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Sep 30, 2010

Natural disaster risks remain high in Latin American and the Caribbean, IDB says

New indicators show some progress in disaster risk management, but region needs to do more

Latin America and the Caribbean face potentially crippling economic and social costs from natural disasters and needs to do more to reduce risks and prepare government finances to respond to eventual catastrophes, according to a new set of indicators by the Inter-American Development Bank (IDB).

The new edition of Indicators of Disaster Risk and Risk Management details the potential economic losses a group of 17 countries in this region could suffer in the event of a natural disaster and evaluates how effective their governments are in managing these risks. The indicators show that the region’s systems and policies to manage disaster risk are still unsatisfactory.

The latest results of the risk indicators will be presented during the Ninth Consultative Meeting of the Global Facility for Disaster Reduction and Recovery, which will be held at IDB headquarters on October 4–7.

The system of indicators, developed in 2005 with financial support from the IDB’s Multidonor Disaster Prevention Trust Fund and the Japan Special Fund, allows countries to better assess their risks, serving as a useful guide for policymaking and government actions to reduce human, infrastructure, financial, and economic losses caused by earthquakes, floods and other natural events. The IDB is currently working with 15 countries in Latin America and the Caribbean in projects related to disaster risk management.

Human and economic losses stemming from natural disasters have increased over the past century in this region as a consequence of population growth, unplanned urbanization, overexploitation of natural resources and probably the effects of climate change. Earthquakes, floods and storms caused $34 billion in economic losses in 2000–2009, compared with losses of $729 million in the in the 1940s.

For example, the indicators show that if Peru were hit today by an earthquake similar to the one that hit Chile earlier this year, it could suffer economic losses of as much as $15.8 billion. A similar event could cause losses of as much as $5.2 billion in Mexico, $3.8 billion in Colombia and $3.5 billion in Ecuador.

“The region faces significant levels of risk that have apparently not being fully gauged by policymakers and society in general. Latin America and the Caribbean have shown unsatisfactory levels of risk management,” said Héctor Malarín, head of the IDB’s Rural Development, Environment and Disaster Risk Management Division.” In order to improve their risk management, countries need to upgrade their policies, enhance integration among agencies at the central and subnational levels of government as well as invest to reduce, retain and transfer these risks.”

The Indicators

The system of indicators is made up of four main indices. The Disaster Deficit Index (DDI) compares the potential economic losses a country can face and the government’s financial capacity to address these costs. Honduras, Barbados and Nicaragua are the countries with the highest potential deficit, while Trinidad and Tobago, Chile and Argentina have the lowest levels.

The Local Disaster Index (LDI) evaluates the social and environmental risks stemming from recurrent small-scale disasters, looking at deaths tolls, numbers of affected people and damages to housing and crops. Unlike the DDI, this index takes into account events that frequently involve few victims and occur in remote areas, rarely attracting media coverage. However, the accumulation of losses caused by these recurrent disasters can hinder development at the local and national levels. The LDI can help guide decisions regarding land use, social safety nets and risk management at the local level.

Under the LDI, Panama, Costa Rica and El Salvador are the countries that have highest incidence and suffer most regularly the effects of small-scale disasters. Argentina, Colombia and Bolivia are the ones with a high concentration of small disasters affecting only a few local areas.

The Prevalent Vulnerability Index (PVI) gauges a country’s predominant vulnerability conditions by measuring exposure to human and economic activity in disaster-prone areas, as well as the capacity to absorb impacts of disasters. The three composite indicators that make up this index consider factors such as demographic growth, population density, poverty and unemployment levels, soil degradation caused by human action, gender balance, social expenditures and insurance of infrastructure and housing.

By the PVI, Nicaragua, Honduras and Jamaica showed the highest vulnerability levels while Mexico, Argentina and Chile exhibited the lowest levels.

The Risk Management Index (RMI) combines several measures to evaluate a country’s capacity to identify and reduce risk, respond and recover from catastrophes, and provide financial protection and risk transfer. All countries analyzed by the index show unsatisfactory levels of disaster risk management.
 



The Economic Impact of Natural Disasters
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    The Economic Impact of Natural Disasters

    In the last decade, the economic toll of natural disasters added up to 35 billion dollars in Latin America and the Caribbean. Sergio Lacambra, senior specialist in disaster risk management, addresses the key factors that can reduce the region´s vulnerability.
  • The Economic Impact of Natural Disasters (4:02) Video Icon

More Information

Sergio Lacambra
IDB Natural Disaster and Risk Management Senior Specialist
slacambra@iadb.org

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