Disruption of development by disasters

Disasters can seriously disrupt development initiatives in several ways, including:

· Loss of resources
· Interruption of programs
· Impact on investment climate
· Impact on the non-formal sector
· Political destabilization

Loss of resources

Development resources are lost when a disaster wipes out the products of investment - it shortens the life of development investments. The disasters affect development through:

· Impact on capital stock and inventory

· Loss of production and provision of services due to disruption and increased cost of goods and services

· The secondary effects of the disaster include inflation, balance of payment problems, increase in fiscal expenditure, decreases in monetary reserves

· Other indirect losses, for example: the impact on a country’s debt position could be that as the debt service burden increases, the country has less resources available to invest in productive enterprises

· The outcome of these losses of resources include: loss of economic growth, delays to development programs, cancellation of programmes, and disincentives to new investment

· There may also be a shift in skilled human resources toward high visibility recovery activity - a diversion from long-term to short-term needs.

Interruption of programs

Disasters interrupt ongoing programs and divert resources from originally planned uses.

Impact on investment climate

Disasters, especially when they have occurred repeatedly within a short period of time, have a negative impact on the incentive for further investment. Investors need a climate of stability and certainty to be encouraged to risk their money. The disaster further clouds the investment picture when it has caused loss of employment, thereby depressing market demand, and resulting in a stagnation which limits overall growth.

Impact on non-formal sector

Disasters have special negative impacts on the non-formal sector where approximate costs of disasters are often underestimated. Disasters depress the non-formal economy through the direct costs of lost equipment and housing (which often also serves as business sites). The indirect costs of disasters include lost employment, and lost income. Sometimes the importation of relief items creates disincentives to producers.

Political destabilization

The stress to a country caused by a disaster often results in the destabilization of the government. This may occur for several reasons. For example, the government may have mismanaged the disaster relief and recovery, leading to discontent on the part of affected communities. Or the survivors may have had unmet expectations which, for whatever reason, translate into some form of protest. The government could also become the scapegoat for problems beyond its control, again leading to its possible downfall. In fact, it is very common for a government to collapse or be overthrown within two or three years of a major disaster.

Q. Recall the most recent disaster with which you are familiar. Based on that experience, respond to the following.
A.
1.	Identify a facility critical to the local economy that was knocked out of service. _______________________________________________________
2.	Name one development project that was interrupted. _______________________________________________________
3.	Identify one case of an investment that was withdrawn or reduced because of the disaster. _______________________________________________________
4.	Identify one case of non-formal sector employment that was lost because disaster relief displaced the need for it. _______________________________________________________
5.	Describe an example of how the government may have been destabilized by the disaster. _______________________________________________________