Economics of mitigation
Perhaps the greatest difference likely to be encountered between
the various countries served by UNDP and DHA, and between the various societies
threatened by disasters, is the budgetary constraints on spending for
mitigation. The Japanese Government spends over $2 billion a year on disaster
mitigation and preparedness. This is more than the total annual government
revenue of half the world's nations.
Mitigation investment has to be seen in terms of the price
of protecting existing and future infrastructure.
In most of the developing nations threatened by disaster,
capital for investment is at a premium. Investment in agricultural irrigation
projects or in industrial manufacturing capability has a demonstrable effect in
increasing economic output. Investing in disaster mitigation is likely to mean
fewer resources left for irrigation projects, industry or hospitals. And yet not
spending on disaster mitigation means that the investment in irrigation
projects, industry and hospitals will be wasted if they are destroyed in a
future occurrence of a hazard. The spending of a few percent extra on a new
facility to build it a little stronger and protect it against a future threat is
usually seen as prudent. Mitigation investment has to be seen in terms of the
price of protecting existing and future infrastructure.
The level of investment that is justified to protect society,
its economic activities and its built environment is a matter of political
decision making, and the economics of risk. Choosing an appropriate level of
safety for building codes, for example, is a matter of considerable debate in
the engineering profession. The cost of providing safety is considerable and the
stronger a building is, the more it costs. Structural resilience standards
written into code requirements in United States, where GNP per capita is about
$20,000 may not be directly applicable in countries with income levels of $1,000
GNP per capita, but the attitude to safety that the code espouses is applicable.
Appropriate levels of investment in safety need to be defined for each country.
Decision making on appropriate levels of investment in disaster
mitigation depends on how likely the hazard is to occur, and what would be the
impact of the hazard if it does occur. The assessment of risk and use of
vulnerability evaluation in decision-making is covered in the module on
Vulnerability and Risk Assessment.
The nature of political administrations means that
projects that result in tangible or demonstrable outputs within the lifetime of
the administration (two, three, four years) are preferred.
The costs and benefits of alternative investment strategies need
to be carefully evaluated. In a number of evaluations of disaster mitigation
projects, it has been demonstrated that well-targeted investment will repay
itself several times in the event of a disaster in reduced levels of direct
damage cost. It will also have the additional benefits of saving life and
reducing consequential losses to the economy and the costs of emergency
operations. The use of a systematic framework of risk assessment to establish
which hazards are most likely to occur and the probable effects will help define
the priorities of a mitigation program - whether to build flood protection
barriers or to establish a public information campaign for cyclone-resistant