Introduction

Purpose and scope

This module is about the economics of disasters. It shows how economic analysis can be used to advise decision-makers about alternative policy options. Some policies may cost little and achieve much. Some policies are expensive in the short run but save money in the future. Some policies save funds in the short run but cost much later. This module is written for the policy analyst - the person who has to advise government, UN, NGO and community leaders regarding hard decisions about how to spend limited funds to achieve maximum results.

The economics of disasters is easily brought home by the following simple example. In Jamaica, a public housing project known as "Poorman's Corner" was being built by the Jamaican National Housing Trust. The 120 units were completed about the time that Hurricane Gilbert struck the island. Each of the units suffered partial or total roof damage compounded by vandalism in the aftermath of the storm. Lack of hurricane straps between roof and walls, undersized (and too few) roofing nails and low quality aluminum roof sheeting were identified as the technical reasons for roof failure. Repairing the units cost almost one quarter of the original construction cost and seven months of rental income was lost during the rehabilitation process. It is obvious that building the housing units right the first time would have prevented substantial direct and indirect costs and would have freed funds for other development projects.

In this module, economic terms have been used in such a way that the concepts are comprehensible to readers from all professional disciplines and backgrounds. If you wish to obtain more detailed information about a particular subject, please refer to the attached bibliography. A glossary is provided at the end of the text. The glossary contains many terms that you will find useful in understanding economic analysis concepts.

Overview of this module

The module is divided into three parts. Part 1 gives a quick review of what economics is about, describes the quantitative tools that facilitate economic analysis, gives an overview of the rational decision-making process that economists recommend, and considers how disasters might be analyzed from an economic point of view. Part 2 considers five selected disaster scenarios which highlight key policy issues and the trade-offs which will have to be considered during economic analysis. Part 3 considers alternative ways in which disaster relief and rehabilitation projects may be financed. Finally, key points raised in the module are summarized at the end of the text.

It is impossible to write a document which comprehensively covers disasters of every type and characteristic. The module may not address a particular category of disaster with which you are familiar or primarily concerned. However, the important point is to review the key issues discussed in the module, with a view to assessing how the disaster-related procedures followed in your own country could be improved.

Training methods

This module is intended for two audiences: the self-study learner and the participant in a training workshop. The following training methods are planned for use in workshops and are simulated in the accompanying "training guide". For the self-study learner the text is as close to a tutor as can be managed in print.

Figure

Workshop training methods include:

· group discussions
· simulations/role plays
· supplementary handouts
· videos
· review sessions
· self-assessment exercises

The self-study learner is invited to use this text as a workbook. In addition to using the margins for note taking, you will be given the opportunity to stop and examine your learning along the way through questions included in the text. Write down your answers to these questions before proceeding. This will ensure that you have captured key points in the text.

Figure