Global Assessment Report on Disaster Risk Reduction 2015
Making development sustainable: The future of disaster risk management

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(Source: GAR Global Risk Assessment.)
Figure 3.7 Multi-hazard average annual loss in relation to capital stock by income group
The level of capital investment as a proportion of existing capital stock is very different across income groups, as it accounts for some 30 per cent in low-income countries compared to only 10 per cent in upper middle-income and 5 per cent in high-income countries. Thus the new investments that low-income countries make on an annual basis represent a significant proportion of their total capital stock. A high ratio of AAL to capital investment represents a threat to future development prospects. Prospective risk management then takes on critical importance in order to ensure that new investment does not increase disaster risk.
In terms of geographical regions, capital investment varies from 12 to 33 per cent of GDP,15 and relative AAL varies significantly as a result. In South Asia, AAL is the equivalent of almost 5 per cent of annual capital investment, compared to only 1.23 per cent in Europe and Central Asia (Figure 3.8).
The AAL in Europe and Central Asia represents a lower percentage of annual capital investment than that of East Asia and the Pacific. However, annual capital investment in Europe and Central Asia is currently little more than a quarter of that in East Asia and the Pacific. As mentioned above, this highlights the importance of investing in corrective disaster risk management in countries with sluggish or stagnating economies, as disaster risk can erode what little growth capacity there is.
In other regions, capital investment is also exposed to significant risk. Annual capital investment in Latin America and the Caribbean is currently less than a third of that in East Asia and the Pacific; however, the AAL is equivalent to more than 3 per cent of that investment, compared to 1.89 per cent in East Asia and the Pacific. This acts as a significant brake on future development.
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