HANDBOOKHANDBOOKFOR ESTIMATING FOR ESTIMATING SOCIO-ECONOMIC AND SOCIO-ECONOMIC AND ENVIRONMENTAL ENVIRONMENTAL EFFECTS OF EFFECTS OF DISASTERSDISASTERSWorld Bank / ADPC WorkshopWorld Bank / ADPC Workshop

"RECONSTRUCTION NEEDS ANALYSIS:PLANNING AND "RECONSTRUCTION NEEDS ANALYSIS:PLANNING AND IMPLEMENTATION" IMPLEMENTATION"

ECLAC’S PRESENTATIONSECLAC’S PRESENTATIONSADPC-WB Workshop - August 13-15, 2002 / Bangkok, ADPC-WB Workshop - August 13-15, 2002 / Bangkok, ThailandThailand

Session 1: Presentation of ECLAC Session 1: Presentation of ECLAC MethodologyMethodology

Session 2: Sectoral Revision of Session 2: Sectoral Revision of Assessment in ECLAC MethodologyAssessment in ECLAC Methodology

Session 2 Cont: Global/Macro Effects of Session 2 Cont: Global/Macro Effects of a Disaster in ECLAC Methodology a Disaster in ECLAC Methodology

Presentation of the ECLAC Presentation of the ECLAC methodologymethodology

General considerationsGeneral considerations Valuation as a tool for reconstruction, Valuation as a tool for reconstruction,

mitigation and planning resiliencemitigation and planning resilience Usefulness of historical recordsUsefulness of historical records Methodological considerationsMethodological considerations

Definitions: risk, vulnerability, mitigation recurrence, Definitions: risk, vulnerability, mitigation recurrence, etc.etc.

Basic concepts: direct (assets/capital), indirect Basic concepts: direct (assets/capital), indirect (flows/economical, financial, fiscal)(flows/economical, financial, fiscal)

Valuation criteriaValuation criteria Sources of information: remote, statistical, direct Sources of information: remote, statistical, direct

observation, surveys, second hand, etc.observation, surveys, second hand, etc.

WHAT IS IT:WHAT IS IT:

A tool for the socio-economic and environmental A tool for the socio-economic and environmental assessment of disastersassessment of disasters

Multi-sectoral and multidisciplinary damage evaluation and Multi-sectoral and multidisciplinary damage evaluation and quantification method for disaster affected sectorsquantification method for disaster affected sectors

Standard sectoral procedures that allows comparability of Standard sectoral procedures that allows comparability of resultsresults

Instrument for the decision making process and for policy Instrument for the decision making process and for policy formulation as it identifies more severely affected sectors, formulation as it identifies more severely affected sectors, geographical areas and vulnerable groupsgeographical areas and vulnerable groups

Conceptual improvement for measuring aspects not Conceptual improvement for measuring aspects not included in national accounting and assessing specific included in national accounting and assessing specific vulnerability (of social groups, such as women and th vulnerability (of social groups, such as women and th environment)environment)

WHAT IT DOES:WHAT IT DOES:

Allows projecting future performance of the affected Allows projecting future performance of the affected economy in the short and medium term, and implement economy in the short and medium term, and implement the necessary corrective economic policy measuresthe necessary corrective economic policy measures

Allows to determine the State’s capacity to face Allows to determine the State’s capacity to face reconstruction tasks and determine needs for cooperation reconstruction tasks and determine needs for cooperation and international financingand international financing

Facilitates training in damage valuation and formulation of Facilitates training in damage valuation and formulation of mitigation strategiesmitigation strategies

Involves affected population with relevant authorities and Involves affected population with relevant authorities and aid providersaid providers

Puts in evidence the systemic character of the Puts in evidence the systemic character of the development process and the interaction among sectors development process and the interaction among sectors and stakeholdersand stakeholders

Social Social sectorsectorss

InfrastructInfrastructure and ure and servicesservices

ProductivProductive sectorse sectors

EnvironmEnvironmentent

Dynamic interaction between Dynamic interaction between sectors and activities with natural sectors and activities with natural

occurrences:occurrences:

Vulnerability and mitigationVulnerability and mitigationMudslides Mudslides and silt and silt depositsdeposits

Landslips, Landslips, avalanches avalanches and erosionand erosion

GroundsweGroundswells, sea lls, sea surges and surges and high waveshigh waves

Flooding Flooding and rainand rain

Vicious circle: Man, Environment, Vicious circle: Man, Environment, DisastersDisasters

Human actions Human actions progressively progressively deteriorate the deteriorate the environmentenvironment

Natural phenomena Natural phenomena affect the affect the environment environment (positively / (positively / negatively)negatively)

Impact of disasters Impact of disasters tends to increasetends to increase

NATURALNATURALPHENOMENAPHENOMENA

HUMANHUMANACTIONSACTIONS

ENVIRONMENTENVIRONMENT

**SOCIAL SOCIAL

STABILITYSTABILITY

SECURITYSECURITY

(Reduced (Reduced

Vulnerability)Vulnerability)

GOOD GOOD GOVERNANCEGOVERNANCE

ECONOMIC ECONOMIC RECOVERYRECOVERY

BREAKING THE CYCLE OF CONFLICT BREAKING THE CYCLE OF CONFLICT AND RESUMING THE PATH OF AND RESUMING THE PATH OF DEVELOPMENTDEVELOPMENTThe World Bank’s Conflict Prevention and Reconstruction Team, SDVThe World Bank’s Conflict Prevention and Reconstruction Team, SDV

SEQUENCE OF EFFECTSSEQUENCE OF EFFECTS

PHENOMENON:PHENOMENON:

CharacteristicsCharacteristics (physical description, (physical description, typology and context) typology and context)

EFFECTS:EFFECTS: directdirectindirectindirect

LINKAGESLINKAGESMenace Menace VulnerabilityVulnerability Risk Risk

Impact/Benefit of reconstruction (global, by sector) Impact/Benefit of reconstruction (global, by sector) Reduce vulnerabilityReduce vulnerabilitySynergies for reconstruction: “appropriation” of risk by Synergies for reconstruction: “appropriation” of risk by affected/menaced population (community, social group, sector, affected/menaced population (community, social group, sector, country)country)

SOME DEFINITIONS IN SOME DEFINITIONS IN DISASTERSDISASTERS

PREVENTIONPREVENTION the “before” the “before”

actionsactions

Actions (programmes, projects) Actions (programmes, projects) with the objective of anticipating with the objective of anticipating and counteract the negative and counteract the negative consequence an event may have consequence an event may have (hydro-meteorological, climatic, (hydro-meteorological, climatic, seismic, tectonic, geological, seismic, tectonic, geological, even technological, industrial or even technological, industrial or “complex” “complex”

It implies namely operational and It implies namely operational and organisation actions, training of organisation actions, training of potentially affected groups and potentially affected groups and population to face a disaster’s population to face a disaster’s consequences.consequences.

SOME DEFINITIONS IN SOME DEFINITIONS IN DISASTERS (2)DISASTERS (2)

MITIGATIONMITIGATION encompasses encompasses

actions “before”, actions “before”, “during” and “during” and “after”“after”

Actions (programmes, project) Actions (programmes, project) with the objective of with the objective of counteracting (reducing the counteracting (reducing the negative impact) of an negative impact) of an occurrence.occurrence.

Includes allocation of Includes allocation of resources to reinforce resources to reinforce structures, redesign or alter structures, redesign or alter existing elements to reduce existing elements to reduce vulnerability in addition to vulnerability in addition to training and organisation training and organisation (including at the community (including at the community level)level)

SOME DEFINITIONS IN SOME DEFINITIONS IN DISASTERS (3)DISASTERS (3)

VULNERABILITYVULNERABILITY calculation made calculation made

on the basis or on the basis or recurrence and recurrence and severity of severity of disastrous eventsdisastrous events

Risk factors or exposure to Risk factors or exposure to danger of existing physical danger of existing physical structures (buildings, houses, structures (buildings, houses, etc.) and basic infrastructure etc.) and basic infrastructure (lifelines, transportation and (lifelines, transportation and communications, etc.). communications, etc.).

Conditions of human Conditions of human settlements and localisation settlements and localisation of productive activities of productive activities (primary, industrial,l tertiary (primary, industrial,l tertiary or services) and their linkage or services) and their linkage among them and with the among them and with the environment.environment.

SOME DEFINITIONS IN SOME DEFINITIONS IN DISASTERS (4)DISASTERS (4)

DISASTER DISASTER REDUCTIONREDUCTION

encompasses encompasses actions actions “before”, “before”, “during” and “during” and “after”“after”

Actions (programmes, project) Actions (programmes, project) with the objective of reducing with the objective of reducing vulnerability and exposure to vulnerability and exposure to risk in the face of the interaction risk in the face of the interaction between human action and between human action and natural foreseeable or recurrent natural foreseeable or recurrent events.events.

Implies the use (design and Implies the use (design and enforcement) of construction enforcement) of construction codes, land-use regulation, codes, land-use regulation, space planning, institutional space planning, institutional arrangements and community arrangements and community involvementinvolvement

SOME DEFINITIONS IN SOME DEFINITIONS IN DISASTERS (5)DISASTERS (5) RISK RISK

MANAGEMENTMANAGEMENT (actions to be (actions to be

carried out carried out “before” with “before” with consequences consequences “during” and “during” and “after”)“after”)

Pro-active strategy (in contrast to Pro-active strategy (in contrast to re-active response) to reduce re-active response) to reduce vulnerability and counteract risk vulnerability and counteract risk factorsfactors

Its objective is disaster reductionIts objective is disaster reduction Is not a sector action but a global Is not a sector action but a global

set of actions encompassing all set of actions encompassing all sectors, beginning with sound sectors, beginning with sound environmental managementenvironmental management

Is not a conservation policy per-se Is not a conservation policy per-se but requires sustainability criteria but requires sustainability criteria both in terms of natural resources both in terms of natural resources and human intervention.and human intervention.

SOME DEFINITIONS IN SOME DEFINITIONS IN DISASTERS (6)DISASTERS (6) DISASTER DISASTER

MANAGEMENTMANAGEMENT actions to be actions to be

carried “during” carried “during” and the and the immediate immediate (short-term) (short-term) “after”“after”

The response strategy (re-active The response strategy (re-active strategy) to, after the occurrence of strategy) to, after the occurrence of a disaster, intends to counteract its a disaster, intends to counteract its more immediate negative impact more immediate negative impact and prevent more severe effects in and prevent more severe effects in the short term. the short term.

Includes emergency actions Includes emergency actions (search and rescue, immediate (search and rescue, immediate assistance, shelter, sanitary and assistance, shelter, sanitary and health campaigns, rehabilitation of health campaigns, rehabilitation of lifelines, assessment of emergency lifelines, assessment of emergency needs and first appraisal of needs and first appraisal of reconstruction requirements.reconstruction requirements.

SEQUENCE OF DISASTER VALUATIONSEQUENCE OF DISASTER VALUATION

R EIN FO R C EMEN T /R EIN G EN EER IN GPR EVEN T IO NMIT IG AT IO N

SchedulingInput a va ila b ility

Ma teria lH um a nFina cia l

Ma croeconom ic im pa ct

T EC H N O LO G IC AL IMR PO VEMEN T At present va lue costsIncludes a sset deprecia tion

C onsiders the sta te of a sset a t tim e of da m a geD iscounts la ck of m a intena ntce

R EPLAC EMEN T C O ST SB y econom ic sectors a nd a ctors

PublicPriva te

Project form ula tionR econstrction a nd repla cem ent

Mitiga tion a nd reinforcem entPrevention

MAC R O EC O N O MIC V IAB IL IT YSU ST AIN AB ILIT Y

C R ED IB IL IT Y

Absorption ca pa cityMa teria l

W ork forceInstitutuiona l

D om erstic resourcesC reditsD ona tionsInsura nce a nd reinsura nceExterna l resourcesC reditsD ona tions

Fina ncia l im plica tionsPublicPriva te

R EC O N ST R U C T IO N R EQ U IR EMEN T SB y econom ic a nd sector a ctors

PublicPriva te

VALU E O F D AMAG ESB y econom ic a ctors a nd sectors

PublicPriva te

ConceptsConcepts

Direct damagesDirect damages Impact on assetsImpact on assets

InfrastructureInfrastructure CapitalCapital StocksStocks

Occur immediately Occur immediately during or after the during or after the phenomenon that phenomenon that caused the disastercaused the disaster

Indirect DamagesIndirect Damages Effects on flowsEffects on flows

ProductionProduction Reduced income and Reduced income and

increased expensesincreased expenses Are perceived after the Are perceived after the

phenomenon, for a time-phenomenon, for a time-period that can last from period that can last from weeks to months, till weeks to months, till recuperation occursrecuperation occurs

Measuring the damage “delta” or Measuring the damage “delta” or damage gapdamage gap

Pre-existing Pre-existing conditions (ex ante)conditions (ex ante)

Expected Expected performance (without performance (without

disaster) 3-5 yearsdisaster) 3-5 years

Disaster impact Disaster impact (ex post)(ex post)3-5 years3-5 years

The measure The measure

Of direct and indirect damagesOf direct and indirect damages

Upon the pre-existing situation Upon the pre-existing situation

(sector by sector baselines) is aggregated into the (sector by sector baselines) is aggregated into the national accounts and determines the resulting disaster-national accounts and determines the resulting disaster-

caused scenario, as the gap over the expected caused scenario, as the gap over the expected performance prior to the event. Several scenarios may performance prior to the event. Several scenarios may be outlined, based on the assumptions made for the be outlined, based on the assumptions made for the

reconstruction processreconstruction process

D = Va – VbD = Va – Vb

Where Va es the initial condition expected for a Where Va es the initial condition expected for a variable (sectoral, weighed) and Vb is the variable (sectoral, weighed) and Vb is the discounted effect of the disaster.discounted effect of the disaster.

K = Ka – KbK = Ka – KbMeasures the capital (assets) lost, estimated by Measures the capital (assets) lost, estimated by

compiling direct damages computed sector by compiling direct damages computed sector by sector.sector.

Y = Ya – YbY = Ya – YbMeasures the production/income lossesMeasures the production/income losses

The capital/income-production ratio is The capital/income-production ratio is generally assumed not to vary generally assumed not to vary substantively as a result of the disastersubstantively as a result of the disaster

THE “PERVERSE EFFECT” OF DISASTERS ON GROSS THE “PERVERSE EFFECT” OF DISASTERS ON GROSS CAPITAL FORMATION IN A SMALL ECONOMY CAPITAL FORMATION IN A SMALL ECONOMY Adapted from Mora, “El impacto de los desastres, aspectos sociales, polítifcos económicos, ambientales y su relación con el desarrollo Adapted from Mora, “El impacto de los desastres, aspectos sociales, polítifcos económicos, ambientales y su relación con el desarrollo de nuestros paísesde nuestros países

(BID, 1999)(BID, 1999)

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DEVELOPING DEVELOPING COUNTRIESCOUNTRIESINDUSTRIALIZED INDUSTRIALIZED COUNTRIESCOUNTRIES

** DISASTEDISASTERR

THE EFFECT OF SUCCESSIVE DISASTERS ON THE EFFECT OF SUCCESSIVE DISASTERS ON

CAPITAL FORMATION CAPITAL FORMATION Adapted from Mora, “El impacto de los desastres, aspectos sociales, polítifcos económicos, ambientalesAdapted from Mora, “El impacto de los desastres, aspectos sociales, polítifcos económicos, ambientales

y su relación con el desarrollo de nuestros países (BID, 1999)y su relación con el desarrollo de nuestros países (BID, 1999)

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** TIMETIME

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DEVELOPING COUNTRIIESDEVELOPING COUNTRIIES

INDUSTRIALIZED INDUSTRIALIZED COUNTRIESCOUNTRIES

** DISASTERDISASTER

Know the pre-existing situationKnow the pre-existing situation

Identify the core development factors of the economyIdentify the core development factors of the economy Identify the main characteristics at the time of the Identify the main characteristics at the time of the

disaster: face of the economic cycle, seasonal disaster: face of the economic cycle, seasonal elements, indebtedness level, domestic savings, FDI elements, indebtedness level, domestic savings, FDI flows, etc.flows, etc.

Access the macroeconomic data bases from national Access the macroeconomic data bases from national authorities, academic analysts and/or consultants and authorities, academic analysts and/or consultants and advisors in the countryadvisors in the country

Identify existing econometric models for the local Identify existing econometric models for the local economyeconomy

Identify if input-output tables are available or determine Identify if input-output tables are available or determine weighing factors that indicate intersectoral linkages.weighing factors that indicate intersectoral linkages.

Acknowledge the expected or projected outcome in Acknowledge the expected or projected outcome in the absence of disasterthe absence of disaster

Obtain from government, academics and/or advisors Obtain from government, academics and/or advisors and private consultants the existing scenarios or short and private consultants the existing scenarios or short and medium term projections before the disasterand medium term projections before the disaster

Build a price table at current value for the disaster Build a price table at current value for the disaster period with at least five year projections. There may period with at least five year projections. There may have been more than one pre-disaster scenario for the have been more than one pre-disaster scenario for the main economic variablesmain economic variables

Build a constant-value (real magnitude) serie for the Build a constant-value (real magnitude) serie for the main variables (using the country’s base year, either in main variables (using the country’s base year, either in local currency or US dollarslocal currency or US dollars

Establish the rate of exchange that will be used for the Establish the rate of exchange that will be used for the valuationvaluation

Determine the situation caused by Determine the situation caused by the disasterthe disaster Stemming from sector valuations assess the value-added Stemming from sector valuations assess the value-added

changes expected for every sector in the short term and changes expected for every sector in the short term and for a medium-term period to be agreed (3-5 years or more)for a medium-term period to be agreed (3-5 years or more)

Supported by input-output tables or sector weighing Supported by input-output tables or sector weighing factors determine the projection of damages of one setor factors determine the projection of damages of one setor to the othersto the others

A damage scenario is built (taking into account the A damage scenario is built (taking into account the measured losses at replacement value) : variations in the measured losses at replacement value) : variations in the main economic gaps is highlighted: external sector, fiscal main economic gaps is highlighted: external sector, fiscal deficit, internal equilibrium (prices, exchange rate, etc.)deficit, internal equilibrium (prices, exchange rate, etc.)

EXTERNAL IMPACT MACROECONOMIC IMPLICATIONS SECTOR

Weighted by economic models and input / output tables available PRODUCTIVE SECTORS

Agriculture (includes cattle raising, fisheries and forestry)

IndustryCommerceServices - Financial and banking - Tourism - Personal and otherINFRASTRUCTUREWater (drinking, irrigation, drainage, sanitation and sewerage)Energy (generation, transmission, distribution)

- Electricity - Other (petroleum, gas, etc.)Transport and communicationsSOCIAL ASPECTSEducationHealthHousingCultural heritageSocial fabricENVIRONMENTAL ASPECTSTOTALGOVERNMENT SECTOR IMPLICATIONS

- Revenues - Expenditures

III. MACRO / GLOBAL IMPACT (current value)

Ex-ante situation (current period)

Ex-post situation (present period)

Short/medium term

projections1. GDPExternal 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 - Expenditures3. CAPITAL ACCOUNT - Gross capital formation - domestic investment - foreign direct investment

Future ScenariosFuture Scenarios 11stst. Scenario: damage assessment and event’s impact, . Scenario: damage assessment and event’s impact,

without including reconstruction actionswithout including reconstruction actions Alternative reconstruction scenariosAlternative reconstruction scenarios

Taking into account no longer the replacement but the reconstruction Taking into account no longer the replacement but the reconstruction costscosts

Emerging reconstruction priorities, sector by sectorEmerging reconstruction priorities, sector by sector The emerging reconstruction strategies in the immediate weeks after The emerging reconstruction strategies in the immediate weeks after

the disasterthe disaster The economy’s absorption capacity of foreign resourcesThe economy’s absorption capacity of foreign resources The economy’s capacity to execute projectsThe economy’s capacity to execute projects The performance of key economic variables in the face of an increase The performance of key economic variables in the face of an increase

or impending reorientation of resources for reconstruction: interest or impending reorientation of resources for reconstruction: interest rates, indebtedness, inputs and production means availability (raw rates, indebtedness, inputs and production means availability (raw materials, capital goods, domestic saving, labour force, etc.)materials, capital goods, domestic saving, labour force, etc.)

Sector by sector valuation methodologySector by sector valuation methodology

Social SectorsSocial Sectors HousingHousing HealthHealth Education, culture, Education, culture,

sportssports InfrastructureInfrastructure

Transport and Transport and communicationscommunications

EnergyEnergy Water and sewerageWater and sewerage

Productive sectors Productive sectors Goods: agriculture, industryGoods: agriculture, industry Services: commerce, Services: commerce,

tourism, etc.tourism, etc. Global impactGlobal impact

On the environmentOn the environment Gender perspectiveGender perspective Employment and social Employment and social

conditionsconditions Macroeconomic Macroeconomic

assessmentassessment