risk, vulnerability and asset based approach to disaster risk management

Risk, Vulnerability, and Asset-based Approach to Disaster Risk Man-

agement

by Krishna S. Vatsa, Institute for Crisis, Disaster and Risk Management,

George Washington University,Washington, D.C.

Abstract

Households are exposed to a wide array of risks, characterized by a known

or unknown probability distribution of events. Disasters are one of these

risks at the extreme end. Understanding the nature of these risks is critical to

recommending appropriate mitigation measures. A household’s resilience in

resisting the negative outcomes of these risky events is indicative of its level

of vulnerability. Vulnerability has emerged as the most critical concept in

disaster studies, with several attempts at defining, measuring, indexing and

modeling it. The paper presents the concept and meanings of risk and vul-

nerability as they have evolved in different disciplines. Building on these

basic concepts, the paper suggests that assets are the key to reducing risk

and vulnerability. Households resist and cope with adverse consequences of

disasters and other risks through the assets that they can mobilize in face of

shocks. A sustainable strategy for disaster reduction must therefore focus on

asset-building. There could be different types of assets, and their selection

and application for disaster risk management is necessarily a contextual ex-

ercise. The mix of asset-building strategies could vary from one community

to another, depending upon households’ asset profile. The paper addresses

the dynamics of assets-risk interaction, thus focusing on the role of assets in

risk management.

Keywords: Risk, Vulnerability, Assets, and Mitigation

Section I: Introduction

Contrary to what we often get to see in the preamble to many publications on

disasters, global trends and macroeconomic variables help us little in under-

standing the impact of disasters on people, their habitat, and livelihoods. It is

necessary to disaggregate the impact of disasters to understand how regions,

communities or households within a country are affected by disasters. Dis-

aster impacts and losses are not distributed evenly across populations. Its

Volume 24 Number 10/11 2004 1

distribution depends upon underlying vulnerabilities which arise from fac-

tors such as location of human settlements and economic enterprises, condi-

tions of housing, and access to resources and information. These

vulnerabilities exist in both the developed and developing countries, though

spatial and physical aspects of vulnerability tend to be more pronounced in

developing countries.

It is often stated that the poorer segments of the population are more

exposed to disaster risks. With increasingly greater concentration of settle-

ments and buildings in hazard-prone areas, this statement needs to be quali-

fied somewhat. In the Bhuj earthquake (2001) in India, the high- and

middle-income groups lost more of their asset value. Most of the people

who died in collapse of mid-rise apartment buildings in Ahmedabad and

Bhuj belonged to the middle class (Vatsa, 2002). In the Marmara earthquake

(1999) in Turkey, 90 percent of casualties took place in mid-rise reinforced

concrete apartment blocks, owned by urban upper middle classes (Erdik,

2001). In Germany, 2002 floods in River Elbe inundated the city of Dresden,

did not spare any segment of the population, as it caused inundation of all

the residential and commercial properties and damaged many historical

buildings in the city center (Toothill, 2002). In the United States, when an

earthquake strikes California hillsides or a hurricane strikes the coastal areas

of Florida, absolute disaster losses in dollar terms are higher for upper and

middle classes than for the poor, though in relative terms the poor generally

lose a larger percentage of their material assets and suffer more lasting ef-

fects (Bolin and Stanford, 1999).

While the distribution of disaster impacts has become more compli-

cated across social classes, it is also true that stable employment, insurance,

credit and assets help upper and middle classes to recover faster from a dis-

aster. The low-income group, on the other hand, has fewer options than the

wealthy for coping with a disaster. They have fewer assets, almost no insur-

ance, and less diversified sources of income, and a disaster can push them

into destitution (World Bank, 2001). In rural areas in Vietnam it was re-

ported that those with capital have a buffer and are better able to survive and

International Journal of Sociology and Social Policy 2

recover, whereas poorer households without capital reserves go under with

even the smallest shock (Narayan, et al., 2000).

In the 1990s, El Niño-related disasters and the East Asian financial

crisis underscored the importance of reducing risk and vulnerability to sus-

tain our economic and welfare gains. Reducing volatility in income and con-

sumption has become a serious public policy concern. Along with

opportunity and empowerment, security as embodied in risk and vulnerabil-

ity reduction is posited as a cornerstone of development and poverty eradi-

cation (World Bank, 2001). Households1 are exposed to a wide array of

risks, characterized by a known or unknown probability distribution of

events. Disasters are one of these risks at the extreme end. A household’s re-

silience in resisting the negative outcomes of these risky events is indicative

of its level of vulnerability. The means of resistance are the assets that

households can mobilize in face of these shocks (Moser, 1997). This paper

aims to develop a conceptual framework of risk management, focusing on

the role of assets in risk management.

The paper is divided into six sections. The following section discusses

the concept of risk and how it has been understood in physical and social sci-

ences. Section III analyzes the meaning and structure of “vulnerability”.

Section IV briefly presents a brief review of literature on vulnerability as-

sessment, measurement, indexing, and modeling. Section V presents the as-

set framework of risk management and the dynamics of assets-risk

interaction. Section VI discusses specific asset-building strategies for disas-

ter risk management.

Section II: Understanding Risk

During the past quarter-century, the term “risk” has been a subject of inten-

sive conceptual and empirical research. The field of risk analysis has grown

rapidly, focusing on issues of risk assessment and risk management. The

former involves the identification, quantification, and characterization of

threats to human health and the environment. The latter, risk management,

centers around processes of communication, mitigation, and decision-

making (Slovic and Weber, 2002).


2.1 Classical Concept of Risk

The classical conception views risk as “the chance of injury, damage, or

loss.” It distinguishes between risk— defined as the probability that a par-

ticular adverse event occurs during a stated period of time, or results from a

particular challenge— and detriment— defined as a numerical measure of

the expected harm or loss associated with an adverse event. The probabili-

ties and consequences of adverse events are assumed to be produced by

physical and natural processes in ways that can be objectively quantified by

risk assessment. One way to describe risks and uncertainty is to construct an

exceedance probability (EP) curve. An EP curve specifies the probabilities

that a certain level of losses will be exceeded. A critical issue in constructing

an EP curve is the degree of uncertainty regarding both probability and out-

comes. For low probability-high consequence risks, the spread between the

three curves depicted in Fig.1 shows the degree of indeterminacy of these

events. Information on uncertainty enhances the credibility of a risk assess-

ment exercise (Swift, 1999; Adams, 1995; Kunreuther and Slovic, 1996;

Kunreuther, 2002).


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Such a view of risk agrees upon the objective nature of risk. There is

general agreement among those who hold such a view of risk that progress

lies in refining the methods of measurement and collecting more data on

both the probabilities of adverse events and their magnitudes. A report by

the Britain’s Royal Society called “Risk Assessment” concluded that there

was a need for “better estimates of actual risk based on direct observation of

what happens in society” (cited in Adams, 1995).2

This approach also distinguishes between objective risk—the sort of

thing “experts” know about—and perceived risk—the lay person’s often

very different anticipation of future events. Perceptions of risk play a promi-

nent role in the decisions people make, in the sense that differences in risk

perception lie at the heart of disagreements about the best course of action

between technical experts and members of the general public (Slovic and

Weber, 2002). We may express objective and perceived risk as in the matrix

below:

Figure 2: Risk Matrix

Risk Detriment

Objective

(measured as)

Statistical probability Economic cost

Perceived

(measured as)

Perceptions of likelihood

of different events by

different actors

· Economic cost

· Non-economic cost (including,

self-esteem, community solidarity,

future livelihood solidarity)

Source: Swift, 1999

2.2 “Risk” in Social Sciences

Much social science analysis rejects such a notion of risk. In this tradition,

such objective characterization of the distribution of possible outcomes is

incomplete at best and misleading at worst. The distinction between objec-

tive risk and perceived risk is considered false. According to this perspec-

tive, both the adverse nature of particular events and their probability are

inherently subjective. For example, between 1950 and 1970, coal mines in


the US became much less risky in terms of deaths from accidents per ton of

coals, but they became marginally riskier in terms of deaths from accidents

per miner. Which measure one thinks more appropriate for decision-making

depends on one’s point of view (Kunreuther and Slovic, 1996; Adams,

1995).

In social science, the concept of risk is primarily concerned with the

distribution of risky outcomes and its impact on the people who experience

them. Over their lifetime, all men and women are subject to a wide variety of

risks: unemployment, illness, injury, disability, death, loss of residential and

commercial property, crop failure, etc. Different disciplines within social

science have discussed these risks from their own point of view.

One of the most important contributions to social theories of risk came

from the European sociologists, Ulrich Beck and Anthony Giddens. In the

globalized modern world, which Beck characterized as a “risk society”, the

future has become uncertain. Possible events which technology unintention-

ally generates cannot be insured against because they have unimaginable

implications. Beck, citing the example of the Chernobyl nuclear explosion

in 1986, associates nuclear power with suspension of “the principle of insur-

ance not only in the economic, but also in the medical, psychological, cul-

tural and religious sense. The residual risk society has become an

uninsured society” (Beck, 1992: 101).3

Giddens makes a similar point by distinguishing between external

risks emanating from bad harvests, floods, plagues or famines and manufac-

tured risks which include most of the environmental risks. Not only has ex-

ternal risks been supplanted by manufactured risks, but we know very little

on how to handle the latter. As manufactured risk expands, there is a new

riskiness to risk. “We simply don’t know what the level of risk is, and in

many cases we wouldn’t know for sure until it is too late.” Further, “we live

in a world where hazards created by ourselves are as, or more threatening

than those that come from outside” (Giddens, 2000 cited in Quarantelli,

2000).


2.3 Elements of Risk

The concept of “risks” as discussed by Beck and Giddens derives its context

from the developed world. Such a notion of “risk” is inherent in the pursuit

of energy-intensive economic growth and affluence, an inescapable condi-

tion of the post-industrial society. These risks are qualitatively different

from those faced by households with limited resources in both developed

and developing countries. Most of the households are exposed to “risks”,

which arise from an economy based on lack of resources and limited op-

tions. In the field of development, the “risk” is closely related to poverty,

deprivation and lack of insurance. A great deal of research has taken place

on the subject of household risks, but most of it deal with agricultural and

pastoral societies trying to cope with individual risks such as illness and un-

employment or collective risks such as droughts and scarcities (Udry, 1994;

Morduch, 1995; Dercon; 1999, Sinha and Lipton, 1999; Fafchamps, 1999).

At the level of households, risk refers to uncertain events that can

damage well-being—the risk of becoming ill, or the risk that a drought will

occur. The uncertainty can pertain to the timing or the magnitude of the

event (World Bank, 2001). Many risks such as illnesses, death of an earning

member, or individual loss of job, are household-specific, and called idio-

syncratic (individual) risks. The natural disaster risks such as floods and

drought simultaneously affect many households in a community or region,

and are called covariate (collective) risks. The covariation of risks depends

upon the size of risk pool, the group that households can draw upon for as-

sistance in managing the impacts of risk. The capacity to insure depends

upon the size of risk pool. If the risk pool is small, as could be the case in re-

mote rural areas, even idiosyncratic risks have impacts similar to those of

covariate risks. The distinction between idiosyncratic and covariate risks is,

therefore, largely contextual (Siegel, 2000).

While the probability and frequency of these risks and their magni-

tude, an outcome of physical and natural processes, can be estimated with

some approximation, it is difficult to forecast what will be the ultimate im-

pact of the risky event on vulnerable households. It depends upon the house-

hold’s level of vulnerability or resilience (Holzmann and Jørgensen, 2001,


Siegel and Alwang, 1999). The EP curve is useful here only in a limited

sense, and the concept of risk in these situations clearly diverges from the

one used in physical and engineering sciences.

Risk, combined with the household responses, lead to the outcome.

The outcome is the change in welfare that results from the realization of risk

– the shock – and from the success or failure of risk management instru-

ments applied. Asset losses, unemployment, decline in production and

wages, illness, injuries, deaths are some of the outcomes of a disaster.

Households cope with these losses by withdrawing their savings, borrow-

ing, reducing their expenditures, and selling their assets. Their capacity to

insure against these losses is enhanced by the availability of public-funded

and market-based mechanisms of risk management. A household’s vulner-

ability is ascertained on the basis of its asset endowment, likely welfare

losses, and risk management strategy. The household is thus said to be vul-

nerable to suffering an undesirable outcome, and this vulnerability comes

from exposure to risk (Alwang, Siegel and Jørgensen, 2001).

Risk (disaster) in disaster management has been defined as the cumu-

lative impact of hazard and vulnerability (Blaikie et. al., 1994), expressed

through the following equation:

R = HV

where R stands for the loss or realized risk (disaster), H for hazard (the prob-

ability of occurrence of a specific hazard in a given area over a given time

period, and V for vulnerability (the degree of loss resulting from the occur-

rence of the phenomenon). The United Nations Disaster Relief Coordinator

(UNDRO) provided an official definition of risk as “expected losses from a

given hazard to a given element at risk over a specified period of time (cited

in Coburn et. al. 1994). For example, risk may be expressed in terms of aver-

age expected losses, such as “10,000 lost over 20 years period” or a “10 per-

cent probability of economic losses to property exceeding US$25 million in

the town of Puerto Novo within the next 10 years.” It introduces stochastic

factors in calculation of risk, as total risk (RT ) becomes a function of expo-

sure to hazard over time (tE), vulnerability (V) of elements at risk (E), and


the probability that a natural hazard will strike in a certain way (P) (Alexan-

der, 2001):

RT = fcn { tE , V(E), P}

Risk is compiled from hazard and vulnerability data and from the in-

ventory of elements at risk. A variety of ways of presenting risk are avail-

able such as scenario mapping, potential loss mapping, and annualized risk.

While the probability of occurrence of a hazard may always be estimated on

the basis of historical data and physical information, and some of the ele-

ments at risk (buildings and population) can be identified and inventorized,

the issue of measuring vulnerability and resilience is always difficult. While

we understand that zoning, land use planning, improved building technol-

ogy, and lower population density should lead to a lower number of deaths

and injuries, the precise connection between human losses and spatial and

demographic factors is always difficult to establish. This is why the equa-

tions as mentioned have remained abstract, and have not been used for ac-

tual estimation of risk. It points to the constraints in measuring a range of

socio-economic factors which could be classified under the broad category

of “vulnerability”.

Section III: Perspectives on Vulnerability

Vulnerability is the key factor which explains how the outcome of a risky

event is distributed across households. Most of the literature regarding cata-

strophic risk in risk sciences is conspicuous by the absence of reference to

“vulnerability.”4 In social sciences, however, the use of the term “vulner-

ability” has proliferated. It has been discussed in the context of a wide range

of risks to which households are exposed. As there is a greater concern for

reducing welfare losses before they actually happen, and more public policy

support for ex ante approach to risk management, vulnerability has become

a central theme of all the broader approaches to poverty alleviation and risk

management.

Vulnerability has been defined in terms of exposure to welfare losses,

rather than in terms of exposure to poverty. An individual, a household, or a

community can be considered vulnerable when there is a probability that

they will experience a level of well being that is below a socially accepted


threshold (Glewwe and Hall, 1998; Cunningham and Maloney, 2000; Al-

wang, Siegel and Jørgensen, 2001). It represents a general definition,

though in the context of a specific discipline, the meaning of vulnerability

changes according to its primary focus. For instance, in economics, vulner-

ability is discussed in terms of decline in income and consumption, whereas

in disaster management, the focus is on human and property losses.5

Downing and Bakker (2000) list the central concepts of vulnerability

as follows:

· Vulnerability is a relative measure—critical levels of vulnerability

must be defined.

· Everyone is vulnerable, although their vulnerability differs in its

casual structure, its evolution, and the severity of the likely

consequences.

· Vulnerability relates to the consequences of a perturbation, rather than

its agent. Thus people are vulnerable to loss of life, livelihoods, assets

and income, rather than to specific agents of disaster, such as floods,

windstorms or technological hazards. This focuses vulnerability on

the social systems rather than the nature of hazard itself.

· The locus of vulnerability is the individual related to social structures

of household, community, society and world-system. Places can only

be ascribed a vulnerability ranking in the context of the people who

occupy them.

· Vulnerability is spatially and temporally variable. Vulnerable groups

are dispersed over space and change over time. More critically,

patterns of vulnerability depend on geographical linkages and are

often contingent on past conditions.

3.1 Poverty and Vulnerability

Though the poor and near-poor tend to be vulnerable, poverty and vulner-

ability are not synonymous. Poverty is a static concept, an ex post state of

being, measured in terms of a minimum level of income and consumption.

Vulnerability, on the other hand, is a dynamic concept, characterized by


changes in socio-economic status, and refers to an inability to cope with

risks, shocks, and stress. So a vulnerable household may have a level of wel-

fare at a point in time that exceeds the minimum level, but under the influ-

ence of a shock, this household would fall below this level. Vulnerability is

thus both an ex ante and ex post state associated with the probability of fal-

ling below a minimum threshold of well-being (Alwang, Siegel and Jør-

gensen, 2001; Glewwe and Hall, 1998).

A failure to distinguish vulnerability from poverty has led to making

frequent statements about the disaster-poverty nexus, without any concrete

evidence. It gives us little idea about how the non-poor are affected by disas-

ters. It also has a bad impact on policy-making. Anti-poverty programs can

reduce poverty, but at the same time they can increase vulnerability. Be-

sides, elimination of poverty is a long-range goal requiring social justice and


Figure 3: Sequence of Vulnerability

Adapted from Glewwe and Hall, 1998

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CommunitySupport /Household’s

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adapts

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Povertyline

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equity, and income and resource distribution, and disaster management need

not wait for the achievement of such goals (Chambers, 1989; Wisner, 1993).

3.2 “Vulnerability” in Disaster Management

In disaster management literature, the discussion of vulnerability had its

precursor in the concept of ‘a range of adjustments’, developed by Gilbert

White. White (1961) recommended a set of possible accommodations to

given hazards, and the best mix of them is more effective than single solu-

tions, as had prevailed for instance, in the approach to flood hazards in

North American through engineering control works. In making these alter-

native adjustments, White emphasized the question of choice and adjust-

ments people at risk choose or would prefer. An important theme is that the

adjustments which people consider and make depend upon social organiza-

tion, and the capacity to choose adjustments—or lack of it. Choice is con-

strained by status and rights within a society. Those least likely to have a

voice in public safety and risky developments are so often the ones to suffer

most in disasters (Hewitt, 1997).

When the concept of “vulnerability” was introduced in disaster man-

agement in 1970s, it was predominantly in terms of vulnerability of the criti-

cal infrastructure and urban lifelines: buildings, pipelines, roads, etc.

Vulnerability assessment was concerned with estimating losses and dam-

ages to physical objects (Arnold, 1984). The Office of the United Nations

Disaster Relief Coordinator (1982, cited in Alexander, 1993) echoed this

view in their definition of vulnerability as the “degree of loss (from 0 % to

100 %) to a given element or set of elements at risk resulting from the occur-

rence of a natural phenomenon of a given magnitude. It is expressed on a

scale from 0 (no damage) to 1 (total loss).” Such a view considered that a

natural hazard risk was the same for all who were exposed to it, and there

was no concept of differential vulnerability.

Around the same time, a more socialized interpretation of disasters

emerged which suggested that economic processes could increase the vul-

nerability of populations to natural disasters and should be considered in the

same way as were the more obvious physical or environmental phenomena.

There was a process of marginalization at work, which had a strong spatial


implication in terms of pushing the poor into unsafe living conditions. Some

of these views traced their ideological underpinnings to the dependence the-

ory, and provided a strong critique of the relationship between relief and un-

derdevelopment. These views had a distinct flavor of political economy

approach to disasters. Amartya Sen’s work on poverty and famines in 1981

reinforced such an interpretation of disasters. Sen challenged the widely

held conviction that lack of food availability (or supply) due to lack of rains

and crop failures was the primary explanation for famines; instead, he pos-

ited lack of purchasing power or access as the key to understanding who

went hungry and why. Over the years, a number of social scientists and ge-

ographers have steadily developed this approach which repudiated the dis-

tinction between physical and social vulnerability, and developed a more

integrated explanation of natural disasters (Westgate and O’Keefe, 1976,

Winchester, 1992; Wisner, 1993; Blaikie, et.al., 1994, Varley; 1994, Can-

non, 1994; Hewitt, 1997).

Westgate and O’Keefe define vulnerability as “the degree to which a

community was at risk from the occurrence of extreme physical or natural

phenomena, where risk refers to the probability of occurrence and the de-

gree to which socio-economic and socio-political factors affect the commu-

nity’s capacity to absorb and recover from extreme phenomena.” This

definition could be considered a definitive view of vulnerability within the

field of disaster research. It suggests that the likelihood of being affected by

disasters depends on (i) frequency and severity of the impact—the more fre-

quent and severe the impact, if the impact is not cushioned and mitigated,

higher the vulnerability; and (ii) the peoples’ resilience to a given shock. Re-

silience is therefore an integral part of the concept of vulnerability. It is

linked to the household’s capacity to resist and recover from the adverse im-

pact of a disaster. Since we take the view that assets are the means of resis-

tance to the impact of a disaster, a household’s resilience is closely linked to

the asset ownership.

Miller and Nigg (1993) have developed the concept of “event vulner-

ability” and “consequence vulnerability”, the former referring to the house-

hold vulnerability associated with the direct impacts of a disaster event and


the latter referring to the household vulnerability associated with the social

and political processes of recovering from the disaster event. Whereas upper

and middle income-groups are vulnerable to the “event”, the lower classes

share both the “event” and “consequence” vulnerability. A low asset base

and limited livelihood opportunities trap low-income group into a vicious

cycle of poverty and deprivation. The vicious cycle of vulnerability can be

represented as:

Limited asset base >= management of risk leads to inefficient allocation of as-

sets >= low returns >= low consumption >= low savings and investment >=

limited asset base >=lower returns, consumption and savings (Siegel and Al-

wang, 1999, p. vi).

3.3 Structure of Vulnerability

Resilience is just one part of their vulnerability map; a number of structural

factors contribute to and complete this map. These factors could be identi-

fied as social class, gender, race, caste, ethnicity, age, etc (Winchester, 1992;

Cannon, 1993; Blaikie, et.al., 1994; Bolin and Stanford, 1999). It is neces-

sary to assess these structural factors to understand who is vulnerable to the

sufferings and losses from a natural disaster, and which segment of popula-

tion is more likely to be affected by a disaster event.

Social class is generally a marker of access to resources and can in-

clude type and stability of employment, income, savings, and education lev-

els (Blaikie, et.al., 1994). People in low-income groups find it difficult to

secure financial resources and technical skills to recover after disaster. Loss

of life, injury, and disability can trap poor families in chronic poverty

(World Bank, 2001).

Women as a group are disproportionately affected by disasters. For

example, post-disaster mortality, injury, and illness rates are often (but not

universally) higher for girls and women. Women also have to assume

greater responsibility following a disaster in managing household responsi-

bilities, reviving livelihoods and supporting reconstruction. There have also

been reports of increased incidence of sexual and domestic violence against

girls and women in disaster contexts (Enarson, 2000).


In all the multiethnic and pluralistic societies, race / caste / ethnicity is

closely related to the material losses experiences and to differential abilities

to acquire resources for recovery. The effects of race / ethnicity in disaster

have been documented in numerous US disasters. Research on recent U.S.

disaster documents racial and ethnic discrimination in relief aid (Bolin and

Stanford, 1999). In the relief operations following the Bhuj earthquake in

India, it was reported that there was discrimination against the lower caste

people in the distribution of aid.6

Elderly victims of natural disasters find it difficult to recover from

natural disasters due to impaired coping abilities, limited incomes, the avail-

ability of support systems and their own health (Covan, et.al, 2000).7 In

some instances, elders are overrepresented among the casualties of disaster

due to frailty and being housebound (Hewitt, 1997, cited in Bolin and Stan-

ford, 1999 p. 96).

In rural areas, vulnerable groups include smallholder agriculturalists,

pastoralists, landless laborers, and the destitute. In urban areas, these could

come from unemployed destitute, underemployed poor people, and refugees

(Downing and Bakker, 1997). Winchester (1992) identifies household char-

acteristics, which contribute to the making of differential vulnerability. Im-

portant characteristics are: family type, household size, age, sex

composition of the household, skills / education, and caste.

However, it needs to be pointed out that these specific categories of

population by themselves do not mark vulnerability. It is their level of par-

ticipation in social and economic processes that impinges on vulnerability.

Lack of education and skills, weak social support and protection, low in-

come, poor health care, and single parenthood are the attributes that make

these segments of civil society especially vulnerable. This explains why the

state policies and social protection measures have a substantial impact on

the levels of vulnerability. In many developing countries, where social wel-

fare and protection policies are not adequate, the level of vulnerability is

high, particularly for lower-income groups. Public policies are not always

non-partisan, and tend to marginalize certain communities. In the U.S., fed-

eral relief programs traditionally privilege middle class home owners over


renters and the marginally housed, revealing a persistent (if unintended)

class preference (Comerio et.al. 1996, cited in Bolin and Stanford, 1999). In

erstwhile socialist countries, where the public-supported welfare system has

been dismantled, the level of vulnerability has gone up significantly. In

Mongolia, the dismantling of state support for pastoral collectives wreaked

havoc on nomadic communities when they were struck by droughts and

winter zud between 1999 and 2002 (Bass, Batjargal, and Swift, 2001).

Section IV: Modeling, Assessing, Measuring, and Indexing Vulnerabil-

ity

4.1 Modeling Vulnerability

Blaikie, et.al. (1994) have attempted to model vulnerability for explaining

its causation, structure and possible response. They discuss two models,

which are (1) Pressure and Release and (2) Access models. The Pressure

and Release (PAR) model attributes disasters to the interaction between

vulnerability on one side and physical exposure to hazard on the other side.

Increasing pressure can come from either side, but to relieve the pressure,

vulnerability has to be reduced. The model can be represented as follows:

1 →Root causes →2 Dynamic pressures →3 Unsafe conditions →Disaster

← Hazards

The PAR model proposes a ‘progression’ of vulnerability with three

main levels: root causes, dynamic pressures, and unsafe conditions. Vulner-

ability begins with root causes, which are economic, demographic, and po-

litical processes. These root causes interact with dynamic pressures such as

population growth, rapid urbanization, and deforestation to produce unsafe

conditions. Unsafe conditions are the specific forms in which the vulnerabil-

ity of a population is expressed in time and space in conjunction with a haz-

ard. Examples of unsafe conditions are people living in fragile physical

environment, like dangerous locations or unprotected buildings and infra-

structure, weak local economy with low income and uncertain livelihoods,

population categories at risk such as the old and disabled, prevalence of en-

demic disease and lack of disaster preparedness. All of these factors change


over time, sometimes rapidly. They also interact with each other in complex

ways. The outcome can be unpredictable (Twigg, 2001).

The PAR model takes a structural view of vulnerability. It explains the

systemic pressures contributing to vulnerability, but does not suggest a strat-

egy for reducing it. It also does not provide insight into what constitutes vul-

nerability at the household level. It is the access model, which explains the

household vulnerability. The model suggests that it is the level of access to

resources that determines the vulnerability of people and turns some natural

events into disasters for some people. Each household has a range or profile

of resources and assets that represent their particular access level. These

may include land of various qualities, livestock, tools and equipment, capi-

tal and stock, reserves of food, jewelry, as well as labor power and specialist

skills. Non-material ‘resources’, qualities, or qualifications such as gender,

and membership of caste or kinship-based organizations may also be in-

cluded. Access to all the resources that each individual or household pos-

sesses can collectively be called its access profile. Those who possess

access qualifications for a large number of income opportunities have more

flexibility in securing a livelihood under generally adverse conditions, com-

mand considerable resources, have reserves of food, and can be said to have

a well-resourced profile. On the other hand, those whose access profiles are

limited usually have little choice in income opportunities, less store of value

to draw upon, and have the least flexibility in adverse conditions (Blaikie,

et.al., 1994).

However, even ‘Access’ model provides just an abstract framework.

It is not modeled on empirical observations in the field, nor has it been vali-

dated through actual experiences. Besides, the model is not sufficiently dy-

namic to explain vulnerability. A household economy is not isolated or

disconnected; it is connected strongly to the regional, national and interna-

tional economy. These connections, which enable households to reduce

their vulnerability, have not been incorporated in the model. Further, the

model does little further than explaining vulnerability. It does not specify

the instruments or programs, which could be used for reducing or mitigating

disaster risks. Vulnerability requires a broader and dynamic framework,


which includes an instrumental perspective too. It is not only necessary to

explain what constitutes vulnerability, but also how vulnerability could be

reduced. A model, which is based on a critical mass of empirical observa-

tions, will also provide a choice of strategies, measures and programs, for

reducing vulnerability.

4.2 Assessing Vulnerability

Several methods of vulnerability assessment have evolved in line with the

requirements of a particular discipline or organization. These methods are

applied at different levels—households, communities, countries, and re-

gions. Vulnerability at one level influences vulnerability at other levels of

aggregation (Ribot, 1996). While a detailed review of these issues could the

subject of an independent discussion, we present here a brief review of dif-

ferent methods of vulnerability assessment (VA) in the field of natural disas-

ters.

4.2.1 Vulnerability Assessment in the US

In the US, the Project Impact8 carries out an assessment, which includes

both hazard identification and VA. The stated purpose of hazard identifica-

tion is to gather existing information about areas with a high likelihood of

hazard occurrences and compile the information into a useful format. Simi-

larly, the purpose of VA is to gather and organize existing information about

the location and vulnerability of buildings, utilities, and transportation sys-

tems serving the community. The National Oceanic and Atmospheric Ad-

ministration (NOAA) goes one step further with the tool it has developed for

comprehensive community-wide VA.9 It specifies a series of steps through

which this assessment is conducted. Though the NOAA methodology in-

cludes societal analysis in its vulnerability framework, this too focuses more

on hazard identification and prioritization, built environment, and economic

centers.

4.2.2 Vulnerability Assessment in Developing Countries

Famine Early Warning System (FEWS) and Vulnerability Analysis and

Mapping (VAM): In developing countries, communities’ vulnerability has

been assessed first in terms of food security, due to incidence of droughts


and famine and high levels of mortality. The USAID has developed a dis-

tinct methodology for conducting VA in the context of improving food secu-

rity in sub-Saharan Africa under the Famine Early Warning System

(FEWS).10. However, the concept and methodology of VA applied in the

FEWS has the perspective of a donor organization, and it is used primarily

as a tool to assist decision-makers faced with the responsibility of respond-

ing to any potential threat of famine. As is the case with FEWS, food secu-

rity is the leading perspective in the Vulnerability Analysis and Mapping

(VAM) conducted by the World Food Program (WFP), a UN agency.11

Participatory Rural Appraisal (PRA)-based Vulnerabilities and Capacities

Analysis (VCA):

The Participatory Rural Appraisal (PRA) methods, extensively practiced in

development activities, have been used for carrying out the Vulnerabilities

and Capacities Analysis (VCA). Developed in the context of relief work un-

dertaken by NGOs, the VCA undertakes an assessment by dividing societal

capacities and vulnerabilities into three categories: physical/material; so-

cial/organizational; and motivational/ attitudinal (Anderson and Woodrow,

1998). The International Federation of Red Cross and Red Crescent Socie-

ties (IFRC) has adopted the Vulnerability and Capacity Analysis (VCA) as a

diagnostic tool to assess institutional capacity and evaluate the effectiveness

of current programs. The IFRC national societies have preferred VCA over

needs-based assessment approach, as it emphasizes capacity building and

community participation, making their mitigation programs more adaptive

and responsive (IFRC, 1999).

Given the multi-dimensionality of vulnerability, not all of the assess-

ment can be encompassed in a single model. Instead, a number of analytical

techniques could be used to assess vulnerability, which includes quantitative

data of different measures of vulnerability, qualitative information upon dif-

ferent vulnerable groups, descriptive details of spatial and geographical

situation, and multivariate modeling of vulnerability with respect to out-

come indicators such as consumption (Tesliuc and Lindert, 2002).


4.3 Measuring and Indexing Vulnerability

Can vulnerability be measured? At what level is it feasible to measure vul-

nerability? According to the World Development Report 2000/1, it is espe-

cially difficult to measure vulnerability at the household level. It observes as

follows:

“…since the concept is dynamic, it cannot be measured by observing house-

holds once. Only with household panel data—that is, household surveys that

follow the same households over several years—can the basic information be

gathered to capture and quantify the volatility and vulnerability that poor

households say is so important. Moreover, people’s movements in and out of

poverty are informative about vulnerability only after the fact. The challenge is

to find indicators of vulnerability that can identify at-risk households and

populations beforehand.”

There has been some research at measuring vulnerability at household

level using panel and cross-sectional data. A number of country-based stud-

ies have attempted to measure vulnerability on the basis of variability of

consumption, expenditure, and household characteristics in Pakistan, Indo-

nesia; and Guatemala (Mansuri and Healy, 2000; Chaudhary, Jalan, and

Suryahad, 2002; Tesliuc and Lindert, 2002). Another study uses longitudi-

nal data on rainfall in Ethiopia to estimate the vulnerability to poverty aris-

ing from variation in rainfall (Dabelen, Poupart, and Kline, 2002).12 These

studies are part of the economic research, and are primarily concerned with

the future risk of households falling below poverty line. Many indices of

losses associated with natural disasters are not included in these studies.

At the country level, there have been recent initiatives to measure and

index vulnerability. The South Pacific Applied Geoscience Commission

(SOPAC) is in the process of developing an Environmental Vulnerability In-

dex (EVI), which will provide a general sense of the environmental condi-

tion and vulnerability of a country, particularly for small island developing

countries (SIDS). It has included 54 indicators, covering natural hazards and

information on national eco-system. The EVI has been developed and is

now undergoing testing and refinement in order to make it a globally appli-

cable tool.13


The United Nations Development Programme (UNDP) is preparing a

World Vulnerability Report. As part of the report, it is developing a Global

Risk and Vulnerability Index at the national level. The index, which will

rank countries in terms of their vulnerability to natural disaster losses, is

based on a wide range of data, drawn from different sources. Among the

data it has taken into consideration is the data on hazards, disaster losses,

and socio-economic information. Social vulnerability is reflected through a

number of indicators such as economic aggregates, resource endowments,

demography, health and sanitation, capacity for disaster response, and cor-

ruption.14

These and similar other initiatives at indexing vulnerability at the na-

tional and sub-national levels are in progress. However, there is still a dis-

tance to go before there is a consensus on indices of vulnerability and their

measurement. It is likely that these efforts at national indexing will provide

the necessary framework for measuring and indexing vulnerability at the

sub-national and community levels.

V. Asset-based Approach to Disaster Risk Management

5.1 Evolving Mitigation Strategies

In the last few decades, the nature of disaster mitigation has changed signifi-

cantly. In the mid-20th century, the US, traditionally the world leader in dis-

aster mitigation, was still almost entirely dependent on engineering

measures. However, the structural approach generally failed to reduce the

scale and cost of damages. In developing countries too, mitigation began

with structural measures, particularly the construction of dams and embank-

ments to reduce floods. These measures did not produce intended results;

their consequences in terms of environment and displacement of settlements

were indeed adverse. The failure of structural approach led to a steady shift

towards non-structural approaches, which included land use planning, zon-

ing restrictions, building codes and insurance schemes.

Despite the emphasis on the management of human systems, these

non-structural measures predominantly represent a technocratic model, fo-

cusing on hazards. It does not take into account social and economic vulner-


ability of communities in developing countries, nor does it heed the cultural

aspect of community life (Alexander, 1997). The alternative to these stan-

dard notions of mitigation planning is provided by community-based miti-

gation plans. However, despite all the rhetoric, the examples of successful

community-based mitigation plans in developing countries are difficult to

identify (Vatsa, 2000). Besides, community projects too do not address the

central issue: how to provide more resources and information to households

and communities and build more assets with a view to reduce their endemic

vulnerability?

While there is a greater agreement among experts and academics on

reducing vulnerability, the literature on disaster management does not offer

many ideas about how to reduce vulnerability. Interventions that are gener-

ally recommended for disaster risk reduction are from the conventional

menu, borrowed from the literature of urban and regional planning and ar-

chitecture. There is a surfeit of rhetoric about linking disaster management

with development, but again there is no road map about securing the link-

age. The interventions and instruments, which effectively link disaster man-

agement with development, have not been identified, let alone practiced.

5.2 Asset-based Approach to Mitigation

Against this backdrop, an asset-based approach promises to be an innova-

tive way of pursuing disaster mitigation and providing a bridge to develop-

ment. The main premise of this approach is that the assets play a central role

in reducing vulnerability. “The more assets people have, the less vulnerable

they are. And the greater the erosion of their assets, the greater their insecu-

rity” (Moser, 1997 p.2). By using a wider definition of assets, the approach

establishes links with programs related to livelihood, human rights, social

protection and social capital. It thus represents a comprehensive approach to

risk management, drawing from different disciplines.

Assets may be defined as the stock of wealth in a household, repre-

senting its gross wealth. Assets can be tangible, such as land, house, jewelry,

savings, and education and skills, or intangible assets such as household re-

lations, social capital, proximity to markets and health and education facili-

ties, and empowerment. The economic literature emphasizes productive


tangible assets as they generate financial returns. Sociologists and anthro-

pologists often focus on intangible assets. However, there is growing con-

sensus that both tangible and intangible assets, and their interplay, are

important in the context of risk management of vulnerable households

(Shearraden, 1991; Siegel and Alwang, 1999).

The household asset-based approach traces its beginnings to Amartya

Sen’s “entitlement” approach, developed in the context of famine. Sen in his

classic book, Poverty and Famines (Sen, 1981), showed that famines could

be attributed to failures in securing individual entitlements, which emanates

from all the endowments (assets)—their labor, cash crops, or animals— at

her or his command. The value of these endowments and related production

activities is liable to collapse in relation to staple food prices, denying indi-

viduals and households the capacity to purchase food. A household’s failure

to secure its entitlement is thus primarily a failure in exchange rate or terms

of trade rather than crop or production failure.

Though Sen’s concept of entitlements includes all the productive re-

sources and tangible assets owned by a household, he has analyzed famine

predominantly in terms of exchange and terms of trade failures. It does not

always explain differential vulnerability within some communities and be-

tween similar communities apparently facing similar production or ex-

change failures. How can a particular community cope longer and better

than other communities? Jeremy Swift (1989) therefore employs a wider

meaning of assets as consisting of investments, stores and claims (Figure 3).

“Assets in this broad sense are created when production leads to a surplus

beyond immediate consumption requirements, and households use this sur-

plus, willingly or unwillingly, to invest (including investment in better edu-

cation or health), to build up physical stores of all sorts, and to “invest in

claims’ by putting more resources into the community or government

(p.11).” Investments, stores, and claims together build the asset profile of an

individual or household.

Asset-based approach was incorporated into the sociological / anthro-

pological literature by the late 1980s, which expanded the concept of assets

(Moser, 1998; Bebbington, 1999). It also came to be applied to the analysis


of poverty (Reardon and Vosti, 1995; Attanasio and Székely, 1999). In the

US, Michael Sherraden (1991) applied asset-based approach to social pol-

icy. According to Sherraden, assets exert impacts in ways that cut across

economic, psychological, and institutional effects. Siegel and Alwang

(1999) provide the most detailed exposition of asset-based approach in the

context of social risk management.

5.3 Classification of Assets

Assets can be classified in many ways. Distinctions may be made between

enterprise assets and individual and household assets; productive and non-

productive assets; tangible and intangible assets; and the ease with which as-

sets can be liquidated. Moser (1998) offers a five-fold classification of as-

sets: labor, human capital, productive assets, household relations, and social

capital. Another scheme of classification —natural, financial, physical, hu-

man and social assets—is more straight and clear as presented below (Siegel

and Alwang, 2000; Sebstad and Cohen, 1999, p.15):

Natural assets: Pasture, forests, fisheries, water: quality and quantity

Financial assets: cash, savings, loans and gifts, regular remittances or pen-

sions, other financial instruments;

Physical assets: housing; buildings and land, and improvements to these; land

and other physical items that maintain or increase in value, such as gold jew-

elry; and physical items that decrease in value, including consumer durables

such as household appliances, shoes, clothing, and vehicles; and productive

assets, including fixed-enterprise assets;

Human assets: skills and knowledge, ability to labor, good health, self-

esteem, bargaining power, autonomy, and control over decisions; and

Social assets: networks, group memberships, relationships of trust, access to

wider institutions of society, and freedom from violence.

Each category of assets has specific relevance for reducing vulner-

ability. Natural assets help households in reducing environmental stress, in

addition to providing the necessary wherewithal for the physical assets (e.g.,

provision of water for irrigation of lands, and pastures for cattle). Financial


assets can be used to smooth consumption, or they can be invested in a vari-

ety of ways that help smooth incomes. Physical assets can be pawned or

mortgaged or turned into productive assets to increase household income.

Human assets form the basis for labor mobilization, a key strategy for cop-

ing with shocks and stress events. Social assets are a critical source of finan-

cial and non-financial support in times of need, and clients place high

priority on building and maintaining these assets (Sebstad and Cohen, p.

72). Depletion of assets in a certain category would have a corresponding

impact on the associated vulnerability. An asset vulnerability matrix, which

identifies indicators of increasing and decreasing vulnerability associated

with a certain category of assets at the household level, has been presented

below (see Figure 4):

Figure 4: Asset Vulnerability Matrix

Type of

Assets

Indicator of Increasing

Vulnerability

Indicator of Decreasing

Vulnerability

Financial

Assets

Withdrawal of savings

Rise in indebtedness

Loans for consumption

Default or postponement of loan

repayment

Dependence on remittances

Lack of insurance

Sustained level of savings

Diversified financial investments

Credit for productive assets

Loan repayment on schedule

Availability of insurance

Availability of a wide array of

financial instruments

Physical

Assets

Crop failure

Soil erosion and degradation of

land

Damaged and destroyed houses

Disruption or closure of businesses

Distress sale of household

consumer durables

Diversified cropping

Soil and water conservation

Structural reinforcement of houses

Business continuity plans

Increased level of security for house,

crops, business and household goods


Human

Assets

Illnesses and loss of health

Deaths and disability

Poor nutrition

Withdrawal from schools

Primary concern with coping

strategy

Bonded and child labor

Good health

Physical capacity to work

Availability of nutrition

Educational opportunities for

children

Opportunities for learning skills

Independence and self-esteem

Social

Assets

Discrimination based on race, sex,

caste or ethnicity

Social disintegration and lack of

trust

Lack of participation in community

organizations

Dependence on charity

Looting and criminal activities

Relief and assistance based on equity

and special needs of different social

groups

Community solidarity, cohesion,

reciprocity and presence of social

networks

Participation in community initiatives

and volunteerism

Self-help and mobilization of

community resources

Mutual support and cooperation

5.4 Household Assets, Risk, and Vulnerability

A household’s level of assets has a positive, if not direct, relationship with

its ability to deal with risks. The greater the household’s level of assets,

more the capacity to cope with risk and the lower its level of vulnerability.

A household must have a minimum level of assets to cope with risks.

If the household does not have the bare essential assets, it slips to situation

where it cannot cope with risks and reaches a breakdown point. The asset-

level of a household corresponds to its poverty level. Extremely poor house-

holds have lower level of assets. Moderate and vulnerable non-poor house-

holds have increasingly higher level of assets (Sebstad and Cohen, 1999).

The interaction of assets with risk is always complex. It is not just the

level of assets, but also the mix of assets that influence the capacity to man-

age risks. While the importance of financial, physical assets is obvious, hu-


man and social assets have also emerged as important variables in risk

management. Education, skills, and information equip households in deal-

ing with risks in a more balanced way. Similarly, social cohesion, commu-

nity networks, gender relations, and participation in social organizations,

which are considered to be the expressions of social capital or assets, play

important roles in responding to risks and crisis situations. A great deal of

transactions, involving reciprocal arrangements, gifts, and loans, take place

on the basis of expectations and obligations, helping households and com-

munities. For example, human and social assets are more important for ex-

tremely poor households, while the moderate and vulnerable non-poor may

find physical and financial assets more important (Vatsa and Krimgold,

2000; Sebstad and Cohen, 1999).


Figure 5: Relationship between Household Assets and Vulnerability

Source: Sebstad and Cohen, 1999

Les

s

Vuln

erab

le

Mo

reV

uln

erab

le

��

Househol

d

Moderate

Poor

Vulnerable

��

��WNPOINT

Capacity

to

Asset Mix and

Least Risk

Disasters can drastically alter a household’s portfolio of assets by ei-

ther destroying them physically, or by dramatically reducing its value due to

prolonged collapse of asset markets (Vosti, 1999). In Malawi, the food

shock of 2001 is relatively small compared to 1991, yet its impact is far

more severe in the country. Recent research evidence suggests that the cur-

rent situation in rural Malawi, where three quarters of households corre-

sponded to the poorest households in Tanzania and Uganda, is due to an

erosion of Malawi’s assets over the last 10 years (Stevens, et.al. 2002).

Households reallocate their assets in response to risks. They use their

savings or insurance, draw down their physical stocks, borrow, sell or pawn

assets, reduce expenditures, modify their consumption, or seek help from

friends and relatives. A popular strategy is to make claims upon govern-

ments, NGOs, and international organizations, though such claims have

their own limits. Reducing assets (including claims) makes households and

communities more vulnerable, and its impact could be extended to pro-

cesses within households, particularly in respect of gender and intergenera-

tional assets and claims (Swift, 1989). For instance, it may result into

withdrawal of children from schools, reduced nutrition for women, migra-

tion, or other desperate measures.

Wealthier households allocate their assets more efficiently in dealing

with their risks, and manage their risks with minimal welfare loss. Research

findings collected during drought of 1999-2000 in Ethiopia indicate that

well-off households achieve or maintain higher asset holdings (livestock,

cash, equipment) due to their ability to fully respond to economic opportu-

nity, purchase devalued assets from poorer households, and keep their assets

and products off a devalued market. Asset-poor households find their accu-

mulation constrained by an inefficient asset-mix (abundant land, but insuffi-

cient labor), declining values for their meager assets as markets for these

goods also collapse, declining wages for their labor while costs of borrow-

ing increase, and declining access to social networks and support institu-

tions during periods of massive depletion (Little, 2002, p.2). However,

differential vulnerability between communities may always vary. For exam-


ple, the urban poor, though often very poor, make more effective claims

upon the government assistance compared to the urban poor (Swift, 1989).

Diversification of household assets and income-generating opportu-

nities improves risk management at the household level. Multiple assets can

increase creditworthiness of a household, thereby improving their ability to

borrow during a crisis. Households can engage in small businesses, off-farm

employment, and seasonal migration arrangements. The rural poor engage

in farming and livestock husbandry, in gathering wild food and fuel, and in

the nonagricultural sector (Vosti, 1999). Reardon, et.al. (1988) document

the practices of poorer households in Burkina Faso to spread income risks

across occupations and across space (cited in Seigel and Alwang, 1999).

Pastoralists of East Africa increasingly pursue non-pastoral strategies to

meet consumption needs and to buttress against shocks caused by climatic

fluctuations, animal disease, market failures, and insecurity (Little, et.al.,

1999).

As stated earlier, the poorest households are characterized by low as-

set endowment, and therefore, they tend to reach the threshold of collapse

much faster. Poorer households also tend to adopt risk management strate-

gies that concentrate in lower risk and lower return assets, trapping them in

the vicious cycle of poverty (Swift, 1989; Jalan and Ravallion, 1998).

5.5. Level of Assets and their Interaction

The capacity to reduce risk and vulnerability depends not only upon the ini-

tial assets and endowments, but also by the ability to transform such assets

into income, food, or other basic necessities in an effective manner. Factors

at household, intra-household, community and extra-community levels de-

termine both the use of assets and the strategies adopted during the periods

of crisis and disasters. At the level of households, factors which influence its

response to a major shock are changes in household structure, composition,

and headship, care of children and the elderly, and domestic violence. Intra-

household factors basically refer to gender-based differences, which influ-

ence the process of resource allocation within a household. Within a house-

hold, the distribution of impact and resources in a crisis or disaster situation

are different for men and women, and boys and girls. At the community


level, the extent to which a disaster or crisis has increased or eroded social

capital may have long-term consequences for recovery strategies (Moser,

1997). At the extra-community level, labor, commodity and financial mar-

kets determine the economic returns, and political and institutional factors

determine relief, assistance and security.

There are strng linkages between different levels which allow house-

hold assets to draw on community and extra-community assets. Households

seek community and government’s help in strengthening flood control

measures at the local level. Flood and cyclone shelters, which are commu-

nity assets, can protect many household assets. Governments may provide

financial assistance to households for undertaking seismic strengthening of

their houses. These strategies may then create cross-boundary asset pools

and broaden the risk pool. Assets enlarge the risk pool, creating incentives

for households to contribute to the risk pool and draw upon its resources.

The asset-based approach, by using assets in a broader sense, embod-

ies elements of sustainable livelihoods and rights-based approaches, which

have been advanced by many stakeholders in international development. Its

strength lies in using multiple levels of assets—tangible and intangible—for

managing risks. However, asset-risk interaction needs to be investigated

more empirically to ascertain how different categories of assets correlate

with outcomes of risky events at the household level. Research on these is-

sues will provide better information on the component or a mix of assets re-

quired for dealing with a certain type of risk.

VI. Asset-building Strategies for Disaster Management

The discussion above underscores the importance of following a more com-

prehensive approach to reducing risk and vulnerability. Such a strategy

needs to connect the conventional measures of disaster management to the

world of development: financial assets, livelihoods, social protection, com-

munity networks, housing, and information sharing. Interventions that pro-

mote these issues could be used effectively for managing disaster risks.

Different components of the strategy and their application for ex-ante and

ex-post risk management are presented in a matrix below, followed by a dis-

cussion:


Figure 6: Asset-building and Risk Management

Asset-building

Strategy

Ex-ante

Risk Management

Ex-post

Risk Management

Building

Financial Assets

· Flexible savings

· Credit for asset-building

· Affordable insurance

· Withdrawal of savings

· Re-scheduling loan repayment

· Insurance payments

Promoting

Livelihoods

· Diversification of

income-earning opportunities

· Provision of training in skills

· Management of natural and

common property resources

· Assistance for business

recovery

· Assistance for resumption of

economic activities

· Commence large-scale public

works

· Reconstruction as an

opportunity for employment

generation

Investing in

Housing

· Improvement in sites and

services

· Wind- and seismic-resistance

housing

· Relocation

· Post-disaster reconstruction

· Application of disaster-resistant

technology in reconstruction

Supporting Social

Protection and

Safety Nets

· Microfinance for vulnerability

deduction

· Social / calamity Funds

· Public works (Employment

Generation) programs

· Cash transfer

· Food distribution

· Social insurance

· Public works (Employment

Generation) programs

Strengthening

Community

Networks

· Community-based mitigation

Programs

·Special programs for vulnerable

social groups such as women

· Community participation in

recovery and reconstruction

· Group insurance payment


Sharing

Information

· Risk and vulnerability mapping

· Early warning

· Household and

community-level Preparedness

· Information upon post-disaster

recovery and reconstruction

· Information upon mitigation

solutions financial mechanisms

for mitigation investment

6.1 Providing Financial Services

Households need to avail of financial services to the households—savings,

credit, and insurance—to reduce the impact of a major shock. Many house-

holds borrow, more do save, and all seek informal, if not formal, insurance.

The choice of these services depends upon the household situation. Credit is

obtained more for economic activities, and helps to reduce risk (income

smoothing). Savings can provide more efficient self-insurance to help miti-

gate and cope with risk (consumption smoothing). Formal insurance may

not be affordable for the households, but they seek insurance through their

savings and other physical assets (Siegel, 2000).

In developing countries, government is the primary source of disaster

assistance for households. Governments provide assistance through their

own resources or by borrowing from international financial institutions. In

the private sector, formal banking sector, insurance companies, and microfi-

nance institutions can provide a wide array of financial services and prod-

ucts, specifically designed for disaster risks. Flexibility and heterogeneity of

financial services and instruments offer more alternatives to households in

managing their risks.

6.2 Promoting Livelihoods

One of the important steps is to expand livelihood opportunities for the peo-

ple living in vulnerable situations. It may involve different strategies suited

to particular hazards. For example, those likely to be affected by drought

may be assisted for preventing soil erosion, water resource management,

dry land farming, social forestry, and common property resource manage-

ment. Households facing floods, cyclones and earthquakes may be assisted

with productive assets such as restoration of their business premises, re-

sumption of fishing operations, or replacement of their agricultural imple-


ments. Training in different trades can also be organized for the people who

have to seek alternative sources of employment. Governments may begin

large-scale public works, which could provide employment to the people af-

fected by a disaster event.

Poor households have labor as their greatest asset. In face of a disas-

ter, a frequent response by poor households is to migrate or mobilize addi-

tional labor—principally women’s labor and sometime even children’s

labor. These strategies have their own welfare losses. If households have

more diversified livelihood opportunities, they may avoid these losses, and

maintain their level of economic and social well-being. A number of inter-

national agencies such as the DFID, UNDP, CARE International and Oxfam

are working on sustainable livelihood approaches. These organizations have

also underscored the importance of including livelihood strategies in their

disaster-related interventions (Carney et al. 1999, cited in Sanderson, 2002).

6.3 Investing in Housing

Housing is an important productive asset that can cushion households

against most of the big and small shocks. When households have secure

ownership of houses, they often use this asset with particular resourceful-

ness when other sources of income are reduced. Homeowners use their

housing as a base for enterprises or rent it to raise income. They sell part of

their plot or, as a last resort, all of their property. They save “imputed rent”

that would otherwise be added to household expenditure. And they use their

housing as a tool for extending personal relationships and generating social

capital (Moser, 1997, p. 7).

Housing can be promoted through infusion of public and private re-

sources. These resources need to be mobilized for the construction of new

and better houses, strengthening of existing houses, and improvement in

sites and services. People who live in unsafe conditions could be assisted to

move in safe and better houses. For instance, people living in flood-prone

areas could be helped with simple flood prevention measures such as rising

of plinths or building on stilts or even relocating. Insurance schemes could

be tied to specific mitigation measures. These policies could be pursued

through building incentives, and developing adequate legal and institutional


frameworks. The government alone cannot promote housing. Financial in-

stitutions and non-governmental organizations need to partner with the gov-

ernment in encouraging housing sector.

6.4 Supporting Social Protection and Safety Nets

Social protection or safety net programs assist individuals, households, and

communities to better manage a wide range of risks that leave people vul-

nerable. These programs deal with both the absolute deprivation and vulner-

ability of the poorest people and also with the need of the currently non-poor

for security in the face of shocks and life-cycle events. A number of safety

net programs are in nature of income support or social insurance. In view of

its equity-enhancing and social investment functions, it has received wide-

spread support from governments and development agencies.

Despite its growing portfolio worldwide, the agenda of social protec-

tion has not yet been linked very effectively to disaster risk reduction.

Though the literature recognizes the potential of safety nets for disaster risk

reduction, in practice, there have not been many successful examples (IDB,

2000). Applying social protection programs for disaster management will

mean introducing both ex ante and ex post measures, with a view to reduce

disaster risks. In practice, ex ante measures will include credit, subsidy and

assistance for improvement in shelter, flood protection, crop management,

and diversification of livelihoods, whereas ex post measures will mean us-

ing the financial services for resumption of economic activities, reconstruc-

tion, and even consumption. Among the instruments and services, which

could be used for both ex ante and ex post risk management, are microfi-

nance, social funds, insurance, and public works program.

Safety net programs involve targeting of the people who are the most

vulnerable or most affected. However, in very low-income countries, such

as Ethiopia, Nepal and Malawi, almost everyone is poor or affected. Be-

sides, in these poor countries too, there is a group of ultra-poor, which needs

to be supported very directly. Some of the options that could be used for

these groups involve cash transfers (selected / universal), food programs

(free distribution, food stamps, school-feeding, etc.), food subsidies, agri-

cultural inputs (subsidies, free packs), and health and education fee waiver


programs (Smith and Subbarao, 2002). In almost all the low-income coun-

tries, underlying vulnerability and institutional weaknesses are so serious

that a simple intervention would not work. It would require multiple inter-

ventions, encompassing both short- and long-term measures.

6.5 Strengthening Community Networks

The importance of community networks in mobilizing human, social and fi-

nancial assets has been demonstrated in recent disasters. A generous interna-

tional assistance for the Gujarat earthquake in 2001 could be attributed to

the political and commercial strength of the non-resident Gujarati commu-

nity in a number of developed countries (Vatsa, 2002). Similarly, El Salva-

dor tapped a large amount of resources through remittances from millions of

expatriates after the earthquake in 2001. These social networks could be

strengthened through participatory programs. Group-based insurance pro-

grams and community-based mitigation programs could be among the inter-

ventions required to promote community networks.

An important component of community programs is to support

women with special programs. In Honduras, women coped with hurricane

Mitch by mobilizing formal and informal social networks and organizing

women’s groups to meet needs, organize temporary shelters, and coordinate

relief efforts. They also used kin networks to take in affected family mem-

bers (Corrieia, 2001). Women also participated in construction of shelter

and digging of wells and ditches. In Maharashtra, India, after the Latur

earthquake of 1993, women’s participation in the seismic repairs and

strengthening program facilitated successful completion of owner-driven

earthquake reconstruction program.

6.6 Sharing Information and Knowledge

One of the valuable assets is information and knowledge that could be used

for risk management at the household and community level. Through elec-

tronic media and Internet, one can immediately get an access to data, and see

how a river is rising, track a tornado or hurricane, or observe the likely ex-

tent of damage caused by an earthquake that just occurred. One can access

the latest information on disaster resistant design, regions of high and low


risk, sources of emergency supplies, preparedness plan, and more. A risk

and vulnerability mapping can be undertaken to inform the people of their

risks and how to deal with these risks. The information could also be used to

seek the attention of decision-makers and enhance claims upon national and

international resources.

Several factors influence the value of information and knowledge.

The credibility of source, clarity of the message, and simplicity of solutions

are some of the important factors that help households to act upon the infor-

mation. Risk communication strategy is thus an essential part of the risk

management strategy. Though in the recent times, the global connectivity

has increased significantly, a digital divide still exists in developing coun-

tries. An important challenge lies in widening the channels of communica-

tion and providing relevant information to the individuals, households and

communities for taking more informed decisions.

6.7 Conclusion

An increasing concern about vulnerability in disaster management has re-

flected into programs that concentrate on households and communities. The

above-mentioned strategies form the integral part of these programs and in-

terventions, helping households and communities in accumulating assets,

and thus increasing their resilience and capacity to manage risks. With a bal-

anced mix of assets at their disposal, households are empowered to address

all kinds of risks: health and employment risks which arise frequently, life-

cycle risks related to old age and loss of income, and infrequent disaster

risks causing major losses. It provides a sense of personal and social secu-

rity, which is critical to households’ well-being.

The relative importance of these strategies would depend upon the

risk exposure and coping strengths of households and communities. While

certain households or communities can prepare or recover through access to

financial resources, there would be many others who would require social

protection measures and safety nets. Similarly, housing would be a critical

asset for reducing the risk of floods and earthquakes. It could, however, be

said that while access to financial resources, and sharing information and


knowledge are emerging as the transformative strategies for reducing vul-

nerability, other strategies are more relevant for coping and sustenance.

Whether governments would extend the necessary support to house-

holds for building their assets or these should be driven by market incen-

tives, is an extremely important issue. A policy choice would be guided by

the context in which these interventions are called for. In respect of access to

financial services and housing, market institutions can implement a more

feasible strategy, while governments are more effective in implementing so-

cial protection and safety net measures and encouraging community net-

works. Both governments and market institutions can play a mutually

supportive role in creating livelihood opportunities and improving public

access to information and knowledge. A strong public policy support for

asset-based approaches would encourage both the governments and market

institutions to increase their commitment of resources for risk management

at the household and community level.


Endnotes

1. A household is a unit of social production with common eating arrange-

ments.

2. The Royal Society’s report in 1983, which strengthened the international

orthodoxy on the subject of risk, became a major work of reference. In 1992

when the Society returned to the subject with a new report entitled Risk:

analysis, perception and management, it was a significant deviation from

the earlier formulation of risk, sparking differences between physical and

social scientists. The Royal Society disowned the report, stating therein that

the “views expressed are those of the authors alone” and that it was merely

“a contribution to the ongoing debate”.

3. In Germany, Beck had a major impact on environmentalist politics and

thinking, but in the English-speaking world that impact has been considera-

bly lessened by the gap between original publication and translation (Beck’s

book was published in Germany in 1986; the English translation appeared in

1992).

4. Most of the papers produced by the The Risk Management and Decision

Processes Center, Wharton School and International Institute for Applied

Systems Analysis (IIASA), Austria on the subject of catastrophic risk do

not refer to social vulnerability.

5. For a detailed discussion, see Alwang, Siegel and Jørgensen, 2001. It

presents a review of perspectives on vulnerability provided by different dis-

ciplines.

6. http://www.guardian.co.uk/naturaldisasters/story/0,7369,439143,00.html

7. http://www.ecu.edu/coas/floyd/papers/floyd007.pdf

8. The Project Impact was a community-based mitigation program launched

by the Federal Emergency Management Agency (FEMA) in 1997. The pro-

gram was recently discontinued.

9. Information on NOAA’s vulnerability assessment method is available on

www.csc.noaa.gov/products/nchaz/htm/step1.htm.


10. The FEWS project conducts annual assessments of the ability of popula-

tions within numerous countries to meet their consumption requirements

since 1988. Steps involved in FEWS are preseason VA, season monitoring,

special alerts and warning, and contingency planning. More information is

available on www.fews.net.

11. More information on VAM is available on www.wfp.it/vam_docu-

ments/.

12. These papers were presented in a workshop organized by the World

Bank and International Food Policy Research (IFPRI) on “Risk and Vulner-

ability”.

13. The information on EVI is available on the following site: http://co-

balt.sopac.org.fj/Evi/.

14. The World Vulnerability is under preparation.


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Web Sites

http://www.udel.edu/DRC/preliminary/217.pdf

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www.usaid.gov/fews/va/vaterms.html#fews&va

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http://cobalt.sopac.org.fj/Evi/.


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