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MON4.2: Socio economic aspects of natural hazards
How do different geohazards affect mortality and economic losses?
Yale-NUS College, Singapore
In 2010, a Ms=7.0 earthquake hit the Haitian capital of Port-au-Prince causing an estimated 316,000 deaths along with $8B USD in economic losses in a struggling economy with a $7B USD gross domestic product. Also in 2010, a heat wave in Russia resulted in a high death toll (55,000) and $400M USD in economic losses. These two events in nations with disparate vulnerabilities led us to expand the scope to all disasters between 2000 and 2010 and ask, how do the physical nature hazards affect mortality and economic loss in countries with different levels of wealth?
Integrative disaster risk management: case study from India on social and economic re-construction”
MICRO INSURANCE ACADEMY, India, Republic of
Eminent Sociologist Karl Mannheim known for “sociology of planned re-construction” comes close to the contemporary chaos in disaster management prevailing all over the world. Mannheim speaks of “democratic planning” which is not economic planning alone but, overall social re-construction! In his book “diagnosis of our time” he says, “the great psychological and sociological problem in the future is (...) how to organize inarticulate masses and crowds into various forms of groups.”In other words, with climate change being a reality and consequent rise in natural disasters impacting the developed and developing countries there is an urgent need to “re-construct” the social system into an integrated system to tackle such emergencies. As per the Global Assessment Report," Countries report little progress in mainstreaming disaster risk reduction considerations into social, economic, urban, environmental and infrastructural planning and development."The HFA principles and MDGs provide the guiding principles to every nation in the world that has led to the formation of national disaster management bodies whose mandate is to formulate the national disaster management plan but the challenge to convert these plans into implementable and operational plan remains to be addressed. This paper seeks to present two successful case studies from the world’s largest democracy – the Indian federal states of Rajasthan and Haryana.Through their state disaster management plans an attempt has been made to “reconstruct” the “response mechanism” in Rajasthan that integrates the chain of command beginning from the chief minister of state to the village head in the community. Haryana adopted a financial mechanism on the lines of the UNOCHA Central Emergency Relief Fund that makes funds available within seven minutes to any far-flung village in-case of emergency. The underlying factor was to bring standardization amongst the authorities to tackle the masses through these mechanisms for a coordinated response at every level and effective recovery towards building a resilient society.
Interregional economic impact analysis of the Wenchuan earthquake, China
1State Key Laboratory of Earth Surface Processes and Resource Ecology, Beijing Normal University, China; 2Academy of Disaster Reduction and Emergency Management, Beijing Normal University, China
Loss and damage induced by catastrophic earthquakes have significant impacts not only on the disaster-affected area’s economy but also on other regions outside the disaster area, which is adverse to regional sustainable development. The ripple effects, originate from imbalance between supply and demand in the regional economic system, can spread far beyond the region, and could have considerable impacts on other regions. An improved input-output model, incorporating interregional commodity flows and regional input-output relationships, was applied to evaluate the indirect losses in and outside the disaster areas caused by the Wenchuan earthquake, occurred in 2008. The magnitude and the extent of the indirect impacts in different spatial scale from this quake were analyzed; the impact mechanisms and economic vulnerability of the indirect loss in different provinces were also identified. The results show that, for worst-hit region, the trend of the Gross Regional Product had an obvious “V” type recovery trajectory, but it has a blooming trend in other regions surrounding the disaster-hit areas just after this quake, and for the whole country of China, the effects of this earthquake seems not very clear. These analytical results may be used to propose risk management strategies in the recovery and reconstruction periods in the following years.
Annualized catastrophe mortalities and driving long term risk reduction
RMS Ltd, United Kingdom
While a range of mortality statistics can readily be compared across countries worldwide for infant mortality, death in childbirth, or deaths from HIV (etc.) the extreme tail characteristics of natural catastrophes makes it impossible to compare equivalent catastrophe mortality statistics. However, use of casualty catastrophe loss models, calibrated against actual casualty statistics for that territory and set of perils (including the relevant local exposures and vulnerabilities) provides a means to generate 'average annualized casualty' information that can become the equivalent of other annualized mortality metrics. To generate such consistent data worldwide, countries should be assisted, and where appropriate, audited with an internationally consistent approach to modeling. Having achieved an internationally consistent catastrophe casualty metric (the 'annual expected % mortality from natural catastrophe') it becomes possible to rank countries and better prioritize assistance. Each high risk country could then be assigned a long term target of natural catastrophe 'annual expected % mortality' reduction (for example at 10% or 20% per decade) which would be audited by remodeling the risk every five or ten years (including any change in expected catastrophe occurrence). The same model
Social cost benefit analysis: a way to optimize net economic benefits
1Green Economics Institute, UK,; 2Universiti Teknologi MARA,Malaysia,; 3University Malaya, Malaysia
During recent global financial crises, several governments had to bail out failed banking institutions. This is seen by many as “socializing” private losses, as during good times the banks enjoyed the profits but during bad times everybody shares the losses. Thus, could a more equitable method of allocating resources be used instead? Social Cost Benefit Analysis (SCBA) may be the answer. In SCBA, the impact of projects on all individuals in the society is included and social prices rather than market prices are used. Here, the authors have unprecedentedly used SCBA to evaluate, a sample of private sector firms in Malaysia. The aim is to investigate the claims made in support of financial liberalization; that is, if indeed financial liberalization results in more optimal allocation of a country’s resources. The methodology is to conduct an ex-post evaluation of loans allocated by the banking sector; to see on hindsight, if the loans were allocated to firms that used them optimally; that is, give rise to net economic benefits (or social profits). Contrary to liberalization theory, results indicated that these firms did not used resources more optimally after liberalization had occurred. Only 63% of post liberalization cases contributed positive net economic benefits compared to 92 % for pre liberalization case. The United Nations (2008) had called for a reduction in unnecessary consumption of earth’s resources. SCBA may play a significant role, as distributional weights used for analysis can be set, such that they reflect the socioeconomic objectives of a society. The pursuit of future growth as an objective may involve sacrifice of another, such as current consumption. If a country unwaveringly chooses allocation of resources that achieve the most, in terms of the desired objectives, then perhaps whatever resources we have left will be used in a sustainable and optimal manner.
The regional economic impact of catastrophe - case study on the China-Japan auto industry after the Great East Japan Earthquake
Beijing Normal University, China, People's Republic of
With the increasing pace of globalization, the international economy is getting closely inter-connected. As a result, the impact of catastrophes tends to transcend the border of countries and may induce regional or even global problem. Due to the complexity of global economy connection, the understanding of impacts between countries of catastrophe remains poor, which restricts the implement of large-scale disaster risk governance. This study uses the case of the 2011 Great East Japan Earthquake to explore the pathway by which the disaster affected China, and thus estimate the economic impact on China’s auto industry. The impact mainly consists of three aspects: 1) the decrease in the supply of the auto product and its core components; 2) the disruption of raw materials supply chain and withdrawl of investment from Japan of Sino-Japanese joint venture auto companies; 3) the decrease in the demand of intermediate product for automobile in the market of Japan. Damage data of Japanese auto industry, historical records on the import of intermediate goods for auto manufacturing from China to Japan and econometrical models are used to evaluate the influence of this event on the intermediate goods market in China. In addition to statistical data, a survey is conducted to acquire the information of the major Japanese auto seller in China and Sino-Japanese joint venture auto companies about the effect of this disaster, including total loss of these companies, duration of the effect, sectors that suffered the heaviest influence and other negative effects. This study will provide valuable insight for better understanding of the overall impacts of catastrophe in the context of globalization, especially on the industry, and help to work out effective coping strategies to achieve the international integrated risk management for catastrophe.
The role of economics in making better sustainable flood risk management decisions
Middlesex University, United Kingdom
We now better understand that we are part of integrated, dynamic and complex systems (economic, social and environmental). We want to make progressively ‘better’ decisions that will take us on the path to sustainable development. In this context, hazards are shocks that have to be accommodated using the principles of resilience and adaptive management. Those shocks result in an immediate reduction in well-being and a hoped for recovery over the longer term. This is the context in which the economic analysis of floods is now situated where the purpose of economics is help the stakeholders understand how the shock of a flood propagates through the different systems, how recovery takes place, and the implications of intervening at different points in time and space. At the same time, it is necessary to recognise the current limitations of economics in addressing these questions. This was the challenge confronted in the European ConHaz project (www.conhaz.org ) and resulted in the recent guidelines for assessing the costs of floods. Rather than being supply driven, an economist’s analysis of flood risk management, these attempted to be demand driven: addressing the questions of what the stakeholders want to know, what they need to know, and how they want to know it.