Download Handbook for Disaster Assessment 3 Edition Omar D. Bello, Ph.D.

Handbook for Disaster Assessment
3rd Edition
Omar D. Bello, Ph.D.
Economic Affairs Officer
Disaster Risk Reduction and Response Unit
ECLAC Subregional Headquarters for the Caribbean
Disaster assessment methodology
Bangkok
February 18, 2015
Background
ECLAC has been a pioneer in the field of disaster assessment
and in the development and dissemination of a disaster
assessment methodology. Our history assessing disasters
started in 1972 with the earthquake that struck Managua,
Nicaragua.
Since then, ECLAC has taken part in more than 90
assessments of the social, environmental and economic
effects and impacts of disasters in 28 countries in the region
Background
Those disasters include 15 of the 20 most devastating
disasters to hit Latin America and the Caribbean in the past
40 years. It is worth to mention that it has been used in 40
countries on other continents, mainly Africa and Asia.
Disasters assessed by ECLAC which were responsible for
around 310,000 deaths and affected the lives of 30 million
people, and estimated cost of US$ 213 billion (at 2000
prices).
Disasters
Disasters studied by ECLAC derive from a combination of two factors:
(a) natural phenomena capable of unleashing processes that lead to
physical damage and the loss of human lives and capital, and
(b) the vulnerability of individuals and human settlements.
These events disrupt the living conditions of communities and
individuals and the economic activity of countries.
All nations are exposed to extreme natural events to a greater or lesser
degree. Their effects do not always result in a disaster, however. This
happens when a natural event meets conditions of vulnerability.
LAC: Deadliest Disasters
1970-89
Year
Country
Type
Deaths
Aff.
Population
1970
PER
Earthquake
66,794
3,216,240
1972
NIC
Earthquake
10,000
720,000
1973
HND
Mudslide
2,800
1974
HND
Storm
8,000
600,000
1974
BRA
Epidemic
1,500
30,000
1976
GTM
Earthquake
23,000
4,993,000
1979
DOM
Storm
1,400
1,554,000
1985
COL
Volcanic eruption
21,800
12,700
1985
MEX
Earthquake
9,500
2,130,204
1987
ECU
Earthquake
5,000
150,000
LAC: Deadliest Disasters
1990-2010
Aff.
Population
Year
Country
Type
Deaths
1991
PER
Epidemic
8,000
1991
PER
Epidemic
1,726
283,353
1998
HND
Storm
14,600
2,112,000
1998
NIC
Storm
3,332
868,228
1999
VEN
Floods
30,000
483,635
2004
HTI
Storm
2,754
315,594
2004
HTI
Floods
2,665
31,283
2005
GTM
Storm
1,513
475,314
2010
HTI
Earthquake
222,570
3,700,000
2010
HTI
Epidemic
5,592
378,638
Conflicts as Disasters
Economic disaster corresponds to a downward jump in per capita GDP at
any instant of time. (Barro 2006)
Actual and potential economic disasters could reflect
1)
2)
3)
4)
Economic events
Wartime destruction
Disasters of natural origin
Epidemics
Conflicts as Disasters
From the standpoint of sizes of world economic disasters in the twentieth
century, war has been more important than purely economic
contractions.
The outcome depends on the extent of the destruction of physical capital
stock, and whether the country wins or loses.
For example, since the Civil War, wars that the United States participated
did not involve massive destruction of its production capacity.
Conflicts as Disasters
Declines of per capita GDP
Austria
France
Germany
Netherlands
Wordl War I
1913-1919
1916-1918
1913-1919
1913-1918
Source: Barro (2006)
35%
31%
29%
17%
World War II
1944-1945
1939-1944
1944-1946
1939-1945
58%
49%
64%
52%
Great Depression
1929-1933
1929-1932
1928-1932
1929-1934
23%
16%
18%
16%
Conflicts as Disasters
Declines of per capita GDP
World War II
1939-1943
1939-1941
1939-1945
1940-1945
1943-1945
1939-1944
1941-1943
1939-1942
Belgium
Denmark
Greece
Italy
Japan
Norway
Peru
Venezuela
Spanish Civil War
Spain
1935-1938
Portugal
1934-1936
Source: Barro (2006)
24%
24%
64%
45%
52%
20%
18%
22%
31%
15%
Conflicts as Disasters
Declines of per capita GDP
Great Depression
Australia
1928-1931
Canada
1929-1933
New Zealand
1929.1932
1929-1933
United States
Argentina
1929-1932
Chile
1929-1932
Mexico
1926-1932
Peru
1929-1932
Uruguay
1930-1933
Venezuela
1929-1932
Source: Barro (2006)
20%
33%
18%
31%
19%
33%
31%
29%
36%
24%
Conflicts as Disasters
After World War II, the largest contractions were related to conflicts.
Declines of per capita GDP
Iraq
1987-1991
Iran
1976-1981
West Bannk/Gaza 1999-2003
Source: Barro (2006)
75%
45%
44%
We would like to highlight seven issues:
1)
Methodological issues regarding stocks and flows. In particular,
measuring the effects of disasters on the flows: In this edition we
present separately losses and additional costs.
Disaster Assessment
It could include
1.
2.
3.
Estimation of effects: Damage, Losses, and Additional Costs
Estimation of Impacts: Macro-economic and household level
Estimation of financial needs:
1. Recovery: It is partially estimated with the additional
costs
2. Reconstruction
It is a methodology based on sector data.
Affected population
Social
Education
Health
Housing
Culture and cultural assets
Infrastructure
Transportation
Water and sanitation
Power sector
Economic sectors
Agriculture sector
Manufacturing
Commerce
Tourism
Once the effects are estimated by sector, we proceed to estimate the
impacts at macroeconomic and personal levels.
Overall and cross-cutting effects
Macroeconomic impact
Mainstreaming a gender perspective
The environment
Effects and Impacts
ECLAC´s methodology is based on the estimation of effects
and impacts of disasters
Effects of a disaster: Damage, losses and additional costs
resulting from the total or partial destruction of assets
from disasters
Impact of a disaster: The consequences of a disaster´s
effects for social and economic variables such as household
income, unemployment, GDP growth and fiscal deficit.
Previous situation
(ex ante)
Estimates of damage and losses are done with respect to
the baseline. Final result would depend on the pace or
recovery/ reconstruction
Expected evolution
(without disaster)
Disaster consequence
(ex post)
Damage
Damage means the effects the disaster has on the assets of each sector,
expressed in monetary terms. These occur during the event giving rise to
the disaster. Depending on the sector, assets may include:
(a) Physical assets such as buildings, installations, machinery,
equipment, means of transport, storage facilities, furnishings, irrigation
systems, dams, road systems and ports.
(b) Stocks of final and semi-finished goods, raw material,
materials and spare parts.
Damage
Two pieces of information are needed to set a monetary value on
damage: the physical scale of the effect, and a price to convert it into a
value.
Some valuation criterion has to be used to arrive at a monetary estimate
of such damage, and this methodology use the replacement price,
(current price before the disaster) of an asset equivalent to the one
destroyed.
Damage
The baseline
Damage is measured relative to a baseline or pre-disaster situation. This
is constructed using information existing prior to the disaster on the
assets of the different sectors in the affected region, which is compiled
during the estimation process.
The ideal information would include a listing of the different asset
classes. In the case of the housing sector, for example, information would
be sought on the number of homes in the affected area before the
disaster, and a classification would be carried out of these homes and of
furnishings for each of the groups established.
Damage
The baseline
Statistics have to be improved to determine assets value exposed
Replacement costs should not include the costs of dealing with existing
deficiencies in the affected area (such as housing deficits), as these did
not result from the event whose impact is being estimated.
Damage
Institutional agents
For public policy it is important estimating damage as a result of the
event by differentiating the wealth impact experienced by institutional
agents such as households, public- and private-sector enterprises and
levels of government.
The effects on a sector means the effects on one or more institutional
agents. The institutional agent affected by the destruction of assets will
not necessarily be the one financing restoration, owing to the possibility
of public-sector action..
Damage
Insured assets
Classifying damage by institutional sector provides a better estimate of
the fiscal financial effort that might be involved in the asset replacement
process. This would have to focus on the proportion of public-sector
assets that are uninsured and the percentage of uninsured private-sector
assets deemed to be a policy objective.
Damage
Damage and reconstruction funding
The damage estimate is the approximate replacement value of the assets
affected in each sector. This is not the same as reconstruction funding, as
the latter might incorporate elements of risk reduction and resilience
against future events, an example being construction on a different site
that is less exposed to hazards.
It could also include quality and technology improvements. These new
characteristics obviously raise the cost of construction above that of
merely replacing what has been damaged. Relocation could entail land
purchases, while improving resilience would entail stricter building
standards and perhaps even elements like early warning systems.
Damage
Damage and the capital stock
The amount of damage is not the same as the effects on the capital stock.
The two concepts differ because anything totally or partially destroyed
may have been fully written down and thus no longer form part of the
capital stock.
Consequently, it is to be expected that once written-down assets are
replaced, the capital stock of the economy, both residential and nonresidential, will increase.
It is the responsibility of sectoral groups to gather information on the
approximate year in which different types of capital items were built or
manufactured. It is very helpful to ascertain whether the institution that
deals with the national accounts of the country holds capital stock series.
Losses and Additional Costs
It is important to distinguish between the two types of flow disruptions:
1)
2)
Losses
Additional Costs
Losses
LOSSES
Losses are the value of goods that go unproduced and services that go
unprovided during a period running from the time the disaster occurs
until full recovery and reconstruction is achieved. Examples include a
reduction in the size of future harvests because of the flooding of
farmland or prolonged droughts, a decline in industrial production
because of damage to plant or lack of raw materials or inputs such as
water and electricity, and revenues forgone by utility firms because their
services have been interrupted or reduced.
Losses
LOSSES
Losses are a more complex concept than damage. They are not a tally of
obvious, tangible things (destroyed bridges, destroyed or damaged
homes and so on). Calculating them means setting a value on production
that will be forgone, which will obviously have an impact on GDP,
employment, the public finances and the external accounts.
They are a dynamic measure of flows. This being so, the consequences of
a disaster cannot be accounted for at the time they arise; their economic
repercussions will persist for a certain time, which may vary from case to
case.
Losses
LOSSES
This means that losses are hard to measure fully at the time valuation is
carried out (a few weeks after the disaster). At that time, it is not always
obvious whether the short-term losses are over or if they will continue,
or what type of effect there will be in the medium term, especially when it
is worth observing this separately for a particular sector that has been
affected (agriculture or transport, for example).
Losses
The baseline
Losses are calculated as the difference between a situation that has not
occurred, which is the evolution the sector was assumed to be going to
have before the disaster, and another situation that has not occurred
either, the behaviour that will take place after the disaster.
To avoid losses being overestimated, the baseline must be estimated
from the best information available and in a way that is consistent across
sectors. It is suggested that the most recent projection of the economy,
disaggregated by sectors, should be used to establish the baseline. This
forecast needs to be revised in the light of recent economic trends.
It is harder to calculate a baseline for losses than for damage because
assumptions have to be made.
Losses
The post-disaster scenario
The information gathered by the group carrying out the estimation has to
be used to construct projections of the post-disaster situation for each
sector. This situation depends on the scale of asset destruction, which in
turn, together with financing potential and the productive capacity of the
construction sector, determines how long it will take to restore
production.
Losses
The effects of losses on macroeconomic variables
Disruptions in flows could have effects on different macroeconomic
variables such as GDP, employment, the public finances, the balance of
payments, inflation and the exchange rate. Given the local character of
most disasters, these effects could be downplayed.
It is suggested that sectoral experts should report to the mission’s
macroeconomic team on the possible effects on certain variables, but
estimation of the impact on these variables should not be carried out
simply by aggregating sectoral information, as this can result in major
errors.
.
Additional Costs
Additional Costs
Outlays required to produce goods and provide services as a result of the
disaster. These represent a response by both the public and the private
sectors, which may take the form of:
a)
additional spending and/or
b)
spending shifting.
This can happen within a sector, as when the health-care sector redirects
planned infrastructure spending to purchases of medicines so that the
pharmaceutical sector indirectly benefits and the construction sector
loses out. Spending shifting also takes place between sectors, as when the
government decides to reduce technological development spending in
order to direct the funds to emergency assistance (food, shelter and so
on).
Additional Costs and Losses
It is important to distinguish between the two types of flow disruptions:
1)
Losses are the value of goods cease to be produced and services
provided as a result of the disaster while additional spending or a
recomposition of spending are a public policy decision or privatesector response to the event.
1)
Losses are obtained by comparing the outlook after the disaster with
a baseline represented by the evolution each sector would have had
if the disaster had not occurred. These are both hypothetical
situations that rely on a number of assumptions, as does any
estimate derived from them. Conversely, additional costs or a
recomposition of spending are outlays that are in fact made as a
consequence of the event.
Additional Costs and Losses
Losses, additional costs and financial needs for recovery
Financial needs for recovery are the costs of different supply and demand
policies that help the economy return to normal.
Supply policies include
•
the amounts required to restore provision of and access to basic
services for the population.
•
Resources to finance higher operating costs
•
Resources to provide inputs and working capital so that production
levels can be restored (in the production sectors of agriculture,
stockbreeding, fishing, industry and trade).
Losses, additional costs and financial needs for recovery
Demand policies include the funding required to implement temporary
programmes, such as food-for-work or cash-for-work programmes,
designed to provide a minimum income to those who have lost earnings
or even been left workless.
A post-disaster assessment has the goals to approximate the financial
needs for recovery and reconstruction
1)
2)
Recovery of all economic activities – at the macro-economic, sectoral
and personal or household levels
Reconstruction of damaged physical assets, using pre-defined postdisaster standards
In order to guide those processes these financial needs must be
expressed in a disaggregated manner taking into consideration
breakdowns by sector of economic activity, geo-political divisions, and
groupings of affected population
Financial needs for each post-disaster program and activities
must be estimated on the basis of a reliable and quantitative
assessment of damage and losses caused by the disaster.
These needs must be expressed in a disaggregated manner
taking into consideration breakdowns by sector of economic
activity, geo-political divisions, and groupings of affected
population
We would like to highlight seven issues:
1)
Methodological issues regarding stocks and flows. In particular,
measuring the effects of disasters on the flows: In this edition we
present separately losses and additional costs.
1)
We present an integration between our methodology and the
national accounts framework. We emphasize this issue especially to
the social sectors.
Public and private education in national accounting
Public education
Public education, or education provided by non-profit institutions, does
not have market prices. As such, the gross “output” value (GrOV) must be
calculated from the sum of its costs. They include intermediate
consumption (IC) and compensation of employees (CE).
GrOV=IC+CE
Intermediate consumption includes costs such as public utilities,
maintenance, transport, paper, and printed material. Compensation of
employees includes wages and salaries, plus other staff emoluments and
social security contributions.
Public and private education in national accounting
Public education
In this case the gross value added (GVA) is calculated as follows
GVAPublic Educ. = CE
Public and private education in national accounting
Private education
The production account of the activity “private education” quantifies the
education service provided at an economically significant price. It is
market production, supplied to the household sector as consumers. The
GVA is calculated as follows
GVA=CE+Iin+GOS
where Iin: Taxes on production and imports net of subsidies; GOS: Gross
operating surplus.
Estimation of flows
As a result of a disaster, the sector’s gross output value may vary for the
following reasons:
(a)
Lower production
The output of this sector can be defined as the “quantity of teaching
received by the students, adjusted to allow for the quality of the services
provided for each type of education.”
It is important to distinguish between output and outcome. The first
relates to the transfer of knowledge, whether successful or not, while the
second refers to the knowledge that is actually acquired by the students.
Lower production
Output could fall either because of
1.
a reduction in the number of hours of classes taught. For example, if
it is decided to shorten the school year, this would mean fewer hours
of classes
(a)
2.
a reduction in their quality. For example, classes taught in
suboptimal conditions.
Additional costs
These costs could result in higher intermediate consumption of both
public and private education for different reasons, including:
(i) The outgoings that have to be made to restore the education
service in temporary premises. To estimate these expenses, the
following methodology is suggested:
a) Ascertain how many temporary schools have been set up and how
many have been rented.
b) Ascertain the rental amount per establishment.
c) Estimate the number of months for which such premises are likely to
be operating.
To obtain the total outlays, multiply these three values, and include the
purchase of furniture and the education material needed for teaching
activities, which should be proportional to the number of classrooms set
up.
We would like to highlight seven issues:
1)
Methodological issues regarding stocks and flows. In particular,
measuring the effects of disasters on the flows: In this edition we
present separately losses and additional costs.
1)
We present an integration between our methodology and the
national accounts framework. We emphasize this issue especially to
the social sectors.
2)
Chapter about epidemics: We present an application of ECLAC´s
methodology jointly developed with PAHO about the assessment of
epidemics, specifically on its effects to the health sector.
4) Mainstreaming a gender perspective.
All the editions of our
methodology have been enriched by our experiences assessing disasters.
This chapter incorporates all the issues regarding to gender that we
learnt since 2003.
5) The geomorphological and ecological impacts of different types of
disasters have specific environmental implications. In a chapter devoted
to the environment, we present a methodology to estimate a disaster
impact on the environment providing some examples.
6) Regarding the productive sectors we present separately the
manufacturing and commerce sectors, and we have a chapter especially
for the tourism sector.
7) There is a separate chapter to estimate damage, losses, and additional costs for
the cultural sector.
Handbook for Disaster Assessment
3rd Edition
Omar D. Bello, Ph.D.
Economic Affairs Officer
Disaster Risk Reduction and Response Unit
ECLAC Subregional Headquarters for the Caribbean
Disaster assessment methodology
Bangkok
February 18, 2015