime at the port requires valid information about deepwater waves. Since the results of the oceanographic study were not made available to the consultants until after the conceptual design had been completed and the study was not adjusted after receipt of the report, inadequate or incorrect hazard information was incorporated into the project planning from its inception.

5.2 Norman Manley Law School, University of the West Indies, Jamaica

Original project description

The Norman Manley Law School (NMLS) was constructed in 1974–75 subsequent to a design competition. The building houses a library and lecture halls. The building is a two story reinforced concrete and concrete block masonry structure with a steel space frame roof covered with proprietary ‘tectum’ deck planks and ¾" mastic asphalt waterproofing. The floor area is approximately 7,000 square feet. The Government of Jamaica financed the project, at a cost of US$685,000.

The project consultants were selected through a design competition. The project conceptual design was reviewed by the University and by the Government of Jamaica. Although it is normal for architects and engineers in Jamaica to be concerned about the need for resistance to hurricane winds and to earthquake forces, there is no clear evidence that the documents submitted by the consultants specifically included a strategy for hazard resistance.

Extreme event and damages suffered

Hurricane Gilbert passed over Jamaica on 12 September 1988, reportedly producing winds in excess of 145 miles per hour. The roof of the law school was badly damaged in the storm, due to the removal of some of the ‘tectum’ deck planks and the waterproof covering. The structure of the roof itself did not fail in the storm. Post-Gilbert evaluation indicated that inadequate fixing of the deck planks to the supporting steel roof members, combined with some weakening of the roofing material by rain, caused the building damage. The failure of a clerestory window allowed the ingress of the wind, which contributed to the uplift pressure on the roof deck planks. Fortunately, the librarian had the foresight to secure some of the documents before the hurricane, so damage to the contents of the library was minimal.

Use of hazard information in the original design and in reconstruction

The consultants stated that they had used the British Standard Code of Practice for Wind and the SEAOC earthquake recommendations for the structural design of the building. It is noted that the structure of the building was not damaged by the hurricane, and it can be assumed that the basic structure was competent to withstand the hurricane forces. However the fixings of the roof deck planks, which are critical items for lightweight roofs, were not adequate to resist the uplift forces generated by "Gilbert." The consultants stated that they had supplied the manufacturers of the proprietary roof with the calculated wind speeds and uplift forces, but it would appear that the installation details were not properly checked.

Reconstruction

The University employed a project manager to oversee the reconstruction activities. As many campus buildings were damaged, the principal task of the project manager was to coordinate the reconstruction and to ensure speedy reoccupation of the damaged buildings. The scope of work for the project manager could not be found, but it seemed clear from discussions with University personnel that no firm instructions were given regarding the need to ensure hazard resistance in the reconstruction efforts. The design work needed for reconstruction was done by the building’s original designers, who were also responsible for inspecting the reconstruction work.

Only partial structural design changes were made to the roof cover, due to financial constraints and the urgency to re-occupy the building. The repair work consisted mainly in restoration of the decking, waterproofing of the roof and necessary redecoration. The fixing of the deck planks was improved by securely anchoring each plank to the supporting steel frame, and the waterproofing was re-laid. The consultants confirmed that the fixing details installed as part of the reconstruction would prevent the damage similar to what occurred under hurricane Gilbert. The cost of the reconstruction was given as US$90,000 but the University took the opportunity to carry out some deferred maintenance, so the cost of repair due to the hurricane damage may have been somewhat overstated.

Increased investment in studies, engineering and construction needed to avoid the damage

The consultants indicated that they had the information required for proper design of the buildings. The British wind code used is considered to be adequate for buildings in Jamaica and the earthquake code used is the standard code used by all Jamaican structural engineers. The only extra studies and engineering that would have been required would have been for testing the roof assembly for resistance to hurricane wind forces and for developing the fixing details for the roof deck planks. The supply and fixing of extra fastening mechanisms for the roof deck slabs and extra supervision of the installation, therefore, would account for the increased cost of mitigating the damage suffered in "Gilbert". US$13,000 would have covered any additional research and testing that might have been needed, as well as the costs of installation.

Lessons learned

The NMLS building suffered damage because the roof deck planks were not securely fixed. Often, the responsibility for the details of non-structural elements is not made clear in the consulting contracts. It is normal for the structural engineer to be responsible for the roof structure and for the architect (or in this case the manufacturer) to assume the responsibility for the roof covering. In this case, it appears that the consultants were not aware that the roof deck planks had not been properly fixed. The University has improved its management of new construction on the campus, but the records of the NMLS were not readily available at the time of this study. The staff now concerned with the maintenance of the facilities should have all drawings and documentation of the buildings under their care.

6. Cost-Benefit Analysis of hazard mitigation

The two case studies described above are retrospective studies, which attempt to answer the question, "What mitigation measures would have been required during the design and construction of each project, to avoid losses from the particular extreme event that affected the projects?" For this purpose, one can consider a mitigation measure as an addition to the original design and construction of the project, designed to minimize the likelihood of failure due to the particular historic event. The mitigation measures introduce an incremental cost to the project at the time of construction, and produce a benefit—avoided loss—if and when an extreme event affects the project.

Incremental cost of the additional mitigation measures consists of: (a) the cost of additional investigations into the hazards that may affect the project and the vulnerability of the project to the hazards; (b) the cost of additional design work; and (c) the cost of additional construction.

Sum ( Hazard and Vulnerability Study + Addtional Design Costs + Additional Construction Costs)
= Incremental Costs of Hazard Mitigation

The benefits associated with investment in additional mitigation measures derive from losses avoided due to a reduced probability of failure and a reduced expected loss per failure. These benefits accumulate over the lifetime of the project and are discounted for comparison to the incremental cost incurred at the project’s inception.

Avoided losses over project lifetime T = B(T) =

Whereas it is fairly straightforward to estimate the components of the incremental cost of hazard mitigation, it is much more difficult to estimate the components of avoided losses, i.e. the failure probabilities and the likely losses per failure. At the time of publication of this paper, the study had not yet attempted to make these estimates. Instead, the cost of reconstruction was taken as an approximation of the avoided losses, with the following adjustments:

1. Price deflation: A construction cost index developed for Barbados was used to deflate reconstruction costs to the year of initial construction, i.e.1975.
2. Depreciation: Since most governments in the region do not apply depreciation in their valuation of key infrastructure assets such as ports and bridges, it was decided not to use a depreciation factor to determine the value of the structure. Instead, full replacement cost is used. It is recognized however that any infrastructure asset will need to be replaced and/or upgraded at some point in time, thus becoming less valuable the closer it comes to that point. Replacement costs therefore may overstate the value of the damage.
3. Discounting: Applying a discount rate to damages suffered from future disasters has the effect of reducing the economic justification for applying mitigation measures at the outset of the project. The damages caused by catastrophic failures caused by low probability events, such as wind forces corresponding to a class IV hurricane, will be heavily discounted, producing a negative benefit-cost ratio for any effective mitigation measure. Crowards (1997) notes that this apparent marginalizing of the future has led to calls for changes in the application of discounting, particularly in the context of sustainable development. It can be argued that lifeline infrastructure plays a critical role in achieving sustainable development. The decision to invest in failure prevention should not be dictated by the selection of a discount rate. It was therefore decided to apply a zero discount rate to future avoided losses.

Applying no depreciation to the value of the structure, and using a zero discount rate on the cost of future reconstruction, each contribute to overstating the avoided losses, and thus make a stronger economic case for investing in mitigation. On the other hand, the cost of reconstruction is only a fair approximation for the direct damages. Catastrophic events cause indirect and collateral damages that often exceed the direct damages. Thus, using the cost of reconstruction has the effect of understating the avoided losses.

Table 1 summarizes the costs associated with the original construction, reconstruction and additional costs associated with mitigating the damages incurred by the Dominica sea port and the Norman Manley Law School in Jamaica. For both projects, the cost of reconstruction significantly exceeded the cost of additional mitigation measures to avoid the damage. Thus, without accounting for any other potentially avoided losses, the benefits accrued clearly outweigh the added cost.

Table 1: Cost of Construction and Reconstruction for Selected Infrastructure Projects
(All cost figures expressed in US$)

7. Conclusions and Recommendations

The information available from the project files and discussions with the owners and designers indicate that the failures were in large part preventable. A comparative analysis of the costs of original construction, of reconstruction and of additional mitigation for the Manley Library and the Dominica port showed that, the estimated additional costs required to mitigate the damage suffered amounted to less than 2% and 12 % of the original cost, respectively, and were two to four times less than the cost of reconstruction for the same two projects. Clearly, additional mitigation measures taken at the time of the original construction would have led to significant savings over the costs of reconstructing the facilities. It should be noted that the cost of reconstruction is a conservative estimate of the losses suffered by a failed project, since it does not include various indirect and collateral losses associated with the interruption in functioning of the damaged facility.

The critical junctures for addressing natural hazards lie early in the project cycle—in the pre-investment study and the review by the financing agency. As was the case with the Delft report for the Dominica sea port, hazard information that is identified or developed later in the cycle is less likely to be used. Design and material choices made in the detailed design and subsequent construction, which can significantly affect resilience to hazards, are based on the information available during these early project stages.

• The pre-investment study should clearly explain the nature of the risks and the costs and benefits of the hazard mitigation strategy being recommended. Only with full information on hazards and vulnerability can the client and financing agency make informed decisions about appropriate design alternatives. The consultant undertaking the pre-investment study should be responsible for conducting or coordinating all necessary hazard and vulnerability assessments, to ensure that all are completed within the appropriate time.
• During project appraisal by the financing agency, analysis of the hazard information and the associated mitigation strategy should be standard, in the same way that environmental considerations are now integral parts of project review. Current appraisal procedures, which focus on financial and economic risks and benefits of the project while ignoring the risk posed by recurrent natural hazards, do not ensure the least-cost alternative over the lifetime of the project—or the loan.
• In post-disaster reconstruction of lifeline facilities, such as bridges along main roads, the window for incorporating hazard mitigation is also focused on the early stages of reconstruction. Consequently, planning for reconstruction must be carefully thought out—even where the urgency to reopen the facilities demands hasty action. It is recommended that the Ministry or institution overseeing the reconstruction insist that the consultants or in-house engineers responsible for the design of the works develop long term plans to enable the facility to resist the known hazards. Maintenance of important facilities, including institutional buildings, roads, waterways and bridge structures, is a critical component of a long-term hazard mitigation strategy.
• The practice of contracting an independent review consultant or ‘check’ agency, to review the work of the design consultants and periodically inspect construction, is strongly encouraged. Through this mechanism, the owner and/or the financing agency receive a professional opinion on the effectiveness of the hazard mitigation strategy being recommended and can monitor its implementation.

Incorporating recommendations into existing project design and review procedures

The preceding recommendations are meant to be implemented within the context of established procedures for project formulation, appraisal and implementation. Such procedures may vary widely according to the nature of the project, of the owner or client, and of the financing source. Governments are more likely to seek financing from multilateral financing agencies, such as the World Bank, following published procedures for project review and procurement of engineering services. Private sector investors are more likely to use their own or commercial bank funding and will follow the applicable planning and review procedures. Insurance companies may impose additional requirements, when catastrophe protection is sought for the investment.

Three distinct but complementary opportunities can be identified for interventions in existing procedures to more effectively incorporate disaster mitigation in infrastructure investment decision making. The first one is to fully integrate the assessment of natural hazards and the analysis of the potential impact of these hazards on the project into the existing environmental review guidelines or impact assessment (EIA) procedures. All multilateral and bilateral financing agencies, and most governments, require that infrastructure investment projects be subject to an EIA. Introducing natural hazard considerations into these procedures does not mean adding a new dimension to the EIA. It does however make explicit the fact that natural hazards are an integral part of the "environment." As such, an EIA has to analyze the impact of the environment on the project, just as it analyzes the impact of the project on the environment. Since EIA studies are usually contracted out to consultants, the necessary natural hazard investigations, and the desired outputs of these investigations, need to be carefully crafted in the terms of reference for the EIA.

The second opportunity consists of fully integrating natural hazard risk in the economic and financial analysis of investment projects. Such analysis routinely addresses risk posed by uncertainty in prices on both costs and benefits, but fails to address the risk posed by disruption of the project’s ability to produce the benefits due to a hazardous events over its lifetime (Vermeiren, 1989). Various techniques have been developed to incorporate risk into the traditional cost-benefit analysis and are available to deal with the uncertainty inherent in the frequency and intensity of hazardous events (OAS, 1991). It is within this framework that the costs of alternative mitigation options and their benefits in terms of reduction in expected losses need to be evaluated.

The third opportunity to promote hazard mitigation occurs when the insurance industry is called upon to underwrite catastrophe protection for the investment project. It is clearly in the underwriter’s interest to minimize the likelihood of future payouts for damages and/or business interruption caused by natural hazards. To achieve this, the project has to be designed using adequate standards and mitigation measures and has to be properly constructed. Insurance companies can ensure that these conditions are met by reviewing design and construction work with in-house engineering staff or contracted consultants. Alternatively, the insurance company can make such review a condition for obtaining insurance, in which case the owner of the project contracts the service of a check consultant, as recommended above.

The Caribbean region is prone to a wide range of natural hazards. Incorporation of hazard information and mitigation techniques into infrastructure planning is critical in the quest towards sustainable development within the region. Substantial institutional change remains to be made in the various institutions involved in infrastructure development, to address hazard risk more effectively and to ensure a more disaster-resistant development.

8. References

Caribbean Disaster Mitigation Project and John Pereira, 1995. Cost and Benefit of Disaster Mitigation in the Construction Industry. Caribbean Disaster Mitigation Project publication series, Organization of American States, Washington DC.

Crowards, Tom, 1997. "Discounting and Sustainable Development: Adjusting the Rate, Abandoning the Process, or Extending the Approach." International Journal of Sustainable Development and World Ecology. March 1997.

Inter-American Development Bank–Caribbean Development Bank, 1996. Infrastructure for Development: A Policy Agenda for the Caribbean.

Organization of American States, 1991. Primer on Natural Hazard Management in Integrated Regional Development Planning. Unit for Sustainable Development and Environment, Organization of American States, Washington DC.

Vermeiren, Jan, 1989. Natural Disasters: Linking Economics and the Environment with a Vengeance. Proceedings of the Caribbean Conference on Economics and the Environment. Caribbean Conservation Association, Barbados, 1989.

Endnotes

1. Since design and construction of most large infrastructure projects are contracted out to external engineers and consultants, such an arrangement will be assumed throughout this paper.

2. In the Caribbean, engineers commonly use the terminology "Design Stage I" and "Design Stage II", as developed by the Association of Consulting Engineers of the UK. Under Design Stage I, the consultant carries out all investigations necessary to produce a conceptual design, advises the client on special investigations that may be required (geotechnical, coastal dynamics, etc.), and prepares the necessary documents to allow the client to apply for approval in principle from the financing agency and the development control authority. Under Design Stage II, the consultant prepares detailed design drawings and tender documents, including specifications, schedules and bills of quantity. The consultant also advises the client on appropriate conditions to be incorporated in the contract documents, and assists the client in evaluating the proposals to the tender. In this paper, the term "preliminary design" is synonymous with "Design Stage I" and "detailed design" is used in place of "Design Stage II."

3. One private sector project was selected so that comparisons can be made between public sector and private sector procedures.

4. The original report could not be located while researching this study.

5. According to the HURDAT database, compiled by the US National Hurricane Center, three category 3, four category 4 and one category 5 hurricanes passed through a 2-degree square centered on Dominica during the period from 1886 to 1996.

6. The estimation and comparison of construction and other costs took into account the change in exchange rate between the EC$ and the US$, and the annual inflation rates between 1975 and 1982.

Suggested Outline Implementation Procedure for Infrastructure Projects