Chapter 8 Redefining development: the way forward
The preceding chapters highlight key opportunities to reduce disaster risks and facilitate implementation of the Hyogo Framework for Action (HFA). This collected evidence allows decision-makers and their constituents to quantify the costs and benefits of investments in disaster risk management (DRM), and weigh the trade-offs between action and inaction. Fundamentally, the challenge is not to protect development, but to use it to address the underlying risk drivers.
Strategic investments must be taken, often with uncertainty and incomplete information, and this report makes a compelling case for action in four areas.
1. Addressing global risk drivers
2. Taking responsibility for risks
3. Leveraging existing development instruments
4. Strengthening risk governance capacities
8.1 Address global risk drivers
Primary responsibility for reducing disaster risks rests with individual countries, but progress also depends on international cooperation to address climate change and support adaptation, particularly in developing countries where risk is concentrated. In highly vulnerable, low-income countries, DRM and adaptation financing should be used to strengthen risk governance capacities. This will leverage mainstream development investment and help meet the Millennium Development Goals.
8.1.1 Invest in risk governance for highly vulnerable countriesThere is a group of vulnerable low-income countries whose development paths are diverging from those of OECD countries and other low- and middle-income countries. Major development investments are needed to assist these countries to address the structural causes of poverty, upgrade informal settlements, build risk-reducing infrastructure, improve natural resource management and strengthen governance at all levels. These are indispensible conditions for improving risk governance capacities, including those needed for climate change adaptation.
Chapter 2 illustrated that economic development generally increases hazard exposure. A country’s ability to develop with accompanying reductions in vulnerability is therefore critical to managing and reducing disaster risk. However, there will always be trade-offs between economic growth and risk reduction. For example, tourism development may generate employment and foreign exchange, but if not well planned and managed, it may increase both agricultural and hydrological drought risks and lead to the degradation of hazard-regulating coastal ecosystems. Similarly, policies designed to increase certain agricultural exports may overexploit water resources and concentrate drought risks among subsistence farmers.
Investment in strengthening governance is therefore particularly important. Countries with effective institutions, low levels of corruption and strong accountability will have a far greater capacity to address underlying risk drivers. High GDP per capita alone does not guarantee strong risk governance. Countries whose economies depend on energy exports, for example, are often characterized by high GDP per capita but weak risk governance (DARA, 2011
). Therefore, efforts to strengthen risk governance must go hand in hand with economic development so increases in exposure are accompanied by reductions in vulnerability.
8.1.2 Adopt low-carbon developmentSince the publication of the 2009 Global Assessment Report (GAR09) (UNISDR, 2009
), the UNFCCC Parties have failed to agree on a binding multilateral framework to reduce greenhouse gas emissions. Meanwhile, atmospheric CO2 concentrations surpassed 391 ppm, and grew by 2.42 ppm in 2010 (Tans, 2011
Click here to go to GAR09 page.
). This was one of the largest annual increases ever recorded, despite the growing momentum to adopt low-carbon energies and technologies in a number of countries and sectors. This trend must be reversed. Mitigating climate change is one of the few means by which the frequency and intensity of certain physical hazards can be reduced.
As highlighted in GAR09, the primary means to mitigate climate change is for countries to adopt low-carbon development paths. With the exception of large, rapidly growing economies such as China, India and Brazil, most lowand middle-income countries make small contributions to the global carbon footprint, meaning that climate change mitigation is largely out of their hands. These countries have contributed least to climate change but already have the greatest difficulty addressing existing disaster risks. As those risks become magnified by climate change and increasing climate variability, these countries will have even greater difficulty managing disaster impacts.
In major greenhouse gas-emitting countries, climate change mitigation can also provide other important risk reduction benefits. For example, urban and regional development can be planned in a way that reduces flood risk and transportation-related CO2 emissions. The UN-Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (UN-REDD) has been specifically designed to reduce emissions while simultaneously regulating hazards and supporting rural livelihoods and ecosystems.
8.1.3 Capitalize on political momentum for adaptationClimate change adaptation is one issue on which the UNFCCC Parties made significant progress in 2010. At COP 16 in December 2010, the Cancún Adaptation Framework was adopted, inviting governments to link their implementation of climate change adaptation to other policies and processes, including the HFA. The Green Climate Fund was also established to provide direct financing for adaptation to developing countries. Given that most adaptation programming has been indistinguishable from DRM, these agreements will potentially increase the resources available for risk reduction in general.
There is growing momentum towards the integration of climate change adaptation and DRM into national development planning and investment. However, in most countries, institutional and programme mechanisms are managed separately and are only weakly coordinated. Both DRM and adaptation need to be integrated into national development planning and investment, local governance should be strengthened, and partnerships with civil society facilitated.
Additional resources for climate change adaptation and for DRM should be used to strengthen risk governance capacities including those accounting for disaster loss and assessing risk. These resources could then leverage the billions of development dollars that low- and middle-income countries invest each year to better address underlying risk drivers and reduce vulnerability. Such adaptation resources can provide the critical mass needed to address increasing risks in a context of climate change and provide a ‘no regrets’ strategy, particularly given the inherent uncertainty of future climate scenarios.
In addition, donors that provide budget support to low- and middle-income countries through overseas development assistance could learn from countries that are starting to factor disaster risk considerations into their public investment planning. They could then incorporate this learning into their dialogue with other recipient countries, in the context of OECD-DAC as one example.
8.2 Take responsibility for risk
Further progress in risk reduction will depend on governments taking decisive steps to explicitly recognize, and take full ownership of, and responsibility for, their stock of risk. This entails political risks, as it requires acknowledging the real costs and consequences of unmanaged risk. However, without owning their risks, countries remain effectively in denial, while experiencing unexpected disasters for which they are neither prepared nor able to manage. This continuously erodes their development potential, as the stream of recurrent losses from extensive disasters either absorbs public resources or is transferred to low-income households and communities.
Key elements for successful disaster risk management (DRM)
across governance scales and development sectors identified in the
2011 Global Assessment Report on Disaster Risk Reduction
TAKE RESPONSIBILITY FOR RISK
INTEGRATE DRM INTO EXISTING DEVELOPMENT INSTRUMENTS AND MECHANISMS
BUILD RISK GOVERNANCE CAPACITIES
8.2.1 Account for disaster lossesThe crucial first steps of taking responsibility for risk involve the systematic recording of disaster losses and impacts, and the institutionalization of national disaster inventory systems. Countries collect statistics on demography, employment, economic activity and many other development indicators to orient economic and other public policies, but without accurate accounting for disaster losses, such indicators form an incomplete picture. Comprehensively recording disaster losses and downstream impacts will allow governments to measure and value the costs of recurrent disasters and identify the underlying drivers of risk. Unless a country can calculate the cost of these losses, it is unlikely to be able to justify significant investments in DRM in the national budget.
Accounting for drought losses and impacts is a particular gap, even in those countries that have developed systems for recording losses from other physical hazards. National disaster inventory systems need to include criteria for measuring drought losses, not only in agriculture, but also in terms of impacts related to livelihoods, health and other economic sectors.
A number of countries have already established disaster inventory systems, many within the last few years. However, there remains significant room for improvement, as 90 percent of the countries that endorsed the HFA do not currently have functioning and institutionalized systems for recording disaster losses, and downstream impacts are currently only measured in isolated small-scale studies.
8.2.2 Quantify the risksCountries not only need to know what they are losing, they must also estimate potential future losses for which they need to be prepared. A comprehensive probabilistic risk assessment that includes drought risk is the key to developing a cost-effective portfolio of disaster risk management measures. One method, using a ‘hybrid loss exceedence curve’, is highlighted in Chapter 5 of this report.
The capacity to apply probabilistic risk methodologies depends on accurate historical disaster loss data, and adequate capacity to assess vulnerability, for example by maintaining a functioning network of rainfall or seismic monitoring stations. This in turn requires strong institutional frameworks for hazard and risk assessment, which in many countries remain fragmented and poorly coordinated between a number of different and often competing institutions.
The formulation and adoption of international standards for disaster loss accounting and risk estimation may provide additional incentives for countries to take ownership of their risks. This could be especially important if such standards are used to prioritize financing for climate change adaptation and DRM.
8.2.3 Use cost–benefit analysis to guide disaster risk management investmentsSystematically accounting for losses and comprehensively assessing risks help governments categorize and stratify their stock of both extensive and intensive disaster risks. Cost–benefit and other analyses can then be used to assess economic and political costs and benefits of different prospective, corrective and compensatory risk management approaches. A well-balanced portfolio of DRM investments can produce powerful incentives for governments, including the enhanced quality and sustainability of public spending, increased public safety and business continuity, strengthened financial protection and fiscal stability, and avoidance of political fallout in the event of a catastrophic disaster.
A balanced portfolio is likely to include investments in prospective risk management, through effective planning for example. Corrective risk management is often less cost-effective but is necessary to address existing concentrations of risk, particularly in the case of critical services and facilities such as hospitals. Compensatory risk management may include a mix of different instruments, such as national contingency funds, contingent credit, insurance and reinsurance. These mechanisms contribute to providing financial liquidity and fiscal stability after disasters, as well as more predictable recovery and reconstruction. If risk-transfer measures are linked to specific requirements and criteria for risk reduction, they can provide a powerful incentive for other DRM investments.
At present, drought risk management currently relies on forecasting, early warning and compensatory measures, including relief and insurance. Access to early warning information that can inform decisions on what crops to plant and when, and insurance to buffer losses, can significantly reduce the vulnerability and increase the resilience of subsistence farmers. Compensatory measures play an important role, but their penetration in low- and middle-income countries is at present still incipient, and unless they are used strategically, they can reinforce poor resource management. These measures need to be complemented by prospective drought risk management to ensure that all new development takes into account current and anticipated future water availability.
As the March 2011 nuclear crisis in Japan shows, governments should also invest time and resources in anticipating emerging risks. In general, while there is widespread recognition of the potential magnitude of such risks, few governments or international organizations currently have policies to deal with them, and even fewer have translated any such policy into operational instruments. Developing scenarios of ‘what might happen’ and preparing appropriately means moving away from viewing future risks merely as an extension of the past. This is especially important with climate change, which may trigger hazards that have no historical antecedent in a particular location. It involves developing anticipatory capacities and tools such as scenario development and horizon scanning, and having the adaptive capacity to factor ‘what might happen’ scenarios into future policies and plans. In turn, this will require overcoming an aversion to risk and innovation that often characterizes both the public sector and international organizations.
GAR 2011 Contributing PapersNo GAR 11 Contributing Papers