IPCC_Managing Risks of Extreme Events.pdf - Climate Access

National Systems for Managing the Risks from Climate Extremes and DisastersChapter 66.1. IntroductionThe socioeconomic impacts of disaster events can be significant in allcountries, but low- and middle-income countries are especially vulnerable,and experience higher fatalities even when exposed to hazards of similarmagnitude (O’Brien et al., 2006; Thomalla et al., 2006; Ibarraran et al.,2009; IFRC, 2010). The number of deaths per cyclone event in the lastseveral decades, for example, was highest in low-income countries eventhough a higher proportion of population exposed to cyclones lives incountries with higher income; 11% of the people exposed to hazardslive in low human development countries, but they account for morethan 53% of the total recorded deaths resulting from disasters (UNDP,2004a). At the same time, while in absolute terms the direct economiclosses from disasters are far greater in high-income countries, middleandlow-income states bear the heaviest burden of these costs in termsof damage relative to annual gross domestic product (GDP: UNDP,2004a; DFID, 2005; O’Brien et al., 2006; Kellenberg et al., 2008; Pelhamet al., 2011). This burden has been increasing in the middle-incomecountries, where the asset base is rapidly expanding and losses over theperiod from 2001 to 2006 amounted to about 1% of GDP. For the lowincomegroup, losses totaled an average of 0.3% and for the highincomecountries amounted to less than 0.1% of GDP (Cummins andMahul, 2009). In some particularly exposed countries, including manysmall island developing states, these wealth losses expressed as apercentage of GDP can be considerably higher, with the average costsover disaster and non-disaster years close to 10%, such as reported forGrenada and St. Lucia (World Bank and UN, 2010). In extreme cases, thecosts of individual events can be as high as 200% of the annual GDP asexperienced in the Polynesian island nation of Niue following cycloneHeta in 2004, or in the Hurricane Ivan event affecting Grenada in 2004(McKenzie et al., 2005).In terms of the macroeconomic and developmental consequences ofhigh exposure to disaster risk, a growing body of literature has shownsignificant adverse effects in developing countries (Otero and Marti,1995; Charveriat, 2000; Crowards, 2000; Murlidharan and Shah, 2001;ECLAC, 2002, 2003; Mechler, 2004; Hochrainer, 2006; Noy, 2009). Theseinclude reduced direct and indirect tax revenue, dampened investment,and reduced long-term economic growth through their negative effecton a country’s credit rating and an increase in interest rates for externalborrowing. Among the reasons behind limited coping capacity ofindividuals, communities, and governments are reduced tax bases andhigh levels of indebtedness, combined with limited household income andsavings, a lack of disaster risk transfer and other financing instruments,few capital assets, and limited social insurance.This body of evidence emphasizes that disasters can cause a setback fordevelopment, and even a reversal of recent development gains in theshort- to medium-term, emphasizing the point that disaster riskmanagement is a development issue as much as a humanitarian one.Poor development status of communities and countries increases theirsensitivity to disasters. Disaster impacts can also force households to fallbelow the basic needs poverty line, further increasing their vulnerabilityto other shocks (Owens et al., 2003; Lal, 2010). Consequently, disastersare seen as barriers for development, requiring ex-ante disaster riskreduction policies that also target poverty and development (del Ninnoet al., 2003; Owens et al., 2003; Skoufias, 2003; Benson and Clay, 2004;Hallegatte et al., 2007; Raddatz, 2007; Cardona et al., 2010; IFRC, 2010).However, some literature suggests that disasters may not always havea negative effect on economic growth and development and forsome countries disasters may be regarded as a problem of, and not fordevelopment (Albala-Bertrand, 1993; Skidmore and Toya, 2002; Caselliand Malthotra, 2004; Hallegatte and Ghil, 2007). Disasters have alsobeen considered to increase economic growth in the short term as wellas spur positive economic growth and technological renewal in thelonger term, depending on the domestic capacity of nations to rebuildand the inflow of international assistance (Skidmore and Toya, 2002).This observation may be partially attributable to national accountingpractices, which positively record reconstruction efforts but do notaccount for the immediate destruction of assets and wealth in somecases (Skidmore and Toya, 2002).To better respond to the impacts of disasters on human livelihoods,environment, and economies, national disaster risk management systemshave evolved in recent years, guided in some cases by internationalinstruments, particularly the Hyogo Framework for Action (HFA) 2005-2015and more recently as part of the adaptation agenda under the UnitedNations Framework Convention on Climate Change (UNFCCC; seeSection 7.3). Increasing knowledge, understanding, and experiences indealing with disaster risks have gradually contributed to a paradigmshift globally that recognizes the importance of reducing risks byaddressing underlying drivers of vulnerability and exposure, such astargeting poverty, improving human well-being, better environmentalmanagement, and adaptation to climate change as well as respondingto and rebuilding after disaster events (Yodmani, 2001; IFRC, 2004,2010; Thomalla et al., 2006; UNISDR, 2008a; Venton and LaTrobe, 2008;Pelham et al., 2011). While governments cannot act alone, the majorityare well placed and equipped to support communities and the privatesector to address disaster risks. Yet recent reported experiences suggestthat countries vary considerably in their responses, and concerns remainabout the lack of integration of disaster risk management into sustainabledevelopment policies and planning as well as insufficient implementationat different levels (CCCD, 2009; UNFCCC, 2008b).It is at the national level that overarching development policies andlegislative frameworks are formulated and implemented to createappropriate enabling environments to guide other stakeholders toreduce, share, and transfer risks, albeit in different ways (Carter, 1992;Freeman et al., 2003). National-level governments in developed countriesare often the de facto ‘insurers of last resort’ and used to be consideredthe most effective insurance instruments of society (Priest, 1996).Governments also have the ability to mainstream risks associated withclimate variability and change into existing disaster risk managementand sectoral development, policies, and plans, albeit to differing degreesdepending on their capacity. These include initiatives to assess risks anduncertainties, manage these across sectors, share and transfer risks, and344