Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
SUBJECT 2. Valuation of the impact of disasters DAMAGE AND RECONSTRUCTION NEEDS ASSESSMENT MODULE DAMAGE AND LOSSES • • • • • EFECTOS DEL TERREMOTO DEL 13 DE ENERO DE 2001 EN EL SALVADOR Loss of life or injury Reduced welfare and well being Material losses and damage Disruption of “normalcy” Degrees of affectation PORCENTAJE DE VIVIENDAS AFECTADAS POR DEPARTAMENTO (GRAFICO CON DISTRIBUCION DE HOGARES SEGUN MATERIAL DE CONSTRUCCION) CHALATENANGO N SANTA ANA CABANAS MORAZAN SAN MIGUEL AHUACHAPAN W E S LA UNION SONSONATE LA LIBERTAD Tipo de material Concreto Bahareque y adobe Otros materiales SAN SALVADOR LA PAZ SAN VICENTE % Viviendas afectadas USULUTAN 0.1 - 6.7 % 6.7 - 15.8 % 15.8 - 30.1 % 30.1 - 74.2 % 30 0 30 LA UNION SAN MIGUEL 60 Kilometers Fuente: información del COEN al 2 de febrero de 2001 Encuesta de Hogares de Propósitos Multiples 1999. DIGESTYC 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 Some figures on the impact of disasters in Latin America and the Caribbean Deaths (1972-2003) Directly affected population (primary) (thousands) Total affected population (‘000) Total Damage (millions of dollars) 110,000 0.02% 15,000 2.68% 160,000 28.57% 65,000 Yearly average amount (millions of dollars) 2,300 As percentage of exports of goods and services 0.55% As percentage of foreign direct investment 7.92% Source: ECLAC Ricardo Zapata ECLAC / DMF Workshop 26 Main Concepts Direct damages • Impact on assets – Infrastructure – Capital – Stocks • Occur immediately during or after the phenomenon that caused the disaster Indirect Damages • Effects on flows – Production – Reduced income and increased expenses • Are perceived after the phenomenon, for a timeperiod that can last from weeks to months, till recuperation occurs WHAT IS IT THE VALUATION METHODOLOGY: Impact assessment INDIRECT EFFECTS Loss of services: Supply / demand mismatch Imbalance, inadequacy / resilience Rehabilitation and reconstruction stages Emergency cost estimates (evacuation, field hospitals, alternative facilities / services) Impact analysis (duration of evacuation and / or use of Alternative facilities vs. opportunity /cost, Cost/benefit, costs / profits) INTERVENTION: Prevention and mitigation plan Operational phase, an evaluation: Updating, revision, prevention reinforcement and mitigation (update and maintenance of technological edge) Technical criteria Management criteria Assessment of health network (sanitary system) DIRECT DAMAGE Goods, equipment, Budget changes (cost / investment) Preparation of technical dossier Operational maintenance Training in use of methodology conservation Prediction Prevention Restoration of service Determine the situation caused by the disaster The value we determine • • • 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.) The images we see SECTOR BY SECTOR VALUATION METHODOLOGY • 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 An example: COMPOSITION OF DAMAGES CAUSED BY MITCH IN CENTRAL AMERICA SOCIAL SECTORS millions of US dollars 3000 2500 INFRASTRUCTURE SERVICES 2000 1500 PRODUCTIVE SECTORS 1000 500 0 SECTORS ENVIRONMENT (protected areas) VALUATION CRITERIA • Valuation of direct damage will depend on the purpose of the valuation – For historical record and comparison over time and with other disasters, present value accounting cost should be used • For reconstruction planning and mitigation strategies – Replacement prices should be used. – Mitigation investment, in terms of reinforcement, redesign, relocation or vulnerability reduction additional values should be incorporated. • Valuation of indirect losses will always be done at current market prices of: – Lost production and supply of goods and services – Additional cost of provision of goods and services under disaster emerging conditions – Business losses due to reduced sales and or activity • When insurance exists, covering assets (infrastructure, buildings, machinery, stocks, etc.) or business loss, value will be established on the basis of covered amount, comparing it to total estimated loss. MEASURING THE DAMAGE “DELTA” OR DAMAGE GAP Pre-existing conditions (ex ante) The measure Of direct and indirect damages Upon the pre-existing situation (sector by sector baselines) is aggregated into the national accounts and determines the resulting disastercaused scenario, as the gap over the expected performance prior to the event. Several scenarios may be outlined, based on the assumptions made for the reconstruction process Expected performance (without disaster) 3-5 years Disaster impact (ex post) 3-5 years VALUATION PROCEDURE 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. Y = 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 Know the pre-existing situation • Identify the core development factors of the economy • Identify the main characteristics at the time of the disaster: face of the economic cycle, seasonal elements, indebtedness level, domestic savings, FDI flows, etc. • Access the macroeconomic data bases from national authorities, academic analysts and/or consultants and advisors in the country • Identify existing econometric models for the local economy • Identify if input-output tables are available or determine weighing factors that indicate inter-sectoral linkages. THE EFFECT OF SUCCESSIVE DISASTERS ON CAPITAL FORMATION GROSS CAPITAL FORMATION Adapted from Mora, “El impacto de los desastres, aspectos sociales, polítifcos económicos, ambientales y su relación con el desarrollo de nuestros países (BID, 1999) * DISASTER DEVELOPING COUNTRIIES INDUSTRIALIZED COUNTRIES * * * * TIME Summary table SECTOR DIRECT Physical PRODUCTIVE SECTORS Agriculture (includes cattle raising, fisheries and forestry) Industry Commerce Services - Financial and banking - Tourism - Personal and other INFRASTRUCTURE Water (drinking, irrigation, drainage, sanitation and sewerage) Energy (generation, transmission, distribution) - Electricity - Other (petroleum, gas, etc.) Transport and communications SOCIAL ASPECTS Education Health Housing Cultural heritage Social fabric ENVIRONMENTAL ASPECTS TOTAL GOVERNMENT SECTOR IMPLICATIONS - Revenues - Expenditures Monetary estimate INDIRECT PUBLIC PRIVATE TOTAL EXTERNAL IMPACT Summary of global impact Ex-ante situation (current III. MACRO / GLOBAL IMPACT (current value) period) Ex-post situation Short/medium (present term projections period) (scenarios) Scenario 1 (Below trend) 1. GDP External Balance (A+B) - Exports - Imports A - TRADE BALANCE B - CURRENT AND CAPITAL ACCOUNT BALANCE - Net loans (considering service and repayment) - Net donations - Net transfers (private) - Other net incoming resources (insurance and reinsurance payments) 2. FISCAL BALANCE - Revenues - Expenditures 3. CAPITAL ACCOUNT - Gross capital formation - domestic investment - foreign direct investment Scenario 2 (Average or Scenario 3 trend) ("Optimistic") The question of expected future performance Future Scenarios EL SALVADOR:POSSIBLE RECONSTRUCCION SCENARIOS, 2001-2003 l 1st. Scenario: damage assessment and event’s impact, Taking into account no longer the replacement but the reconstruction costs l Emerging reconstruction priorities, sector by sector l The emerging reconstruction strategies in the immediate weeks after the disaster l The economy’s absorption capacity of foreign resources l The economy’s capacity to execute projects l The performance of key economic variables in the face of an increase or impending reorientation of resources for reconstruction: interest rates, indebtedness, inputs and production means availability (raw materials, capital goods, domestic saving, labour force, etc.) l 6.0 GDP annual grow th rate without including reconstruction actions l Alternative reconstruction scenarios 5.0 5.0 4.0 4.0 3.5 3.0 3.4 3.0 2.0 4.5 4.0 4.0 3.1 3.2 2.0 Pessimistic 1.0 0.0 1999 Probable 2000 2001 2002 Year ECLAC - 2002 HANDBOOK FOR ESTIMATING THE IMPACT OF DISASTERS 2003 Optimstic 138 ORGANIZATION OR PROCEDURAL ASPECTS OF ASSESSMENT EXERCISES • Composition of team: multisectoral, interdisciplinary, interinstitutional • Timeliness: within the “window of opportunity”, not interfering with emergency actions • Ensure full coverage and avoid duplication • The need for “judgment calls” or the educated guessing of experts • Difference between emergency needs and rapid assessment of need for reconstruction Summary of basic concepts • Direct and Indirect effects • Valuation methods • The damage “delta” or the gap caused in performance by the disaster • Sector by sector evaluation of losses, damage and indirect effects • Summation of damage in a non duplicative way • Valuation of impacts not present in the national accounting system (environment, gender, psychological impacts) • Short and medium term effect on the performance of the economy • Modeling alternative scenarios