Jan C. Vermeiren
Unit of Sustainable Development and Environment, Organization of American States
Note: This paper was originally presented at the Caribbean Session of the 1993 National Hurricane Conference, held in Orlando, Florida, 13 April 1993.
Natural disasters pose a growing threat to the development strategies of Caribbean countries by destroying infrastructure and productive capacity, interrupting economic activity, and creating irreversible changes in the natural resource base. With increasing frequency, countries in the region are facing situations in which scarce resources that were earmarked for development projects have to be diverted to relief and reconstruction following disasters, thus setting back economic growth.
Disasters also directly impact on the foreign exchange earnings capacity of a country, at a time when extra resources are needed to finance imports of food, energy, and inputs for the agricultural and manufacturing sectors. If sustainable development is to be achieved in the Caribbean region, countries will have to take effective measures to reduce their vulnerability to natural disasters.
The underwriting losses suffered by Caribbean property insurers in the aftermath of the recent hurricanes have reduced the availability and increased the cost of reinsurance. This in turn has led to a defensive reaction on the part of insurance companies and agents in the region, who are advising their clients that hurricane coverage will not be as readily available as before, and that, when available, costs will be higher, and property owners will have to bear a larger share of the risk.
As a consequence, property insurance, the traditional mechanism for reducing economic risk from catastrophic events, is no longer as available or affordable as in the past. This development is now forcing property owners and developers to seriously look at other mechanisms to minimize the consequences of natural disasters. Time has come to practice disaster loss reduction in a systematic way, as an integral part of ongoing development planning and investment.
To embark on a systematic campaign of disaster risk reduction, be it in existing development or in designing new development, planners, developers and property owners first of all need access to information on vulnerability reduction measures and their implementation, and secondly, they need to present convincing economic justification for the required investments in vulnerability reduction.
The research community has produced a vast body of knowledge on structural and non-structural mitigation measures designed to prevent or reduce the impact of natural disasters. The problem is that this information remains to a large extent within the domain of the research community and its scientific papers.
The challenge consists in translating this information into a format that can be understood by the development community, and in disseminating it to property owners, developers, and government planners.
Economic Analysis of Investments in Vulnerability Reduction
In the public as well as private sectors, long term hazard mitigation and vulnerability reduction quite often have to compete for scarce investment resources with other development initiatives addressing basic infrastructure, production and employment needs.
The benefits of long-term hazard mitigation go beyond economics, as the reduction in vulnerability to disasters contributes to individual security, social stability and sustainable development. Nevertheless, economic arguments built on a sound benefit-cost analysis are essential when one has to defend the use of scarce resources for investment in mitigation.
Few case studies on benefit-cost analysis of investment in vulnerability have been documented. Such studies are urgently needed to serve as models for better articulation of the benefits of investing in mitigation, and for more accurate estimates of the costs of alternative mitigation options.
Each disaster leaves in its wake an overwhelming volume of evidence of human ignorance or neglect that directly contributed to the magnitude of the damages. It is therefore not surprising that a systematic analysis of how decisions made by planners and developers may contribute to vulnerability and the consequent risk of disasters will effectively identify where hazard mitigation and risk reduction may be best be applied.
This analysis is helped by recognizing the following three broad categories of physical vulnerability of development in hazard prone areas:
|Loss of Natural Protective Systems||
Hazard mitigation is defined as any action taken to permanently eliminate or reduce the long-term risk to life and property from natural and technological hazards. The wide variety of actions that fall under this definition can usefully be categorized as risk avoidance measuresprimarily of a nonstructural naturerisk spreading measures, and structural vulnerability reduction measures.
The use of one type of mitigation measure does not exclude any other type of measure. Structural and non-structural measures can be selected to complement each other, and can be effectively integrated in a multi-sectoral or area-wide disaster mitigation plan.
|Risk Avoidance Measures (Non-structural
Discourage location of settlements, infrastructure and economic activities in known hazardous areas through:
|Risk Spreading Measures
||Vulnerability Reduction Measures
Physical measures designed to enhance natural hazard impacts:
The decision to invest in measures that can protect property against possible damages from disasters is primarily an economic decision. It should therefore be taken in the framework of an economic analysis, evaluating the costs of investing in mitigation or prevention against the expected benefits, in terms of risk reduction, that will be derived from the investment.
For new development projects, the economic analysis of mitigation should be implemented as part of the project appraisal phase. For retrofitting of existing development, the analysis must be carried out on a stand-alone basis.
Present Value of Costs
|Expected Value of Benefits
All empirical evidence shows that it is significantly more cost-effective to design and build a structure to standards that would withstand maximum expected wind or seismic forces in a given location, rather than build to lower standards and suffer the damages.
Field observations after recent hurricanes have shown that loss of roof material and failure of doors and windows are the main contributors to property damage. Failures of this nature could be avoided through the use of proper materials and improved workmanship, factors that would add minimally to the cost of a building.
Examples of Mitigation Costs for New Construction and Retrofitting
|Seismic Risk||New Construction||Retrofitting|
|Hospitals in Costa Rica||||6% to 8%|
|Public Buildings in California||Less than 5%||Up to 40%|
|Hurricane Wind Risk||New Construction||Retrofitting|
|Hotels in Jamaicameasures included in retrofit that would have prevented original damage||||Less than 1%|
|Florida housingincrease design windspeed from 110 mph to 140 mph||2% to 3%|||
Opportunities for natural hazard mitigation can be found anywhere where population, infrastructure or economic activities are at risk of disruption or destruction from extreme natural events. Which vulnerability reduction actions to consider will depend on what is to be protected, on the priorities set by those affected, and on the resources made available for their implementation.
In selecting opportunities for hazard mitigation it is essential to remember that the most effective approach to reducing the long-term impact of natural hazards is to incorporate hazard assessment and mitigation activities into the process of integrated development planning and investment project formulation and implementation.
|Productive Sector Assets and Infrastructure
||National Infrastructure and Utilities
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