Handbook for Disaster Assessment 3 Edition DaLA by Omar Bello.pdfHandbook for Disaster Assessment...

Handbook for Disaster Assessment

3rd Edition

Omar D. Bello, Ph.D.

Economic Affairs Officer

Disaster Risk Reduction and Response Unit

ECLAC Subregional Headquarters for the Caribbean

Disaster assessment methodology

BangkokFebruary 18, 2015

Background

ECLAC has been a pioneer in the field of disaster assessmentand in the development and dissemination of a disasterassessment methodology. Our history assessing disastersstarted in 1972 with the earthquake that struck Managua,Nicaragua.

Since then, ECLAC has taken part in more than 90assessments of the social, environmental and economiceffects and impacts of disasters in 28 countries in the region

Background

Those disasters include 15 of the 20 most devastatingdisasters to hit Latin America and the Caribbean in the past40 years. It is worth to mention that it has been used in 40countries on other continents, mainly Africa and Asia.

Disasters assessed by ECLAC which were responsible foraround 310,000 deaths and affected the lives of 30 millionpeople, and estimated cost of US$ 213 billion (at 2000prices).

Disasters

Disasters studied by ECLAC derive from a combination of two factors:

(a) natural phenomena capable of unleashing processes that lead to

physical damage and the loss of human lives and capital, and

(b) the vulnerability of individuals and human settlements.

These events disrupt the living conditions of communities and

individuals and the economic activity of countries.

All nations are exposed to extreme natural events to a greater or lesser

degree. Their effects do not always result in a disaster, however. This

happens when a natural event meets conditions of vulnerability.

LAC: Deadliest Disasters

1970-89

Year Country Type Deaths Aff.

Population

1970 PER Earthquake 66,794 3,216,240

1972 NIC Earthquake 10,000 720,000

1973 HND Mudslide 2,800

1974 HND Storm 8,000 600,000

1974 BRA Epidemic 1,500 30,000

1976 GTM Earthquake 23,000 4,993,000

1979 DOM Storm 1,400 1,554,000

1985 COL Volcanic eruption 21,800 12,700

1985 MEX Earthquake 9,500 2,130,204

1987 ECU Earthquake 5,000 150,000

LAC: Deadliest Disasters

1990-2010

Year Country Type Deaths Aff.

Population

1991 PER Epidemic 8,000

1991 PER Epidemic 1,726 283,353

1998 HND Storm 14,600 2,112,000

1998 NIC Storm 3,332 868,228

1999 VEN Floods 30,000 483,635

2004 HTI Storm 2,754 315,594

2004 HTI Floods 2,665 31,283

2005 GTM Storm 1,513 475,314

2010 HTI Earthquake 222,570 3,700,000

2010 HTI Epidemic 5,592 378,638

Conflicts as Disasters

Economic disaster corresponds to a downward jump in per capita GDP atany instant of time. (Barro 2006)

Actual and potential economic disasters could reflect

1) Economic events

2) Wartime destruction

3) Disasters of natural origin

4) Epidemics


From the standpoint of sizes of world economic disasters in the twentiethcentury, war has been more important than purely economiccontractions.

The outcome depends on the extent of the destruction of physical capitalstock, and whether the country wins or loses.

For example, since the Civil War, wars that the United States participateddid not involve massive destruction of its production capacity.


Declines of per capita GDP

Wordl War I World War II Great DepressionAustria 1913-1919 35% 1944-1945 58% 1929-1933 23%

France 1916-1918 31% 1939-1944 49% 1929-1932 16%

Germany 1913-1919 29% 1944-1946 64% 1928-1932 18%

Netherlands 1913-1918 17% 1939-1945 52% 1929-1934 16%

Source: Barro (2006)




World War IIBelgium 1939-1943 24%

Denmark 1939-1941 24%

Greece 1939-1945 64%

Italy 1940-1945 45%

Japan 1943-1945 52%

Norway 1939-1944 20%

Peru 1941-1943 18%

Venezuela 1939-1942 22%

Spanish Civil War

Spain 1935-1938 31%

Portugal 1934-1936 15%




Great DepressionAustralia 1928-1931 20%

Canada 1929-1933 33%

New Zealand 1929.1932 18%

United States 1929-1933 31%

Argentina 1929-1932 19%

Chile 1929-1932 33%

Mexico 1926-1932 31%

Peru 1929-1932 29%

Uruguay 1930-1933 36%

Venezuela 1929-1932 24%


After World War II, the largest contractions were related to conflicts.



Iraq 1987-1991 75%

Iran 1976-1981 45%

West Bannk/Gaza 1999-2003 44%

We would like to highlight seven issues:

1) Methodological issues regarding stocks and flows. In particular,

measuring the effects of disasters on the flows: In this edition we

present separately losses and additional costs.

Disaster Assessment

It could include

1. Estimation of effects: Damage, Losses, and Additional Costs

2. Estimation of Impacts: Macro-economic and household level

3. Estimation of financial needs:

1. Recovery: It is partially estimated with the additional

costs

2. Reconstruction

It is a methodology based on sector data.

Affected population

Social

� Education

� Health

� Housing

� Culture and cultural assets

Infrastructure

� Transportation

� Water and sanitation

� Power sector

Economic sectors

� Agriculture sector

� Manufacturing

� Commerce

� Tourism

Once the effects are estimated by sector, we proceed to estimate theimpacts at macroeconomic and personal levels.

Overall and cross-cutting effects

� Macroeconomic impact

� Mainstreaming a gender perspective

� The environment

Effects and Impacts

ECLAC´s methodology is based on the estimation of effectsand impacts of disasters

� Effects of a disaster: Damage, losses and additional costs

resulting from the total or partial destruction of assets

from disasters

� Impact of a disaster: The consequences of a disaster´s

effects for social and economic variables such as household

income, unemployment, GDP growth and fiscal deficit.

Previous situation

(ex ante)

Expected evolution

(without disaster)

Disaster consequence

(ex post)

Estimates of damage and losses are done with respect to the baseline. Final result would depend on the pace or

recovery/ reconstruction

Damage

Damage means the effects the disaster has on the assets of each sector,

expressed in monetary terms. These occur during the event giving rise to

the disaster. Depending on the sector, assets may include:

(a) Physical assets such as buildings, installations, machinery,

equipment, means of transport, storage facilities, furnishings, irrigation

systems, dams, road systems and ports.

(b) Stocks of final and semi-finished goods, raw material,

materials and spare parts.

Damage

Two pieces of information are needed to set a monetary value on

damage: the physical scale of the effect, and a price to convert it into a

value.

Some valuation criterion has to be used to arrive at a monetary estimate

of such damage, and this methodology use the replacement price,

(current price before the disaster) of an asset equivalent to the one

destroyed.

Damage

The baseline

Damage is measured relative to a baseline or pre-disaster situation. This

is constructed using information existing prior to the disaster on the

assets of the different sectors in the affected region, which is compiled

during the estimation process.

The ideal information would include a listing of the different asset

classes. In the case of the housing sector, for example, information would

be sought on the number of homes in the affected area before the

disaster, and a classification would be carried out of these homes and of

furnishings for each of the groups established.

Damage

The baseline

Statistics have to be improved to determine assets value exposed

Replacement costs should not include the costs of dealing with existing

deficiencies in the affected area (such as housing deficits), as these did

not result from the event whose impact is being estimated.

Damage

Institutional agents

For public policy it is important estimating damage as a result of the

event by differentiating the wealth impact experienced by institutional

agents such as households, public- and private-sector enterprises and

levels of government.

The effects on a sector means the effects on one or more institutional

agents. The institutional agent affected by the destruction of assets will

not necessarily be the one financing restoration, owing to the possibility

of public-sector action..

Damage

Insured assets

Classifying damage by institutional sector provides a better estimate of

the fiscal financial effort that might be involved in the asset replacement

process. This would have to focus on the proportion of public-sector

assets that are uninsured and the percentage of uninsured private-sector

assets deemed to be a policy objective.

Damage

Damage and reconstruction funding

The damage estimate is the approximate replacement value of the assets

affected in each sector. This is not the same as reconstruction funding, as

the latter might incorporate elements of risk reduction and resilience

against future events, an example being construction on a different site

that is less exposed to hazards.

It could also include quality and technology improvements. These new

characteristics obviously raise the cost of construction above that of

merely replacing what has been damaged. Relocation could entail land

purchases, while improving resilience would entail stricter building

standards and perhaps even elements like early warning systems.

Damage

Damage and the capital stock

The amount of damage is not the same as the effects on the capital stock.

The two concepts differ because anything totally or partially destroyed

may have been fully written down and thus no longer form part of the

capital stock.

Consequently, it is to be expected that once written-down assets are

replaced, the capital stock of the economy, both residential and non-

residential, will increase.

It is the responsibility of sectoral groups to gather information on the

approximate year in which different types of capital items were built or

manufactured. It is very helpful to ascertain whether the institution that

deals with the national accounts of the country holds capital stock series.

Losses and Additional Costs

It is important to distinguish between the two types of flow disruptions:

1) Losses

2) Additional Costs

Losses

LOSSES

Losses are the value of goods that go unproduced and services that go

unprovided during a period running from the time the disaster occurs

until full recovery and reconstruction is achieved. Examples include a

reduction in the size of future harvests because of the flooding of

farmland or prolonged droughts, a decline in industrial production

because of damage to plant or lack of raw materials or inputs such as

water and electricity, and revenues forgone by utility firms because their

services have been interrupted or reduced.

Losses

LOSSES

Losses are a more complex concept than damage. They are not a tally of

obvious, tangible things (destroyed bridges, destroyed or damaged

homes and so on). Calculating them means setting a value on production

that will be forgone, which will obviously have an impact on GDP,

employment, the public finances and the external accounts.

They are a dynamic measure of flows. This being so, the consequences of

a disaster cannot be accounted for at the time they arise; their economic

repercussions will persist for a certain time, which may vary from case to

case.

Losses

LOSSES

This means that losses are hard to measure fully at the time valuation is

carried out (a few weeks after the disaster). At that time, it is not always

obvious whether the short-term losses are over or if they will continue,

or what type of effect there will be in the medium term, especially when it

is worth observing this separately for a particular sector that has been

affected (agriculture or transport, for example).

Losses

The baseline

Losses are calculated as the difference between a situation that has not

occurred, which is the evolution the sector was assumed to be going to

have before the disaster, and another situation that has not occurred

either, the behaviour that will take place after the disaster.

To avoid losses being overestimated, the baseline must be estimated

from the best information available and in a way that is consistent across

sectors. It is suggested that the most recent projection of the economy,

disaggregated by sectors, should be used to establish the baseline. This

forecast needs to be revised in the light of recent economic trends.

It is harder to calculate a baseline for losses than for damage because

assumptions have to be made.

Losses

The post-disaster scenario

The information gathered by the group carrying out the estimation has to

be used to construct projections of the post-disaster situation for each

sector. This situation depends on the scale of asset destruction, which in

turn, together with financing potential and the productive capacity of the

construction sector, determines how long it will take to restore

production.

Losses

The effects of losses on macroeconomic variables

Disruptions in flows could have effects on different macroeconomic

variables such as GDP, employment, the public finances, the balance of

payments, inflation and the exchange rate. Given the local character of

most disasters, these effects could be downplayed.

It is suggested that sectoral experts should report to the mission’s

macroeconomic team on the possible effects on certain variables, but

estimation of the impact on these variables should not be carried out

simply by aggregating sectoral information, as this can result in major

errors.

.

Additional Costs

Additional Costs

Outlays required to produce goods and provide services as a result of the

disaster. These represent a response by both the public and the private

sectors, which may take the form of:

a) additional spending and/or

b) spending shifting.

This can happen within a sector, as when the health-care sector redirects

planned infrastructure spending to purchases of medicines so that the

pharmaceutical sector indirectly benefits and the construction sector

loses out. Spending shifting also takes place between sectors, as when the

government decides to reduce technological development spending in

order to direct the funds to emergency assistance (food, shelter and so

on).

Additional Costs and Losses

It is important to distinguish between the two types of flow disruptions:

1) Losses are the value of goods cease to be produced and servicesprovided as a result of the disaster while additional spending or arecomposition of spending are a public policy decision or private-sector response to the event.

1) Losses are obtained by comparing the outlook after the disaster witha baseline represented by the evolution each sector would have hadif the disaster had not occurred. These are both hypotheticalsituations that rely on a number of assumptions, as does anyestimate derived from them. Conversely, additional costs or arecomposition of spending are outlays that are in fact made as aconsequence of the event.

Additional Costs and Losses

Losses, additional costs and financial needs for recovery

Financial needs for recovery are the costs of different supply and demand

policies that help the economy return to normal.

Supply policies include

• the amounts required to restore provision of and access to basic

services for the population.

• Resources to finance higher operating costs

• Resources to provide inputs and working capital so that production

levels can be restored (in the production sectors of agriculture,

stockbreeding, fishing, industry and trade).

Losses, additional costs and financial needs for recovery

Demand policies include the funding required to implement temporary

programmes, such as food-for-work or cash-for-work programmes,

designed to provide a minimum income to those who have lost earnings

or even been left workless.

A post-disaster assessment has the goals to approximate the financial

needs for recovery and reconstruction

1) Recovery of all economic activities – at the macro-economic, sectoral

and personal or household levels

2) Reconstruction of damaged physical assets, using pre-defined post-

disaster standards

In order to guide those processes these financial needs must be

expressed in a disaggregated manner taking into consideration

breakdowns by sector of economic activity, geo-political divisions, and

groupings of affected population

Financial needs for each post-disaster program and activitiesmust be estimated on the basis of a reliable and quantitativeassessment of damage and losses caused by the disaster.

These needs must be expressed in a disaggregated mannertaking into consideration breakdowns by sector of economicactivity, geo-political divisions, and groupings of affectedpopulation





1) We present an integration between our methodology and the

national accounts framework. We emphasize this issue especially to

the social sectors.

Public and private education in national accounting

Public education

Public education, or education provided by non-profit institutions, does

not have market prices. As such, the gross “output” value (GrOV) must be

calculated from the sum of its costs. They include intermediate

consumption (IC) and compensation of employees (CE).

GrOV=IC+CE

Intermediate consumption includes costs such as public utilities,

maintenance, transport, paper, and printed material. Compensation of

employees includes wages and salaries, plus other staff emoluments and

social security contributions.


Public education

In this case the gross value added (GVA) is calculated as follows

GVAPublic Educ. = CE


Private education

The production account of the activity “private education” quantifies the

education service provided at an economically significant price. It is

market production, supplied to the household sector as consumers. The

GVA is calculated as follows

GVA=CE+Iin+GOS

where Iin: Taxes on production and imports net of subsidies; GOS: Gross

operating surplus.

Estimation of flows

As a result of a disaster, the sector’s gross output value may vary for the

following reasons:

(a) Lower production

The output of this sector can be defined as the “quantity of teaching

received by the students, adjusted to allow for the quality of the services

provided for each type of education.”

It is important to distinguish between output and outcome. The first

relates to the transfer of knowledge, whether successful or not, while the

second refers to the knowledge that is actually acquired by the students.

(a) Lower production

Output could fall either because of

1. a reduction in the number of hours of classes taught. For example, if

it is decided to shorten the school year, this would mean fewer hours

of classes

2. a reduction in their quality. For example, classes taught in

suboptimal conditions.

Additional costs

These costs could result in higher intermediate consumption of both

public and private education for different reasons, including:

(i) The outgoings that have to be made to restore the education

service in temporary premises. To estimate these expenses, the

following methodology is suggested:

a) Ascertain how many temporary schools have been set up and how

many have been rented.

b) Ascertain the rental amount per establishment.

c) Estimate the number of months for which such premises are likely to

be operating.

To obtain the total outlays, multiply these three values, and include the

purchase of furniture and the education material needed for teaching

activities, which should be proportional to the number of classrooms set

up.





1) We present an integration between our methodology and the

national accounts framework. We emphasize this issue especially to

the social sectors.

2) Chapter about epidemics: We present an application of ECLAC´s

methodology jointly developed with PAHO about the assessment of

epidemics, specifically on its effects to the health sector.

4) Mainstreaming a gender perspective. All the editions of our

methodology have been enriched by our experiences assessing disasters.

This chapter incorporates all the issues regarding to gender that we

learnt since 2003.

5) The geomorphological and ecological impacts of different types of

disasters have specific environmental implications. In a chapter devoted

to the environment, we present a methodology to estimate a disaster

impact on the environment providing some examples.

6) Regarding the productive sectors we present separately the

manufacturing and commerce sectors, and we have a chapter especially

for the tourism sector.

7) There is a separate chapter to estimate damage, losses, and additional costs for

the cultural sector.

Handbook for Disaster Assessment

3rd Edition

Omar D. Bello, Ph.D.

Economic Affairs Officer

Disaster Risk Reduction and Response Unit

ECLAC Subregional Headquarters for the Caribbean

Disaster assessment methodology

BangkokFebruary 18, 2015

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