Natural disasters: Managing the other threat to prosperity

Vinod Thomas, For The Straits Times 29 Sep 08;

EVEN as our attention is riveted on the financial crisis, other calamities have been wreaking havoc on people's lives. From hurricanes in the United States and Central America to floods in South and South-east Asia, natural disasters are striking countries with increasing frequency and intensity. These events were once considered just an interruption to business; they now represent an unmistakable brake on prosperity.

We may label them as hazards of nature, but they are increasingly rooted in man-made causes. Note that the striking increase is in hydro-meteorological events, such as floods and storms, not geophysical phenomena, such as earthquakes and volcanoes. Environmental destruction and climate change can be linked to the rise in natural calamities.

We need urgently a shift in our very mindset. Timely attention to emergency relief and recovery is clearly of paramount importance. But also needed are efforts to mitigate the sources of the growing problem and adaptation in our ways of living. Emergency aid following a calamity may have visibility; but political leaders need to also focus on long-term acts of prevention.

In the first half of the 1980s, some 800 natural disasters were reported worldwide, affecting 400 million people. Twenty years later, the number reached more than 2,300 natural disasters, affecting some 1.4 billion people. The direct cost of calamities in the past decade may have been US$1 trillion (S$1.4 trillion), 20 times more than five decades earlier.

In Bangladesh, the Philippines, Thailand and Vietnam, the concern is not only the frequency of disasters but their geographical coverage and their impact on the economy. By one estimate, Vietnam ranks fifth in the world in potential impact with 90 per cent of its economy at risk, the Philippines is in 10th place with 85 per cent, and Indonesia 28th with 60 per cent.

What must be done by way of mitigation and adaptation?

The first is linked to climate change. The relentless discharge of CO2 emissions in the air is causing temperatures and sea levels to rise, glaciers to melt and aggravates flooding as well as hot droughts. Industrial countries are clearly most responsible for the accumulated stock of greenhouse gases, but solutions to the problem would also rest on large developing nations such as Brazil, China, India and Russia.

Second, local degradation of the environment must be reversed. Wetlands provide a buffer against disasters, but 50 per cent of them worldwide have been lost over the past century. Forests, a key source of protection against flash flooding and landslides, are shrinking. Replanted mangroves helped to lessen the ravages from a typhoon in Vietnam in 2000 and a cyclone in southern India in 2002.

A third priority is investment in early warning systems. In Bangladesh in the early 1970s, a cyclone killed more than 300,000 people. But after the country put in an extensive early warning system, and built robust programmes for community-based preparedness, evacuation and mitigation, a recent cyclone of similar intensity took 3,000, not 300,000, lives.

Fourth, adaptation calls for better land-use planning and zoning regulations to ensure that people live in places less likely to be hit. Building standards can help ensure that buildings withstand natural disasters. One reason the recent California earthquake caused only minor damage was new, tough building codes.

Fifth, adaptation also involves the use of risk transfer mechanisms - for example, catastrophe insurance markets. Insurance coverage in developing countries is only a fraction of that in developed countries. Well-designed use of insurance markets could introduce predictability in the post-disaster management - but in ways that don't encourage people to locate in flood prone areas.

We need better coordination among government units, non-government actors and the communities. Government units need management capacity, financial resources and information.

This may all look like a long list of steps, but the stakes are high. Countries used to view environmental mitigation or adaptation as a deviation of resources from growth. But the situation now is the reverse. Without prevention and adaptation to reduce the risk of disasters, sustained growth will not be possible.

The writer is director-general, Independent Evaluation Group, The World Bank.