The World Bank Supports Thailand's Post-Floods Recovery Effort
December 13, 2011
- Initial findings of a rapid needs and impacts assessment of the floods suggest that the total economic damages and losses, as of December 1, 2011, stand at THB 1,425 Bn (US$ 45.7 Bn approx.)
- The biggest damages and losses were in the manufacturing sector, with a total of THB 1,007 Bn (US$ 32 Bn approx.)
- Reconstruction efforts will spur spending by both the public and private sectors. It will help economic growth pick up in 2012.
Bangkok, December 13, 2011 – The World Bank and GFDRR (Global Facility for Disaster Reduction and Recovery), with development partners, in collaboration with the Ministry of Finance and over 40 other government agencies in Thailand conducted a rapid needs assessment and impacts of the floods from November 7-25, 2011. The assessment focused on 15 subsectors under four main sectors (infrastructure, production, social and cross-cutting) plus macro-economic analysis and disaster risk management. The assessment included data from 26 provinces affected heavily by the floods since October. Visits were made to sites in eight provinces. Also involved in the assessment were the European Union, Japan International Cooperation Agency, Luxembourg and the United Nations.
The initial findings suggest that the total economic damages and losses from the floods as of December 1, 2011 stands at THB 1,425 Bn (US$ 45.7 Bn approx. at time of this writing). An overwhelming large share of the damages and losses – 90%, or THB 1,284 Bn - were borne by private owners, while the public sector bore 6% or THB 81.4 Bn. The public sector estimate does not include damages and losses suffered by the police and military whose resources were mobilized for flood prevention construction and humanitarian relief efforts.
The biggest damages and losses were in the manufacturing sector with a total of THB 1,007 Bn (US$ 32 Bn approx.). The tourism sector would also suffer damages and losses of THB 95 Bn (over US$ 3 Bn), mainly from the loss of tourism revenues for around six months. The agricultural sector, on the other hand, would lose around THB 40 Bn (US$1.3 Bn) from the loss in agricultural production. The housing sector’s damages and losses amount to THB 84 Bn (US$2.7 Bn), with the damages occurring mainly to furniture, while losses are higher expenditures that households must bear which includes cleaning the houses.
“While the full impact of the floods on Thailand's growth can only be assessed once the flood waters have receded, this rapid assessment identifies immediate and long term strategies for resilient recovery, reconstruction and disaster risk management ”, says Ms. Annette Dixon, World Bank Country Director for Thailand. ”The World Bank is committed to supporting Thailand’s post-flood recovery effort”, adds Ms. Dixon.
The economic losses could reduce real GDP growth in 2011 by 1.1 percentage points. The reconstruction of the damages next year, on the other hand, could help raise real GDP growth by 0.2 percentage points and that of 2013 by 0.9 percent.
“Reconstruction efforts will spur spending by both the public and private sectors and help economic growth pick up in 2012”, says Ms. Kirida Bhaopichitr, Senior Country Economist for Thailand. “GDP will likely increase 0.2% next year and be restored to normal levels in 2013 as a result”, she adds.
Thailand has a favorable investment climate relative to many other countries around the world. Thailand ranked 17 out of 183 countries in the World Bank’s latest Doing Business report. “In order to maintain strong investor confidence, Thailand needs to put in place a long-term plan to lower the risk of future flooding in the industrial estates and in Bangkok”, says Ms. Bhaopichitr.
The public and private sectors in Thailand would need around THB 798 Bn over the next six to 36 months for recovery and reconstruction and reduce the risks of future floods. Public spending needs could reach THB 389 Bn from FY 2012-14. In FY2013, this could be up to 8.8% of government revenues. But these would make Thailand emerge stronger and more resilient from future floods.
In the short-term (the next 6 months), the majority of the estimated needs expenditures are for the recovery and rehabilitation of people’s livelihoods and of manufacturing firms. The assessment recommends that short-term recovery measures include providing additional cash transfer (double pensions, disability and poverty transfers) to vulnerable groups for 3 months, implementing labor intensive public works programs using community participation and giving priority to vulnerable and marginalized groups, and providing technical assistance to communities on how to ‘build back better’ their houses.
For the manufacturing sector, measures in the short-run include establishing a credit line facility, especially for micro and small enterprises. In the medium to long-term (beyond two years), rehabilitation of basic infrastructure (roads, bridges, energy, etc.) and establishment of flood protection infrastructure would need to be implemented.
Similarly, for the recovery of the agricultural sector, providing compensation to small and vulnerable farmers/tenants and ensuring the availability of good quality inputs (e.g. seeds, fertilizer) for the upcoming growing season would help farmers recover their outputs and incomes in the short-run. In the medium term, farmers would be encouraged to clean up on-farm irrigation and drainage systems.
Improving the overall infrastructure would need to start as soon as water recedes, but most of the implementation may take up to two years. This includes construction of more weather-resilient roads and identifying networks of strategic links that must be kept open at all times. Drainage capacity of infrastructure and pumping stations should be immediately rehabilitated, and the maintenance gap of the vital hydraulic infrastructure assets reduced.
Moreover, there is a strong need for a more holistic approach to flood water management including accelerating the implementation of the Royal Initiative for Flood Management, which provides more areas for water retention, establishing a strong data and information management system, and strengthening the flood forecasting and early warning systems which incorporates climate change modeling and hazard mapping.
An analysis of the 2011 floods by local and international experts to establish an understanding of the likelihood of a similar event occurring in the future will be useful to inform policy making and prioritize future investments. In the long-term, appointing a high-level “champion” for water management will be important to institutionalize integrated water resources management approach and river basin model to more effectively manage water resources.
“In order to mitigate risks associated with the increasing flooding problem, Thai authorities need to continue to invest in flood protection, improved drainage, construction of flood barriers, improved retention areas and prevention”, says Ms. Dixon. “The most effective flood prevention measure is land use planning”, she adds. “The World Bank Group is working with the Thai authorities to lay out a medium and longer term plan for the recovery and reconstruction that builds resilience into the process”.
“With climate change it is likely that there will be more natural disasters and extreme weather events; this is not unique to Thailand and can be expected all over the world. The World Bank continues to help clients, including Thailand, to come up with an effective response that combines adaptation --to cope with the increased risks due to climate change-- and mitigation --to reduce the impacts of climate change”, says Ms. Waraporn Hirunwatsiri, Environmental Specialist and Team Leader for the Rapid Needs Assessment in Thailand.
The initial results of the World Bank-supported Rapid Post Disaster Needs Assessment and the recommendations were presented to the Strategic Committee for Reconstruction and Future Development at the Ministry of Finance on November 25, 2011 and will be reviewed by relevant government ministries. Media in Bangkok were briefed in the context of the semi-annual East Asia and Pacific Economic Update organized on November 28, 2011. Estimates will likely change as the waters recede and more detailed assessments can be made. The World Bank will continue to support the government in its assessments after the floodwater recedes.
/a>>/>The Damage and Loss Assessment (DALA) Methodology/b>>/>
The rapid needs assessment used the Damage and Loss Assessment (DALA) methodology developed by the United Nations. Damages are defined as the destruction of physical assets. Damages occur immediately and can be built back.
Losses are defined as foregone production/income. Losses occur over a longer period of time following a disaster and cannot be recovered. Together the damages and losses make up the total effect of the economic impact of a disaster.
Needs include Economic Recovery Needs and Reconstruction Needs.
Economic Recovery Needs are defined as financial requirements for reactivation of personal/household income, rehabilitation of basic services, and reactivation of production activities (they are a fraction of the estimated losses per sector)
Reconstruction Needs are defined as financial requirements for reconstruction of destroyed assets, with inclusion of disaster-resilient standards under a building-back-better strategy that includes quality improvement, improved design standards, selected relocation when needed, etc. (These reconstruction needs are normally higher than the estimated value of sectoral damage).