Natural Disaster Management and the Road Network in Ecuador: Policy Issues and Recommendations
By Scott Solberg, David Hale, Juan Benavides (04/03, En, Es) See also Infrastructure and Financial Markets
Latin American countries devote insufficient efforts to prevent the impact of earthquakes, floods, hurricanes and other natural hazards on infrastructure. The political cycle introduces the incentive for some politicians and civil works firms to profit from incoming aid and the reconstruction process. Incentives are at the heart of disaster management policy in infrastructure: every time they are misaligned, countries may end up building inadequate infrastructure that have to be totally developed or massively refurbished every few years ("reconstruction of the vulnerability"). Insurance and other risk transfer measures are necessary to handle the exposure of project debt or equity holders, but may fail to internalize the loss of value added to the society: the economy as a whole suffers because infrastructure takes time to rebuild. More fundamentally, scarce resources are endemically invested to just pull through the physical stock, when they could otherwise be invested in other sectors.
This paper analyzes the institutional and political economy landscape of disaster management in Ecuador, focused on its road network. It also provides policy recommendations, following the IDB Action Plan in Natural Disasters mandate to identify measures increasing the capacities of national disaster management systems. The recommendations pertain to changes in governance of the national disaster management system in issues related to transportation, as well as strengthening the Ministry of Public Works? role and skills as sector leader in all the country. The proposals, if implemented, should diminish ?risk-rent? extraction and provide the context in which risk transfer makes sense.
This working paper is being published with the sole objective of contributing to the debate on a topic of importance to the region, and to elicit comments and suggestions from interested parties. This paper has not gone through the Department?s peer review process or undergone consideration by the SDS Management Team. As such, it does not reflect the official position of the Inter-American Development Bank.
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Last updated: 05/08/07
