March 2002

THE IDB AND NATURAL DISASTERS

IDB RESPONSE TO NATURAL DISASTERS IN LATIN AMERICA AND THE CARIBBEAN

More than $1.5 billion for reconstruction, prevention

Every year natural disasters kill thousands of people and cause billions of dollars of damages in Latin American and Caribbean countries. Over the past decade, catastrophes triggered by hurricanes, earthquakes and floods have taken the lives of more than 45,000 people and affected more than 40 million others in the region. Their economic toll rose to some $20 billion.

In many cases their destructive force was magnified by social, economic and political factor. Poverty, concentration of population in high-risk areas, accelerated demographic growth, environmental degradation caused by the mismanagement of natural resources, shoddy infrastructure and low levels of emergency preparedness have heightened Latin America’s and the Caribbean’s vulnerability to natural disasters.

Over half the Inter-American Development Bank’s 26 borrowing member countries are exposed to these threats. Natural disasters have led the IDB to approve more than $1.5 billion in financing over the past five years, not only for emergency and reconstruction efforts but also for investments in prevention and mitigation.

In order to offer its borrowers a swifter response in the face of these tragedies, in 1998 the IDB established an emergency reconstruction facility under which it can approve fast-disbursing loans of up to $20 million to assist countries hit by natural disasters. To prepare these loans the IDB deploys teams of specialists who work closely with its field offices and local officials to assess damages, establish priorities and identify available resources. In 2001 it approved emergency loans for El Salvador and Peru.

The IDB also has a prevention facility under which it can approve loans of up to $5 million to finance efforts to reduce natural disaster-related risks. It is currently preparing such loans for projects in Bolivia and the Dominican Republic. The IDB often reallocates resources from ongoing projects to help countries meet urgent needs.

In order to foster cooperation networks and information sharing among countries in Latin America and the Caribbean, as well as strategic alliances among multilateral agencies, scientific and technical institutions and NGOs, the IDB hosts international meetings on natural disaster prevention and emergency response.

These fora encourage participants to share experiences and lessons learned and engage in joint actions and projects to reduce risks and strengthen their emergency response agencies. In November 2001, as part of its Regional Policy Dialogues, the IDB held a conference in Washington, D.C. on natural disasters. A second meeting is scheduled to take place in May.

Projects in 2001

El Salvador suffered two devastating earthquakes in January and February of last year. More than 1,100 people were killed and 200,000 were left homeless by the quakes. Damages and economic losses were assessed at $1.6 billion, or the equivalent to 12 percent of the country’s gross domestic product.

At El Salvador’s request, the IDB organized a consultative group meeting in March in Madrid, where international donors pledged to provide some $1.3 billion in donations and long-term financing to support the Central American country’s efforts to rebuild its economy, modernize its infrastructure and strengthen its natural disaster prevention systems.

The IDB quickly approved two emergency loans totaling $40 million to help El Salvador finance urgent tasks, such as removing debris and providing temporary housing to those left homeless. Combining the reallocation of resources from existing operations and new loans, during 2001 the IDB made over $200 million available to El Salvador to support the reconstruction of roads, bridges, hospitals, schools and homes, the re-establishment of water, electricity and sewage services and the stabilization of hillsides.

In June 2001 the IDB approved a $20 million emergency loan for Peru after an earthquake hit several of its southern departments. It also offered to reassign resources from existing loans for urban infrastructure, transportation, health and education to the rehabilitation of basic public services.

In October 2001 Hurricane Iris swept through Belize, killing 22 and causing some $140 million in damage and economic losses. The IDB mission that flew to Belize right after the hurricane identified some $5.6 million available from ongoing projects that could be applied to the reconstruction of public infrastructure.

The IDB also supports the Mesoamerican Initiative for Prevention and Mitigation of Natural Disasters under Plan Puebla Panama, a joint undertaking of Belize, Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua and Panama. This initiative calls for a regional program of natural disaster awareness, a project to improve the quality of weather and hydrometeorological information and the creation of a regional market for catastrophe insurance.