Natural Hazards, Unnatural Disasters: The Economics of Effective Prevention

November 15, 2010

  • New World Bank-UN publication says cost-effective preventive measures can reduce toll of natural disasters, which caused 3.3 million deaths from 1970 to 2008.
  • By 2100, even without climate change, damages from weather-related hazards may triple to $185 billion annually.
  • Report urges governments to make information accessible; provide land titles to reduce the possibility of eviction or demolition; and build dual-purpose infrastructure.

November 15, 2010 — Storms, floods, earthquakes, and droughts caused more than 3.3 million deaths and $2,300 billion (in 2008 dollars) in damage between 1970 and 2008. But much can be done to reduce the toll from such hazards—even in the face of increased risk from climate change, argues a new book, Natural Hazards, UnNatural Disasters: The Economics of Effective Prevention.

The joint World Bank-United Nations publication, released November 11, says natural hazards often turn into disasters as a result of poor policies and practices, such as lack of publicly available information about projected storm surges, or rent-control laws that reduce landlords’ incentives to maintain buildings that then crumble in monsoons.

A deeper questioning of what happened, and why, could prevent a repetition of disasters,” says the book, a two-year collaboration of climate scientists, economists, geographers, political scientists and psychologists.

Damages from disasters are projected to grow, making prevention all the more critical. By 2100, even without climate change, damages from weather-related hazards may triple to $185 billion annually and factoring in climate change can then add another $28-$68 billion from tropical cyclones alone, says Natural Hazards.

While we recognize the challenges of the future, we’re not alarmist about it. Doing a better job in preventing disasters today will greatly help prevent disasters tomorrow. And we’re not doing enough today,” says task team leader Apurva Sanghi, senior economist at the Global Facility for Disaster Reduction and Recovery, and a lead author for the International Panel on Climate Change’s forthcoming Special Report on Extreme Events.

Cost-Effective Measures Possible

A central message of the book is that “prevention pays, but you don’t always have to pay more for prevention. Countries, governments, finance ministers, even donors can do a lot.” adds Sanghi.

For example, Bangladesh, a poor country exposed to cyclones, has successfully put in place early warning systems and benefited from advances in weather forecasting technologies. As a result, it has drastically reduced deaths from cyclones year after year. Bangladesh shows that prevention can be effective even in poor countries, says Sanghi.

Cost-effective preventive measures include greater access to hazard-related information and regulatory changes to remove distortions such as abolishing rent and price controls and providing secure titles to encourage better repair and upkeep of buildings. The book also proposes cost-effective, hazard-specific infrastructure: for example, schools that double up as cyclone shelters or roadways that double up as drains.

Even modest increases in spending – and greater sharing of data internationally—can have enormous benefits, especially to warn people of impending hazards,” says the book.

The Global Facility for Disaster Reduction and Recovery* (GFDRR) is fostering information sharing through local interventions that promote data collection and early warning systems. Among the GFDRR’s efforts in Haiti, for instance, has been the preparation of a hazard and risk map to guide the installation of refugee camps and the reconstruction of areas damaged in last January’s earthquake.

Legal Mandates Not the Only Answer

The book discusses how, when buildings and infrastructure collapse after hazards strike, public outrage and cries for the government to “do something” often result in “stroke of the pen” measures such as stronger building codes. But such measures are less effective than they sound, the book says, and good building practices can be fostered even without a code, as the rebuilding after the 2005 earthquake in the remote and mountainous region of Pakistan shows.

Five years after the earthquake, more than 90% of the 400,000 houses rebuilt comply with safe construction guidelines – not a code mandated by law.

Another issue the book raises is that people, often the most vulnerable, live in risky areas not because they are fatalistic or myopic, but to be closer to work. Therefore, zoning for safety often meets resistance.

After the 2004 tsunami in Sri Lanka, many people refused to relocate from the coastal area to housing projects away from the coast because the move would disrupt their livelihoods. The law mandating relocation away from coastal areas eventually became so unpopular that it had to be rescinded.

Institutions Matter

Underpinning the book’s findings and recommendations is the critical role of institutions in prevention: institutions that increase the public’s involvement and oversight are vital.

Deforestation, a major factor in flood and mudslide deaths after hurricanes Ivan and Jeanne struck Hispaniola in 2004, is a symptom of institutions that don’t function well enough to stop hillsides from being denuded, says the book. Haiti has suffered from disasters more than its neighbors, partly because its institutions have been disrupted for many decades, even at the grass-roots level.

By institutions, we don’t just mean just formal, public ones but also, informal ones at the grass roots -- the mechanisms that allow communities to come together and devise their own sustainable prevention measures,” says Sanghi. “It’s about communities having the freedom to organize and involve themselves in coming up with their own solutions. In some cases it could be mangrove belts, in others a sea wall.”

Catastrophe Risks Examined

While individuals, communities, cities, and other levels of government can take preventive actions, the largest global risks require a global response, says Sanghi.

In a final chapter informed by top climate scientists and economists from MIT, Harvard, Yale, Resources for the Future, and others, the book acknowledges the risk of climate-induced global catastrophes brought on by the melting of the West Antarctic or Greenland ice sheets or the disruption of ocean currents.

While the triggers of such events are uncertain, “recent scientific assessments indicate that the risks of climate change generally look worse today than some years ago,” says the book. To manage such catastrophic risks, it proposes a flexible portfolio of measures, including rapid emissions reduction to stabilize greenhouse gas concentrations, and large scale adaptation measures over the medium term.

These measures may not be enough to satisfactorily reduce the chance of catastrophes, particularly if the world cannot come to an agreement about sharing the burden of reducing emissions, says the book. It is necessary to consider geoengineering – artificially modifying the planet’s climate – as another potential measure to reduce the risk of catastrophe.

*GFDRR is a partnership of 32 countries and six international organizations, including the World Bank, which helps developing countries reduce their vulnerability to natural hazards and adapt to climate change.