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close this bookDisaster Economics (Department of Humanitarian Affairs/United Nations Disaster Relief Office - United Nations Development Programme , 1994, 56 p.)
close this folderPART 1 - Disasters and economics
View the document(introduction...)
View the documentWhat is economics about?
View the documentThe quantitative focus
View the documentThe practical thought process
View the documentEconomic analysis as applied to disasters
View the documentIs disaster economics different from economics?
View the documentOptimal planning
View the documentThe incentive structure
View the documentThe overall picture
View the documentGeneral and sectoral rehabilitation requirements
View the documentSummary

General and sectoral rehabilitation requirements

It is important to obtain an early indication of the total resource requirements implied by any disaster. Decision makers require quantitative information to decide, first, which sectors and geographical areas are to be assigned priority for rehabilitation and reconstruction, and, second, what are the funding requirements and possibilities.

It is important during the preparedness phase to develop sectoral baseline information in key areas where rehabilitation might be required. Following a disaster, estimates of sectoral need must be obtained, which will almost certainly require undertaking rapid urban and rural appraisals. These needs must be analyzed in the light of their foreign exchange requirements.

Naturally, there are variants in the ways that sectors are described. The United Nations Development Programme (UNDP) utilizes fourteen different sectors in its programmes. The UN Economic Commission for Latin America and the Caribbean (ECLAC) has developed a comprehensive damage assessment methodology which enables the accurate estimation of damage in all economic and social sectors. This uses sectoral classifications which are consistent with Latin American economies and divides total damage between public and private sectors. ECLAC makes a distinction between direct damage to capital stock, buildings and inventories, and indirect damage, which includes production losses, higher costs and diminished incomes in the service sector. A secondary assessment of the impact of a disaster shows its effect on the country's future macroeconomic development, as well as its (in)ability to finance necessary rehabilitation requirements.

Whichever approach is used, it will broadly include a phased estimate of financial and physical need, identifying both local and foreign exchange costs. Having estimated overall loss and damage, the planner and policy analyst must then identify the resources required to achieve relief and rehabilitation. Resource requirements should cover:

· Building, plant, machinery and other infrastructural requirements, covering government, local government, government corporations and semi-government institutions.

· Commercial and residential requirements (urban and rural), including moveable properties, such as vehicles.

· The grant, food and medical supply requirements of affected families, children, injured and disabled.

As a part of this analysis, and prior to implementation of any rehabilitation programme, each decision should be screened to evaluate whether or not to undertake proposed investments because:

1. It is not essential to replace damaged or destroyed assets on an equivalent basis.

2. Where assets are replaced, rehabilitation must be cost-effective.

3. The replaced asset must contribute (directly or indirectly) to its maintenance and other recurrent costs.

4. The highest priority rehabilitation should take place first, leaving lower priority reconstruction until later.

5. Construction start-up should not be permitted until it is clear that the rehabilitated infrastructure, when completed, will be capable of delivering all the outputs and services on which any expenditure appraisal was based.

Q. Why is it important to screen each public sector investment?

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ANSWER

It may not be essential to restore each asset to its pre-disaster condition; rehabilitation must be cost-effective; budgets must contain ongoing maintenance and other recurrent costs, high priority projects should be undertaken first; and delivery capacity should be firmly established.