Natural Hazards and Economic Development: Policy Considerations

Organization of American States
General Secretariat
Unit for Sustainable Development and Environment

USAID-OAS Caribbean Disaster Mitigation Project
April 1999


This document was written in the context of a study carried out by the CDMP entitled "Failure of Infrastructure due to Natural Hazards in the Caribbean".  It sets out to analyze the lessons learned from that study, and to formulate recommendations for policy makers.  It is based largely on materials prepared by CDMP consultant Tony Gibbs, with the assistance of Alwyn T. Wason.

Table of Contents

What is the Problem?

Reason for Concern

The need to pay special attention to natural hazards
Losses from recent major events
The cost of business as usual
Climate change

What Can Be Done?

A two-fold strategy for reducing vulnerability to natural hazards in the Caribbean

I. Political Strategy

        Involve Stakeholders

        Mobilise Action

II. Technical/institutional strategy

Develop a disaster mitigation plan
Legal mandating of codes

Enforce codes effectively
Build a New CUBiC
Maintain CUBiC
Improve education and training
Strengthen land-use planning
Improve maintenance of infrastructure and buildings



What is the Problem?

We know that the cost of damage from natural hazards to governments, businesses, and families is very high. We know that money spent to clean up disasters is money lost to economic development. We know planning, design, and construction techniques that can greatly reduce costs due to natural hazards. We know how to site a structure to minimise the effects of natural hazards.

Who are the "we" that know so much? We are planners, engineers, builders, government officials, financiers, and physical and social scientists—the many specialists in development. We work in the private sector, government, and non-governmental organisations (NGOs). We operate at local, national, regional, and global levels. We have been building structures, training personnel, conducting research, and cleaning up disasters for a long time. We are the hundreds of thousands of Caribbean citizens who have suffered the effects of unbridled natural hazards. We have lost loved ones, homes, businesses, and services because those effects were not reduced as they should have been.

Why do governments resist making the small investments that would make buildings and infrastructure safer? Why are individuals unwilling to insist on construction that makes their homes and businesses more hazard-resistant? The problem is: how can governments, investors, and individuals in the Caribbean region be persuaded to deal more wisely with natural hazards than they have to date?

The purpose of this paper is not to tell governments what actions to take to increase the safety and well-being of their citizens. They know. The purpose is to persuade them to take the actions they already know they should take with respect to natural hazards. A second purpose is to create a pair of synergistic and invincible forces— the governments and the people that interact to bring about a reduction in the impact of natural hazards in the Caribbean.

Reason for Concern

The need to pay special attention to natural hazards

Losses from recent major events

The levels of losses in major disasters demonstrate the economic importance of reducing vulnerability. Given the small size of Caribbean states, the impact of a major hurricane or earthquake can affect the entire national community.

As a result of high deductibles and under-insuring, insurance covers less than 50 percent of the losses caused by natural hazards. This proportion to insured losses is expected to become much worse (Figure 1).

Figure 1: Comparison of Economic and Insured Losses (Munich Re 97)

The cost of business as usual

Natural hazards can damage buildings and infrastructure causing a series of direct and indirect losses. The direct losses, borne by the property owner and partially offset by insurance payments, can be approximated by the cost of repair and reconstruction. The indirect losses arise as a consequence of disruption of production and services and spread through the entire economy. An example of this is what would happen to imports and exports if a seaport were out of service for an extended period. Indirect losses are difficult to estimate and can easily exceed direct losses.

A study [2] of infrastructure that failed due to natural hazards finds that:

In other words, most damage and disruption can be prevented, and it pays to do so.


The insurance industry has experienced growing disenchantment with the Caribbean over the past two decades, with several insurers and reinsurers withdrawing from the region. Those that remained increased premiums severalfold, reaching peak rates around 1993. Subsequently, those high premiums attracted investment funds for reinsurance resulting in a drop in rates, but the active hurricane seasons of 1995 and 1996 began to reverse that trend, and the high rates of 1993 could still return [3].   To date, insurance companies have been disinclined to promote measures that would reduce vulnerability to hazards, but both they and their policyholders would benefit if premiums were priced  to reflect reduced risk.

Climate change

Even though global climate change is subject to a great deal of uncertainty, the Intergovernmental Panel on Climate Change (IPCC) recently concluded that human intervention has a discernible effect on global climate. Global mean surface air temperature has increased between 0.3° and 0.6° C since the 19th century and is projected to rise about 2° C more by 2100 [4]. Global sea level has risen by between 10 and 25 cm over the past 100 years and is projected to rise about 50 cm more by 2100. Global climate change also appears to aggravate the impact of El Niño.

What does all this mean for the Caribbean? Small islands and low-lying coastal areas are especially vulnerable to sea level rise. Higher rates of coastal erosion, permanent inundation, and flooding might occur. This is particularly dangerous in a region where population, economic activity, and infrastructure have shifted towards coastal areas and urban settings in recent years. Increased salt-water intrusion of coastal aquifers may also be expected. Given the high dependence of the region on rain for potable water, changes in the rainfall pattern may cause serious problems. Climate change is also projected to exacerbate health problems such as heat-related illness, cholera, and dengue fever. There is some indication that the Caribbean region may be entering a period of increased hurricane activity, after a relatively calm period from the 1960s through the late 1980s.

What can be done?

A twofold strategy for reducing vulnerability to natural hazards in the Caribbean

The concept of disaster management has expanded significantly. Originally focussed only on immediate pre-disaster preparedness and post-disaster response, the concept now encompasses the longer-term issues of hazard assessment, risk reduction, and rehabilitation. To further reduce the long-term risk of  natural hazards, the Caribbean states should develop a comprehensive disaster mitigation policy.



probability of occurrence, within a given time period and area, of a potentially damaging phenomenon


expected damage or loss from a given hazard.  Is a function of hazard characteristics (probability, intensity, extent) and vulnerability


degree of loss to a given element at risk, resulting from the occurrence of a phenomenon of a given magnitude

To reduce vulnerability, structures must be located in areas safe from hazards or be able to resist their impacts. This requires changes in public and private approaches to location, design, construction, and maintenance of structures. Setting appropriate standards and making reasonable decisions about "safe" locations, however, requires understanding of the areal distribution, frequency, and magnitude of hazardous events. Since most hazards are shared by all the countries in the region, a coordinated effort to map prevalent hazards and develop regional expertise in risk management can reduce the cost and increase the accuracy of the information necessary for proper decision-making.

Action is difficult because the people, not the political leaders or the technicians, must take the initiative. When the people lead, the leaders will follow. Of course, much can also be done to improve the technical and institutional situation surrounding natural hazards. We propose a twofold approach of mutually supporting strategies.

I. Political Strategy


On several occasions during the past decade, Caribbean policy workers have put disaster management on the regional and national agendas.  The Programme of Action for the Sustainable Development of Small Island Developing States, adopted in Barbados in 1995 during the UNSIDS conference, calls for the integration of natural and environmental disaster policies into national development planning processes, and for the development and implementation of public and private sector pre - and post - disaster recovery flaws.

Several initiatives were brought forth from the Plan of Action of the Summit of the Americas on Sustainable Development, Santa Cruz de la Sierra, 1996.  These included the recognition of the necessity to establish and / or strengthen disaster preparedness, as well as disaster management institutions and their policies and response capabilities. Also, the promotion of the inclusion of disaster planning, preparedness, and mitigation in national development plans was incorporated into the Plan of Action.

Moreover, the need to establish, as appropriate, regional emergency response teams and regularly test contingency plans; and promote the establishment of appropriate building construction codes that include regulatory and enforcement mechanisms through the sharing of technical information and expertise was recognized. The Plan of Action also committed to cooperate in the development, strengthening and implementation of regional disaster mitigation plans, including contingency and response arrangements.

The Bridgetown Declaration was created at the Caribbean / United States Summit, Partnership for Prosperity and Security in the Caribbean, May 10, 1997 in Bridgetown, Barbados.  Here,  it was recognised that the Caribbean region is vulnerable to several forms of natural disasters including hurricanes, volcanoes, earthquakes and flooding. This vulnerability has been compounded by the geographic situation of the region, which makes the Caribbean Sea a transit area for many cargoes of a potentially hazardous nature.

The important role of preparedness and mitigation in reducing the vulnerability of Caribbean states to such natural disasters was also recognized. The countries pledged to continue to coordinate their efforts and improve their ability to detect, monitor and respond to natural disasters. Moreover, they affirmed the priority of investment in planning, preparedness and mitigation initiatives, to strengthen the capacity of countries in the region to protect themselves from disasters and to decrease the need for emergency response resources in the future.

Involve stakeholders

Communities must become more aware of natural hazards and demand that measures be taken to reduce their negative effects. Little action will take place until pressure is felt on the political front from victims of inaction. Precedent exists for mobilising action at the national, state, municipal, and local levels.

On the national level, the Federal Emergency Management Agency (FEMA) in the United States recently began Project Impact to help communities reduce their susceptibility to disasters. The process consists of four steps: building a community partnership for hazard reduction, identifying risks, instituting mitigation measures, and improving communication. A FEMA publication describes the process in a series of case studies from around the country and tells of the enormous savings the partnerships have already achieved [11].

On the state and municipal level, the Florida Department of Community Affairs (DCA) spearheads a state-wide strategy to help cities and counties establish mitigation plans. Through this US$20 million initiative, launched in 1997, DCA works with cities and counties to identify areas that are continually devastated during disasters and to tap state funds to improve these situations. Although the project is relatively new, it is already bearing fruit [12].

At the local level, the OAS helped organise programs for mitigating the risks of natural hazards in the towns and villages of Grenada and Saint Lucia. Local disaster committees were established, potential risks identified and monitored, mitigation measures instituted, and systems for notification and evacuation put in place. Eventually the plans foundered because the national governments failed to provide the minimum funding required for follow-up, but the feasibility of such local self-help systems and the communities’ enthusiasm for them were clearly established [13].

Mobilise action

Disaster mitigation is difficult to sell. Homeowners prefer to invest in the exterior appearances and comfort of their dwellings rather than in improving wind resistance of roofs. Public-sector decision-makers make investments that fail to consider natural hazards, favouring the distribution of benefits to larger numbers of constituents. Major institutional weaknesses persist in the enforcement of land use and code regulations. The technical challenges of disaster mitigation are well understood. What is less understood is how to address the persistent obstacles of public perception, political expedience, and the myth that "Our country is too poor to afford the required standards" [14]. The most difficult part is provoking the interest of the man in the street to back hazard mitigation. Action must start with raising the general population’s awareness of natural hazards.

II. Technical/institutional strategy

Develop a disaster mitigation plan

At the national level, each country must incorporate disaster mitigation into all its activities, from the traditional realms of emergency management and development control through economic planning, education, tourism, and infrastructure development. A disaster mitigation plan should be developed as a framework for co-ordinating this national effort. The plan could be developed in five steps:

  1. Develop a national disaster mitigation policy. This provides the vision, rationale, and mandate for vulnerability reduction activities.
  2. Assess existing hazards and map the hazard risk. Document the location, frequency, severity, and impact of historical hazardous events.
  3. Assess existing and future vulnerability to hazards. Identify the areas most at risk by combining information on existing or planned development with maps of areas at risk of hazardous events.
  4. Develop a disaster mitigation plan with programs for implementation. Examine public and private activities in vulnerable areas to ensure that these activities do not increase existing vulnerability. This review should include recurrent activities (e.g., operation and maintenance) and one-time decisions (e.g., development approvals). The plan should encompass all government activities, such as building codes and regulation of maintenance, education, and land use. It should include instruments that promote the adoption of mitigation behavior in such areas as fiscal and development incentives, cropping systems, and infrastructure development.
  5. Implement, monitor, and update the disaster mitigation plan. No matter how good the plan, it will effect no change unless it is implemented. The policies and recommendations in the plan should be examined and revised periodically.

At the regional level, the expertise of institutions such as the University of the West Indies (UWI), the Seismic Research Unit in Trinidad, and the Caribbean Meteorological Institute in Barbados can be of great assistance in understanding hazard, vulnerability and risk. Regional hazard assessments undertaken by these institutions can provide critical information for use in national assessments and planning.

Legally mandate building codes

To improve resistance to the effects of natural hazards, better building practices are essential. Until there are building codes with the force of law, they will not be taken seriously by the construction industry. Such codes must incorporate modern technical standards. The costs of improved standards and codes are minimal (Figure 2).

Figure 2: Cost implications of new standards and codes

  • An analysis by M. Ipek of a single-bay, multi-story, reinforced, concrete-framed structure indicated that, for typical Caribbean conditions, when applying levels of earthquake forces similar to those prescribed by the Caribbean Uniform Building Code (CUBiC), the cost of the structure increased only zero to 14 percent [5].
  • A similar study carried out by Whitman et al. indicated that for similar conditions the increase in the structural cost, related to the overall building cost, ranged between 2 and 5 percent with an additional 1 percent for non-structural items [6].
  • A cost impact analysis by Ralph W. Goers & Associates, structural engineers, in 1993 determined that the extra costs of earthquake and hurricane resistance for a variety of single-family dwellings ranged from 0.24 to 2.2 percent [7].
  • The cost of retrofitting Victoria Hospital in Saint Lucia in 1993 was estimated by Consulting Engineers Partnership (CEP), a regional engineering firm, to be 1 percent of the contemporary replacement cost of the facility [8].
  • A major Caribbean electric utility retrofitted US$27 million worth of buildings for less than US$270,000 [9].

Enforce codes effectively

Legally mandating codes is not enough; they must be enforced. Great care should be exercised in selecting the enforcement system for the codes, since some are easier to ignore, manipulate, or corrupt than others. There is no need to establish an elaborate inspectorate before implementing building codes. The region cannot afford large bureaucracies, which may not be effective anyway. Instead, education and economic incentives should be combined with inspection to promote compliance (Figure 3).

Figure 3: Selected regulatory models for checking compliance

Singapore Model. This approach features a considerable degree of self-regulation, with professional engineers certifying that design and construction are in compliance with the specified standards. In-depth audits of a few randomly selected projects are conducted, with bad work leading to penalties.

French Model. An approach inspired by the Code Napoléon made the contractor liable for design and construction faults. This led to decennial insurance which, in turn, led to the need for bureaux de contrôle (check consultants). Consideration should be given to this excellent method of quality assurance.

Colombian Model. A system similar to the French model is used in Colombia, where the building owner employs both the designer and the inspector.

Build a New CUBiC

CUBiC was published in 1985. While many say that it is out-of-date, there are countless standards and codes in use in Western Europe and North America that are older. The proper use of a 1985 CUBiC would be a vast improvement over the present situation in most of the Caribbean. In the spring of 1999, planning for the update of CUBiC was begun with technical support from the USAID/OAS Caribbean Disaster Mitigation Project (CDMP). The new version of the code will be a Caribbean Application Document (CAD) relying on a selected set of base documents from other appropriate jurisdictions, rather than a unique set of standards. The Caribbean Development Bank has agreed to provide a grant to support this CUBiC upgrade. After CUBiC-2000 is widely disseminated, calibrated, and amended as needed, a concerted effort should be made to persuade the construction industry to abide by it.

Maintain CUBiC

CUBiC-2000, like any other set of technical standards, would require periodic review leading to intermittent revision. In metropolitan countries, technical standards are revised at intervals of three to ten years. California revises its earthquake design standards every three years or so. A regional body of technical specialists should be set up to undertake this process of review and revision. It should have a mechanism for considering the views of interest groups in the society, including those not directly concerned with the construction industry.

Improve education and training

Techniques for eliminating or reducing property losses due to hurricanes and earthquakes are well known. More education and training are needed to transmit these techniques to designers and builders in both formal and on-the-job settings. Improved undergraduate education and structured on-the-job training should lead to professional certification.

UWI has an important role to play in the Caribbean. Through its undergraduate programs, engineering students are taught the principles and fundamentals of building design and construction.  Once the basics are understood, engineering students should have no difficulty in understanding and applying codes and standards.. However, existing programs and continuing education programs for practising engineers should be strengthened so that students and professionals have a better understanding of the principles and their practical application.

By strengthening professional organisations we can also improve education and training. The Council of Caribbean Engineering Organisations (CCEO) was very active in the field of continuing education during the 1970s and 1980s, but has dropped off noticeably. A revival of CCEO activities is needed, particularly as they relate to disaster prevention issues. Barbados enacted the first Caribbean legislation for the registration of engineers in 1975. Since then several Caribbean states have enacted similar legislation. All states should adopt a registration program.

Strengthen land-use planning

A low-cost way to reduce damage from natural hazards is to locate structures in safe areas. Plenty of information exists in the Caribbean on the location of fault lines, damage zones for volcanic eruptions, the effect of surge waves on coastal areas, and inundation zones of flood plains. Avoiding the use of such areas for buildings or infrastructure vastly reduces the likelihood of damage. When construction in a known hazardous zone is unavoidable, suitable hazard mitigation measures should be incorporated into the design.

The introduction of planning legislation in the Caribbean in the 1960s has led to a growing consciousness among planners of the need for tighter controls on the use of land. However, change has been slow. A greater financial commitment on the part of the governments may be required to ensure that land-use and zoning regulations are properly enforced.

Improve maintenance of infrastructure and buildings

The physical condition of much infrastructure in the Caribbean is poor, suffering from low maintenance and inadequate management practices. In addition, the tendency of governments to make decisions on major investment projects without appropriate information on hazard assessment or mitigation measures contributes to the precarious state of the infrastructure [10].

Several institutions address problems in the infrastructure of the Caribbean.  The Pan - American Health Organization (PAHO) is spearheading a program of strengthening health facilities. The OAS has established the Hemispheric Plan to Reduce Vulnerability in the Education Sector to Socio-Natural Hazards (Hemispheric EDUPLAN).  The Hemispheric Action Plan for Vulnerability Reduction in the Education Sector to Socio-Natural Disasters supports the design and implementation of activities that focus on the reduction of natural disaster vulnerability in the education sector. It has been designed for presentation to the government and non-governmental organizations of the countries in Latin America and the Caribbean. 

The OAS and the CDB have compared a school / shelter retrofit program in several OECS countries and the World Bank has recently started an Emergency Recovery and Disaster Mitigation loan program for 5 OECS countries [12].

Funding of maintenance activities is commonly insufficient to provide for proper execution of this unglamorous but important function. For public buildings, with their expected heavy usage, a normal annual maintenance budget is about four percent of the contemporary capital cost of the buildings and equipment, assuming that the buildings are in good condition. For coastal infrastructure, the figure is likely to be higher. Obviously, when infrastructure is in poor condition, the cost of maintenance must be higher. Like land-use regulations, maintenance requires greater budget allocations.

A review of the damage caused by recent hurricanes and floods has shown that a well-operated maintenance system is a very effective disaster mitigation measure in terms of cost and facility usage. It is essential to include a maintenance plan in disaster mitigation plans.


The Caribbean is exposed to multiple natural hazards. If the region is to achieve sustainable development, it must counteract these hazards by avoiding hazardous areas whenever possible and by designing and constructing resistant housing, commercial buildings, and infrastructure. Widespread failure must not be tolerated.

The population of the Caribbean must be mobilised to insist on safer building. The first step must be to identify risks and vulnerable areas. The second step is to adopt appropriate designs for buildings and infrastructure at acceptable cost. This would be facilitated through the adoption and mandating of good standards and the continuing education of engineers and architects on how to design against the natural hazards prevalent in the Caribbean. Support must come from governments, financing agencies, and the catastrophe insurance industry.

Hurricanes, torrential rains, earthquakes, volcanic eruptions, and landslides are fascinating, even awesome, natural events. It is possible to imagine the day when these events cause some damage and inconvenience but no longer disrupt normal community functions nor dislocate the economy. These policy considerations are intended to bring that day closer.


  1. Caribbean Disaster Mitigation Project, 1999. Infrastructure Failure in the Caribbean Due to Natural Hazards. Organization of American States.
  2. Caribbean Disaster Mitigation Project, 1999. Infrastructure Failure in the Caribbean Due to Natural Hazards. Organization of American States.
  3. Caribbean Disaster Mitigation Project, 1996. CARICOM Working Party Report on Insurance, Reinsurance and Catastrophe Protection in the Caribbean. Organization of American States
  4. R.T. Watson, et al, 1995. Climate Change 1995. Intergovernmental Panel on Climate Change.
    R.T. Watson, et al., 1997. Summary for Policy Makers. The Regional Impacts of Climate Change, An Assessment of Vulnerability, Intergovernmental Panel on Climate Change.
  5. M. Ipek, 1968. Increase in Building Cost due to Seismic Coefficient. CENTO Conference on Earthquake Hazard Minimization, Ankara, July 1968.
  6. R.V. Whitman, et al., 1974. Seismic Design Analysis. Cambridge, Mass, MIT 1974, Structures Publication No. 381.
  7. Ralph W. Goers & Associates, 1977. Cost Impact Analysis for Earthquake and Hurricane Resistance. Washington, D.C., U.S. Department of Housing and Urban Development.
  8. Consulting Engineers Partnership Ltd., 1993. Vulnerability Assessment of Victoria Hospital. PAHO., Washington, D.C.
  9. Consulting Engineers Partnership Ltd., 1992. Hurricane Damage Mitigation Programme for the Barbados Light & Power Co. Ltd. Bridgetown.
  10. Inter-American Development Bank and Caribbean Development Bank, 1998. Infrastructure for Development, A Policy Agenda for the Caribbean. Washington, D.C.
  11. World Bank, Grenada-Organization of Eastern Caribbean States: Emergency Recovery and Disaster Management Program.   February 2000.
  12. Federal Emergency Management Authority, 1995. Project Impact: Building a Disaster Resistant Community. Boston.
  13. Florida Department of Community Affairs, 1997. The Local Mitigation Strategy: A Guidebook for Florida Cities and Counties. Tallahassee.
  14. National Emergency Organization of Saint Lucia and OAS, 1987. A Manual for Town, Village and Regional Clerks. Castries.
    National Emergency Relief Organization of Grenada and OAS, 1989. A Manual for Local Disaster Committees and Government Officials. St. George’s.
  15. Caribbean Disaster Mitigation Project, 1999. Investing in Mitigation. Organization of American States.