Business & Finance INDUSTRY

How to Build Resilience in the Face of Natural Disasters

On an early Monday morning on the 14th of August, 2017, residents of a suburb of one of the poorest countries in the world woke to an unfamiliar site. At least some of them did. Clearly, this was not the same settlement they retired into the previous night. Houses they knew had inexplicably vanished from the mountain side. The valley was strangely changed. The terrain was alien and seemed to have lost its forest green to earthen brown.

Only that, this was actually the same settlement they had retired into the previous night.

A great and devastating change had happened.

It had been raining torrentially for three days and hot on its heels were great floods which triggered the catastrophic mudslide event of the above as well as concurrent landslides in and around Sierra Leone’s capital city, Freetown, where the confirmed death toll nears 500 as hundreds more remain missing and even thousands more are rendered homeless.

Whenever a wide scale disaster, like this, strikes, we’re likely to get used to statements on socio-economic losses from fiscal analysts and policy makers. Yet, despite the diligence, an important context may be lost in the number crunching. The business as usual approach is to measure the severity of the impact in terms of the monetary value of damages exacted on infrastructural-stakeholders of the economy—like assets and production.

Curiously, the crucial human component is missing.

How does the welfare of the people-stakeholders affected by the natural disaster factor into the economic equation? How may the people build resilience in the face of natural disasters?

Building the Resilience of the Poor

Image Chart via the “Unbreakable” Report

Those were the questions the “Unbreakable” report by the World Bank Group sought to answer. Concerning the well-being of the people, the report illustrated an important distinction at the onset: Does $1 dollar in losses mean the same thing to a rich and poor person? Obviously not! A poor person who lives on a dollar a day would have lost a 100% of a day’s worth, while a rich person who lives on a hundred dollars a day would have lost just 1%. Clearly then, a severity of a “loss depends on who experiences it.”

Indeed, “a flood or earthquake can be disastrous for poor people, but have a negligible impact on a country’s aggregate wealth or production if it affects people who own almost nothing and have very low incomes.”

This is something that would remain hidden in a mere financial figure.

The report, thus, observed that since the “same loss affects poor and marginalized people far more because their livelihoods depend on fewer assets, their consumption is closer to subsistence levels, they cannot rely on savings to smooth the impacts, their health and education are at greater risk, and they may need more time to recover and reconstruct.”

Yet, the traditional risk management system supports the rich more than the poor, for “when projects to reduce disaster risk are assessed on the basis of the value of damages that can be avoided, analysis favour projects that will protect or support richer areas or people.”

Hence, the “Unbreakable” report “moves beyond asset and production losses and focuses instead on how disasters affect people’s well-being [where]. . . losses are measured using a metric that can capture their overall effects on poor and rich” and “takes better account of poor people’s vulnerability.”

The Socio-Economic Resilience Metric

For natural disasters such as landslides, mudslides, storms, tsunamis, earthquakes and the likes, traditional risk assessment typically focuses on these three variables: Hazard, Exposure, and Asset Vulnerability. The Hazard variable considers the likelihood of a hazardous event occurring. The Exposure variable computes the span of influence in population and assets of the hazard. The Asset Vulnerability variable assesses the monetary value of losses inflicted by the hazard. These three factors make up the Risk to Assets Metric—the mean monetary value in replacements and repairs of damages that disasters exact on assets and production.

The “Unbreakable” report, however, considers this an incomplete metric.

A fourth variable—Socio-Economic Resilience—was, thus, added to the mix to take “into account the various dimensions of inequality of poor and nonpoor people in the face of disasters and the distribution of losses across individuals” and “measure an economy’s ability to minimize the impact of asset losses on well-being.” This new ensemble of four variables makes up the Risk to Well-being Metric, as opposed to the Risk to Assets Metric.

This Risk to Well-Being Metric “specifically. . . considers the different abilities of poor and nonpoor people to cope with asset losses by modelling the effects of asset losses on income and consumption” where “consumption losses are translated into well-being losses, taking into account the different impacts of a $1 loss on poor and nonpoor individuals.” It is computed as the ratio of the expected asset losses (the Risk to Asset Metric comprising Hazard, Exposure, and Asset Vulnerability variables) to the Socio-Economic Resilience variable.  

Socioeconomic Resilience is, thus, a key driver of the Risk to Well-being metric.

The Moral Imperative of Building Resilience of the Poor

Resilience, as used in the report, draws inspiration from a portion of the United Nations’ definition of resilience—that is, “the ability to resist, absorb, accommodate, and recover from the effects of a hazard in a timely and efficient manner.”

The underlying principle in utilizing a socioeconomic resilience measure to drive the Well-being metric is that: How much damage a disaster inflicts should not be the only consideration, but also who it inflicts. This is true in reverse. How much benefit a project generates should not be the only consideration, but also who it benefits.

The truth is, poverty has long been a factor in the defencelessness against disasters, as disasters are, in turn, a driver of poverty. The World Bank article on Breaking the Link Between Extreme Weather and Extreme Poverty stated that: “Compared to their wealthier counterparts, poor people are more likely to live in fragile housing in disaster-prone areas, and work in sectors dangerously susceptible to extreme weather events.”

Clearly then, “development and poverty reduction efforts that enable people to settle in safer places, make their livelihoods and assets less vulnerable, and provide them with the tools and support needed to cope with shocks” are imperative to increase well-being in the face of natural hazards and disasters.

Image via Inter-American Development Bank

The President of the World Bank, thus, correctly observed: “Severe climate shocks threaten to roll back decades of progress against poverty. Storms, floods, and droughts have dire human and economic consequences, with poor people often paying the heaviest price. Building resilience to disasters not only makes economic sense, it is a moral imperative.”

WRITER: Richard Yaw Baafi


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