Economic valuation of the cost of disasters

1. Economic valuation of the cost of disasters ECLAC/CEPAL Distance Learning Programme

2. What is the impact of disasters, both positive and negative? • The losses: • Lives (due to the physical collapse of infrastructure and the collapse of services and equipment, instruments, medical attention) • Infrastructure and supplies (Investment, capital, medicines) • Attention and response capabilities • With mitigation you save: • Lives (by maintaining services and the resilience of infrastructure) • Investment capacity (you do not lose the opportunity cost of new investment which must be channelled to reconstruction) • Prevention capacity in contrast to passive curative interventions • Is there any positive outcome of disasters? • Increase resilience • Provide an opportunity for reduction of vulnerability in the face of menaces and risk Distance Learning Programme

3. Mitigation Criteria that have to be negotiated Distance Learning Programme

4. Requirements to fulfill objectives (systemic character of disaster mitigation) Save infrastructure Maintain function (remain operational) Save lives Financial resources Financial resources Financial resources Management procedures Management procedures Management procedures Specific instruments Specific instruments Specific instruments Overall policy Overall policy Overall policy Demand oriented response Demand oriented response Demand oriented response Supply side health response Supply side health response Supply side health response Distance Learning Programme

5. Actors: may be public or private, central or local Distance Learning Programme

6. Incorporating mitigation in the project cycle Distance Learning Programme

7. Impact assessment Distance Learning Programme

8. Mitigation Distance Learning Programme

9. Some things are easier to measure than others • IT IS DIFFICULT TO DETERMINE • The value of lives lost or affected • The opportunity cost, cost-benefit or investment / profitability. This is associated with the lack of adequate base lines that assess the level, quality and efficiency / efficacy of health services provided • The value and quality of services provided (both curative and preventive) • The duration of the transition / emergency phase (when field hospitals and evacuation processes are operational) • IT IS EASIER TO DETERMINE • The amount of investment required for reinforcement vs. The potential losses in equipment and inventories • The cost of reinforcement as compared to the reposition cost of affected infrastructure • The alternative cost of providing services when infrastructures collapse Distance Learning Programme

10. Determine the situation caused by the disaster • Stemming from sector valuations assess the value-added changes expected for every sector in the short term and for a medium-term period to be agreed (3-5 years or more) • Supported by input-output tables or sector weighing factors determine the projection of damages of one sector to the others • A damage scenario is built (taking into account the measured losses at replacement value) : variations in the main economic gaps is highlighted: external sector, fiscal deficit, internal equilibrium (prices, exchange rate, etc.) Distance Learning Programme

11. FUTURE DEVELOPMENTS • VULNERABILITY AND DEVELOPMENT (1) • Subject of analysis: relation of size, development and vulnerability: • “resilience” (strengthening and preparedness) in the face of: • shocks (internal, environmental, climatic, external) • Dependency and diversification • Integration and productive/competitive linkages • Analytical-mathematical formulation • Global (trans border, regional) impact of disaster • Economic, social, environmental • Effects on the donor/relief community • Effects on private sector (trans national corporations, FDI, financial markets, etc.) Distance Learning Programme

12. FUTURE DEVELOPMENTS • VULNERABILITY AND DEVELOPMENT (2) • Lessons from Mitch, droughts and earthquakes in 2001, climatic variability and 30 years of disaster valuation: “revisit” and appraise reconstruction process • Broadening methodology to social and environmental valuation • Enhance current methodology with consideration of prospective alternative scenarios and macroeconomic models • Train national authorities in the areas of economics and planning • Promote mitigation and risk managements policies beyond prevention and response Distance Learning Programme

13. Disasters, conflict and crisis management • How to approach the different interventions required: conceptual aspects, definition problems and purpose of the interventions • Are they different sides of the same coin: crisis managements associated with disasters and / or conflict? Conceptual quagmire • Methodological problems: needs assessments vs. Causal analysis • Operational problems: setting priorities and differentiating emergency from urgency: simultaneity and sequencing • Policy problems: positive vs. negative intervention; resource allocation vs. policy change promotion Distance Learning Programme

14. Restore economic and social fabric Restore and strengthen productive linkages (upstream/downstream) Reduce internal / external vulnerability Proposed courses of action • Sectoral components: • Monitoring, analysis and climate forecasting, including forest fires • Contingency plans in key sectors, for example: • Agriculture, cattle raising, • rural poverty, • energy and baselines • Water and health • Interconnected systems • Regulation of basic services with sponsorship of private enterprise • Focalized plans for vulnerable groups, including employment, food availability and nutrition • Education to reduce vulnerability • Diagnosis and monitoring of vulnerability at the local level • External policies: • Introduce risk management as part of the regional international agenda, alongside: • External competitive insertion • Benefiting from the globalization process • Inclusive regional insertion • Internal policies: • Include vulnerability reduction as an objective of development plans alongside goals of: • Competitive growth • Equitable development • Sustainable and sustained development • Social participation Distance Learning Programme

15. HANDBOOK FOR ESTIMATING SOCIO-ECONOMIC AND ENVIRONMENTAL EFFECTS OF DISASTERS Coordination: Focal Point for the Evaluation of Disasters Subregional Headquarters in Mexico www:eclac.cl/mexico

16. Economic valuation of the cost of disasterswww:eclac.cl/mexico Issues in Economic Analysis for DCPP chapters and Chapter Guidance Ricardo Zapata-Martí (UN México) DISEASE CONTROL PRIORITIES PROJECT PERSONAL HEALTH SERVICES WORKSHOP 23 – 25 JULY 2003 CHURCH HOUSE, LONDON, UK

17. Economic valuation of the cost of disasterswww:eclac.cl/mexico Issues in Economic Analysis for DCPP chapters and Chapter Guidance Ricardo Zapata-Martí (UN México) DISEASE CONTROL PRIORITIES PROJECT PERSONAL HEALTH SERVICES WORKSHOP 23 – 25 JULY 2003 CHURCH HOUSE, LONDON, UK