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Disaster and Emergency Assistance Policy

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Background

Definitions

Disaster

3. A disaster is a sudden, calamitous event that seriously disrupts the functioning of community or society, causing widespread human, material, economic, or environmental losses that exceed the community’s or society’s ability to cope using its own resources. Disasters result from a combination of hazards, vulnerability, and inability to reduce the potential negative consequences of risk.¹

4. Disasters can be caused by natural events, e. g., earthquakes, tidal waves, hurricanes, cyclones, volcanic eruptions, flood, droughts, or epidemics; by technological or industrial accidents, e.g., explosions, oil spills, nuclear reactor failures, or chemical mishaps; or by conflict, e.g., regional conflicts, national or civil wars, or widespread community violence. The term “post-conflict country” refers to a country that is emerging from a situation of violent, protracted conflict.

Emergency

5. An emergency occurs after a disaster when unforeseen circumstances require immediate action and local capacity is insufficient to address and manage traumatic events. Emergencies may involve deaths, injuries, displacement of people, disease, disability, food insecurity, damage or loss of infrastructure, weakened or destroyed public administration, and reduced public safety and security. In disaster-affected countries these situations often occur simultaneously, straining domestic capacity and disrupting economic and social activity.²

6. Emergency management, also referred to as disaster management, is defined as the organization and management of resources, roles, and responsibilities to deal with all aspects of emergencies, including preparedness, response, and rehabilitation. Emergency management uses plans, structures, and predetermined arrangements to coordinate the efforts of governments, voluntary and private agencies, and other organizations to deal effectively with the entire spectrum of emergency needs.

Socioeconomic Impact of Disasters

7. Large-scale disasters have significant humanitarian, social, security, political, and economic implications. Disasters leave large numbers of people ill, disabled, widowed, orphaned, displaced, or suffering from post-traumatic stress disorder. In an emergency situation, people’s access to basic needs—e.g., food, medicine, clothing, shelter, and safety—is disrupted, and large portions of the population may lose access to economic resources and opportunities. At the individual level, victims of disasters lose self-confidence and experience psychological disturbances, e.g., despair, helplessness, fear, insecurity, vulnerability, or loss of faith. More broadly, disasters contribute to (i) fragmentation of the community or society; (ii) loss of social identity; (iii) breakdown of social norms, including such traditional values as respect for elders and authority; and (iv) loss of informal social safety nets. If governments do not deal with these effects of disasters effectively and promptly, major damage to society can result, as restoring social cohesion, values, and norms is not easy. Over time, and if emergency situations are allowed to deteriorate, people experience widespread loss of confidence in institutions and governments.

8. In addition to physical and psychological damage, disasters cause severe economic consequences. During 1987–1997, the global direct economic loss from natural catastrophes was $700 billion, i.e., an average annual loss of $70 billion.³ Despite the concentration of capital assets in the industrial world, direct economic impacts were relatively evenly split between industrial and developing countries and amounted to about $35 billion per year for each group. However, given the enormous disparity in gross domestic product (GDP) between industrial and developing countries, the per capita cost of disasters relative to GDP is much higher in developing countries. For example, the estimated cost of the 1999 Izmit earthquake in Turkey was equivalent to 7% to 9% of Turkey’s annual GDP.

9. While such figures are dramatic, the full economic cost of a disaster goes beyond statistical indicators. Estimated costs, based largely on direct physical impacts or observable losses of fixed capital and inventory, e.g., buildings, infrastructure, industrial plants, crops, and materials, overlook the indirect and secondary effects of disasters on economic activity. Indirect costs include those associated with (i) disrupted flows of goods and services, (ii) reduced output from damaged or destroyed assets and infrastructure, (iii) loss of earnings due to damaged infrastructure, (iv) increased medical expenses, and (v) lost productivity. Secondary effects, which have short- and long-term implications for economic performance, include adverse impacts on (i) the balances of the external and government sectors, (ii) the levels of debt, (iii) the thrust of government monetary and fiscal policies, and (iv) the inequity of income distribution, which implies an increase in the incidence of poverty. Some empirical studies suggest that the indirect and secondary costs of disaster may be as much as 2.5 times the cost of direct losses.⁴

10. Disasters and emergencies also have a major detrimental impact on public finance. Governments, many already in difficult economic situations, must shoulder substantial repair and rehabilitation costs and provide support to victims. Countries whose governments experience such unplanned budgetary reallocations find meeting development targets more difficult. Most governments make post-disaster budgetary reallocations in a reactive mode without the careful, detailed review that would normally accompany programmed allocations. Faced with the pressing and immediate need to raise revenues, governments may increase the money supply, deplete foreign exchange reserves, or increase domestic and/or external borrowing. For example, following severe floods in 1998, the Government of Bangladesh significantly expanded its money supply during fiscal year 1999. The situation is exacerbated by declines in domestic revenues associated with lower levels of economic activity, decreased imports and exports, and lower direct and indirect tax revenues. Although losses may be partly offset by increased flows of external assistance, such flows are unlikely to compensate entirely for higher expenditures. Disasters also reduce the pace of public infrastructure development by reducing the resources available for new investment. In addition, public enterprises may experience disaster-related losses, thereby placing an additional burden on government resources.

Disasters and Poverty

11. ADB’s Long-Term Strategic Framework,⁵ which places poverty reduction at the forefront of all ADB activities, recognizes the need to reach out and assist people who are “pushed below the poverty line by natural and manmade disasters.” Sustained economic growth requires the continual building and upgrading of physical and social infrastructure, but disasters can damage or destroy such infrastructure, thereby threatening the DMC’s ability to reduce poverty. Disasters also entail major social risks, especially among poor and near-poor people (as recognized in ADB’s Social Protection Strategy).⁶

12. Disasters affect the poor disproportionately. Poor people are often the most likely to be exposed to natural and non-natural hazards, even though they are the ones who can least afford to deal with such exposure. “Disasters in developing countries are an integral part of their poverty cycle. Poverty causes disasters, and disasters exacerbate poverty.”⁷ Globally, countries classified by the United Nations (UN) as medium or low in relation to human development feel the impact of disasters and conflicts the most acutely.⁸ This may be attributable to resource constraints in poorer countries. The governments of such countries lack not only the financial resources needed to shoulder the economic burden, but also the institutional and human resources capacities needed to deal quickly and comprehensively with disasters and emergencies.

The Asia and Pacific Region

13. Even though disasters and emergencies occur worldwide, the Asia and Pacific region is the most affected part of the world. Between 1991 and 2000 the region accounted for (i) 46% of reported natural and technological disasters, (ii) 42% of reported conflicts, (iii) 80% of people killed by natural and technological disasters and 14% of those killed by conflict, and (iv) 84% of people affected by disasters and conflicts. The latter figure is striking and can be explained by the large numbers of people affected by such natural disasters as droughts, floods, and windstorms in the People’s Republic of China (PRC) and India.⁹

14. Emergencies related to flooding represent a major challenge for economic and social development and poverty reduction in the region. Of the estimated $70 billion in annual direct economic losses caused by disasters globally, 30% ($23 billion) is due to flooding. Asian developing countries experience 70% of worldwide flooding damage, representing estimated annual direct losses of $14.7 billion from flooding alone in developing Asia. However, these costs vary considerably over time, and losses in some years are much larger than in others, e.g., in 1998 flooding losses in Asia amounted to $35 billion. Given that poor infrastructure is responsible for a large proportion of the losses from flooding, the estimated annual direct and indirect economic losses from floods in Asia may be as high as $37 billion.

15. Conflict and post-conflict situations are often associated with disasters and emergencies. Given the mutually reinforcing nature of conflict and poverty, poverty rates in post-conflict countries are likely to increase amid lingering expectations of renewed conflict. Sri Lanka provides a good illustration of this interaction between poverty and conflict (Box 1).

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