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close this bookDisaster Economics - 1st Edition (Department of Humanitarian Affairs/United Nations Disaster Relief Office - Disaster Management Training Programme - United Nations Development Programme , 1992, 52 p.)
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View the documentIntroduction
Open this folder and view contentsPart 1 - Disasters and economics
Open this folder and view contentsPart 2 - Alternative disaster scenarios
Open this folder and view contentsPart 3 - Financing options
View the documentSummary
View the documentGlossary
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Summary

Key points raised in the module

From the point of view of the World Bank, a disaster is identified as an event that seriously disrupts a country's economy, causing it to modify substantially its investment programmes, (which will have a long term impact), and its economic policies, (which are likely to have an effect only in the short and medium term). In order to minimize such disruption, alternative investment and policy options have to be evaluated, and priorities identified.

Anderson suggests there are three reasons why the "disaster" variable should be included more fully in the development planning process. First, disasters are linked to poverty, which increases the likelihood that a crisis will turn into a disaster. Second, development can increase disaster proneness: for example, (a) industrialization can lead to disaster (for example, toxic emissions from Bhopal, the need to find dumping grounds for hazardous waste, and the use of oil pollution as a environmental bargaining chip in times of conflict), (b) rapid urbanization and human settlement may not be fully protected against seismic activity or flooding, and (c) overpopulation can lead to environmental deterioration and crisis. Third, development resources are often wasted out of failure to consider disaster proneness.

However, while it is correct to say that development planning should take account more fully of the "disaster" variable, in practice it is extremely difficult to establish the most appropriate balance between investment for either disaster mitigation or recovery. This raises two important points for development planning. First, the balance between mitigation and recovery investment will be a function of priorities, which, in turn, will vary between political parties, government departments and individuals. Second, it begs the question whether development planners should attempt to "optimize" after a disaster has occurred. That is:

· Should the disaster be used as an opportunity to rationalize the allocation of resources between and within sectors, with a view to changing the economy's production and consumption balance?

or alternatively,

· Should the economy be allowed to get back to work as quickly as possible, leaving until later an examination of key policy questions on how best to remove any price and supply distortions?

Finally, some key points that are likely to be left unresolved by economic analysis, but that are critical to successful programme implementation, are :

Ö The challenging process of determining entitlements to identify which families should be eligible to receive grant, food, and credit assistance under a rehabilitation and recovery programme (based on which terms, and using which criteria).

Ö Deciding how credit institutions and government should treat debts outstanding at the time of the disaster, and whether a moratorium should be applied (for how long, and to whom it should apply).

Ö Establishing which type of mechanism should be established to allow people at the local level to be involved in planning and establishing priorities.

Ö Determining how the process of rehabilitation and recovery should be monitored in order to minimize any divergence between approved and actual financial and physical work programmes.

Ö Deciding what is the best way to coordinate concessional donor assistance, including retroactive financing, to ensure that internationally financed projects complement one another, rather than compete.