Applications of the ECLAC methodology in Latin America and Asia

1. Applications of the ECLAC methodology inLatin America and Asia Review of the progress and adaptations in light of recent experiences Ricardo Zapata, Focal Point for Disaster Evaluation ECLAC

2. R. Zapata - Focal Point on Disaster Evaluation

3. R. Zapata - Focal Point on Disaster Evaluation

4. There are different approaches to risk: • Living in it • Living with it What is impossible is to ignore it. Not measuring the impact of unattended built risk is precisely ignoring it: • Quantifying and making it visible to decision makers is the first step • A healthy approach is to reduce it and, by appropriating it, transferring it. • Other development goals and major strategies for poverty reduction must live wit risk: appropriate it and discount it as part of the investment strategy and programme and project planning R. Zapata - Focal Point on Disaster Evaluation

5. The importance of economic assessment of damage and needs • Have a record on damage caused by past events • Establish link between level of damage and magnitude or strength of a certain category of event • Value losses to quantify needs for rehabilitation and reconstruction • Put in evidence the benefits of mitigation and reduction • Make information available to potentially affected or exposed communities (stakeholders) R. Zapata - Focal Point on Disaster Evaluation

6. R. Zapata - Focal Point on Disaster Evaluation

7. R. Zapata - Focal Point on Disaster Evaluation

8. The CEPAL/ ECLAC experience • First a thank you note: • To bilateral cooperation: Italy, the Netherlands, individually affected countries • IFIS (World Bank and IDB) and UNDP • Experts and UN agencies (PAHO, ILO, FAO, UNEP, UNFPA, etc.) • Researchers and consultants (ADPC for example) • Secondly: Where we are at present: the data and the research • Increasingly complex assessments • Examples of adaptation: Mexico, Gujarat, case by case emphasis, ESCAP/UNDP/ECLAC project • Collaboration in identifying disaster risk indicators • Link disaster’s impact to development processes, climate change and MDGs R. Zapata - Focal Point on Disaster Evaluation

9. VISION Development is a systemic process, integrated and integrating, sustainable if comprehensive, participative and inclujsive. Basic pillars of ECLAC’s vision are: Competitiviness Equity Governance Sustainability (both in the envronmental and economic sense: equilibria of macro variables coupled with growth and appropriate use of natural resources preserving inter-generational equity) Resilience (by facing and reducing vulnerability in socioeconomic, environmental and political terms, providing better response mechanisms in the face of external shocks, physical, economic, internal and external) MISSION Follow up, analyze and interpret the socioeconomic, environmental and political process in the countries in the region (improve comparative analysis and promote dialogue) Provide technical assistance in policy formulation and contribute to the debate on development paradigms Promote studies that focus on development issues and advance the MDGs Promote diaologue among the different stakeholders in the decision making process (private sector, public officials, academia, NGOs, etc.) Collaborate with other agencies and organizations in the UN family and donor community in common goals and in assistance to countries Promote cooperation and integration initiatives at the national, sub regional and regional levels The vision and the mission: economic assessment reduces vulnerability R. Zapata - Focal Point on Disaster Evaluation

10. Impacts, development and adaptation: reduce risk by managing vulnerability and assessing adaptation needs and costs R. Zapata - Focal Point on Disaster Evaluation

11. Discussions points: Present achievements • A longstanding methodology for assessing the (direct) losses and (indirect) damages that compile the impact of a major natural disaster • Developed by the Economic Commission for Latin America and the Caribbean (ECLAC), seen as both a fund raising instrument to present to the donor community and a planning tool for recovery • is increasingly systematically applied by the World Bank and regional development banks to provide the basis and / or justification for multilateral loans for reconstruction • accepted by governments, donors, the IFIs and the UN system and capacities have been developed at all levels for its application following disasters. • A cross-cutting, multisectoral, inteinstitutional tool A major drawback: it is demand driven, so depends on whether governments see the need to use it or not. Does not allow for a systematic, ongoing data gathering process R. Zapata - Focal Point on Disaster Evaluation

12. Discussion points: Gaps or perceived needs towards a standardized methodology • Define what is it for • Determine differenced between damage /losses assessments from needs assessments • See successive assessments as complementary not competitive tools • Not to overwhelm governments in time of crisis with repetitive questions and assessment missions • Governments give an uneven response to these initiatives and local or national capacities have not been developed in high risk countries. • There is a lack of consensus as to how to fill the gap: • Within the UN system, or • amongst a cadre of experts • The questions remains: how to apply such a methodology in practice • Need to standardize criteria / definitions • Reinforce pre-disaster base line data collection • Train relevant national officials / institutions R. Zapata - Focal Point on Disaster Evaluation

13. Damage (Stocks) Impact on assets Infrastructure Capital Stocks Occur immediately during or after the phenomenon that caused the disaster Losses (Flows) Effects on flows Production Reduced income and increased expenses Are perceived after the phenomenon, for a time-period that can last from weeks to months, till recuperation occurs Main Concepts R. Zapata - Focal Point on Disaster Evaluation

14. Decomposition of total damage • Direct damage • Indirect effects Reconstruction costs Effects on the economy Primary damage • Asset losses • Production costs • Cost increases • Income reduction Secondary effects Tertiary impact • Public sectorPrivate sector Public investment Private investment Projects and resource fund raising R. Zapata - Focal Point on Disaster Evaluation

15. Social Sectors Housing Health Education, culture, sports Infrastructure Transport and communications Energy Water and sewerage Productive sectors Goods: agriculture, industry Services: commerce, tourism, etc. Global impact On the environment Gender perspective Employment and social conditions Macroeconomic assessment SECTOR BY SECTOR VALUATION METHODOLOGY R. Zapata - Focal Point on Disaster Evaluation

16. D = Va – Vb Where Va is the initial condition expected for a variable (sectoral, weighed) and Vb is the discounted effect of the disaster. K = Ka – Kb Measures the capital (assets) lost, estimated by compiling direct damages computed sector by sector. DY = Ya – Yb Measures the production/income losses The capital/income-production ratio is generally assumed not to vary substantively as a result of the disaster R. Zapata - Focal Point on Disaster Evaluation

17. Measuring the cost of impact (and mitigation or adaptation) Baseline situation (ex ante) Measurement of impacts Direct and indirect Over the preexisting situation (baseline, historical trend, by sector) Carried into the national accounts as effect on value added and estimated for alternative scenarios as the gap between trend and scenario results. Scenarios reflect on the one hand impact cost and on the other mitigation / adaptation investment Historical trend (without climate change) based on past performance of economy Cimate change (ex post) To include expected or desired investment R. Zapata - Focal Point on Disaster Evaluation

18. 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 R. Zapata - Focal Point on Disaster Evaluation

19. IMPACT OF DISASTERS IN LATIN AMERICA AND THE CARIBBEAN – 1972-2005(based on ECLAC assessments) R. Zapata - Focal Point on Disaster Evaluation

20. DIFFERENT IMPACTS OF DIFFERENT EVENTS (as observed in ECLAC assessments, 1972-2005) R. Zapata - Focal Point on Disaster Evaluation

21. Future requirements: the road not taken • Have a systematic comparable data base over time and geographically comparable • Currently different organizations and agencies collect data independently at different periods and at different scales, duplicating efforts and hampering data integration. • Little synergy between the data collection efforts during the emergency phase either by UN system, NGOs, IFRC and government agencies, and data collected during IFI assessment missions. • Lack of explicit difference between perception of needs: • By donors to define humanitarian and recovery interventions • By UN agencies to fund projects • By IFIS to provide emergency / recovery / regular loans or to reprogramme, reorient existing loans There is an undeniable turf battle over disaster management, response and recovery and not enough concern about mitigation, effective preventgion, and adaptation (a.k.a. reinforcement and resilience) R. Zapata - Focal Point on Disaster Evaluation

22. HUMAN • Health • Education • NATURAL • Clean water • Clean air • Biodiversity and ecosystem (microclimate) • SOCIAL • Social networks (security and solidarity) • Family ties and extended family • Violence and security • FINANCIAL • Access to credit • Land tenure and ownership • PHYSICAL • Type and quality of settlement and housing

24. Global dynamic effects Macroeconomic effects • Repercussions are felt in the national, local or regional economy as a consequence of the disaster (natural event) • It may last for several years after the disaster, depending on the characteristics of the event, its magnitude and the sectors / activities affected • Are measurable as • Growth rate and level of GDP • Performance of the external sector (imports, exports, transfers and investment) • Performance of public finances • Price variations and inflation R. Zapata - Focal Point on Disaster Evaluation

25. MITCH STAN DROUGHT EARTHQUAKE R. Zapata - Focal Point on Disaster Evaluation

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27. Impact of disasters on GDP: State of Gujarat, India Drought Earthquake Cyclone Drought Floods Floods Cyclone Drought Drought Drought R. Zapata - Focal Point on Disaster Evaluation

28. KEY VULNERABILITIES • Size, level of development and development path matters: • Impact to GDP ratio: co-relation to size • Diversification of economic activities: alternative response mechanisms • Economic and natural cycles interact R. Zapata - Focal Point on Disaster Evaluation

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30. Post-disaster needs in a wider context: Extreme events as a driver for change • The financial adaptation: the experience of re-insurers • The social adaptation: the tsunami and Katrina syndromes • The economic adaptation: move public goods into the market domain R. Zapata - Focal Point on Disaster Evaluation

31. Finally… where do we want to be: the road to be taken • The Kobe conference: from the Hyogo Declaration to effective action • De-tsunamize and De-Katrinize disaster management • Act on conviction: risk reduction is a developmental and an economic issue • Revert the myth on public goods: internalize damage and externalize benefits/profits • Act as a “united” international community, both within the United Nations system, in the donor community, including NGOs and with the private sector • Cooperation and sharing vs. turf battling and individual posturing • Priority to “client” needs over supply-driven initiatives (overcome the “father knows best” syndrome) • Recognize diversity and dissension • Advance knowledge over advance self-interest R. Zapata - Focal Point on Disaster Evaluation

32. Appropriation of risk needed to promote risk reduction: • Need for institutional and regulatory changes • Use of market to value (“price”) risk • Need for social policies for compensation and promotion (provide gender, age, ethnic sensitive instruments) • See risk reduction as a business opportunity Imperfect or inactive markets require government action / intervention R. Zapata - Focal Point on Disaster Evaluation

33. Reference materials: • ECLAC handbook for the socioeconomic and environmental impact of disasters (www.cepal.org/mexico, “desastres”) • Disasters and development (IADB/ECLAC publication, 2000 • Disaster assessments: 1973 to 2005 (www.cepal.org/mexico), “desastres”) • The 2004 Hurricanes in the Caribbean and the Tsunami in the Indian Ocean (ECLAC series (“Estudios y perspectivas) no.35 Thanks for your attention R. Zapata - Focal Point on Disaster Evaluation