Mother nature and South Asian cities
This page in:
In South Asia, 302 million people will join the urban population between 2011 and 2030. If I were one of them, (and let’s assume for a moment that South Asia is one big happy country with no political borders and no religious or ethnic divides), where would I want to live to be safe from natural disasters?
Well, I would probably avoid cities in the mountainous regions of Afghanistan, Bhutan, India, Nepal and Pakistan because they face a high risk of earthquakes and landslides. Cities in northern Pakistan are also at risk of heavy inland flooding. How about the coast? Nope. Data tells me that I should avoid coastal areas in Bangladesh, India, Maldives and Sri Lanka because I do not want my house to be blown away in a cyclone or washed away by a storm surge. Maybe I should live in Bangladesh. Yikes! Chittagong, Sylhet and Dhaka are all in very high earthquake hazard zones. And climate change will cause increased precipitation in eastern South Asia and across India, and warming waters in the Bay of Bengal, which, in turn, will increase the frequency and intensity of cyclones in Bangladesh and on the eastern coast of India. Indeed, for nine cities around the Bay of Bengal, what is now a 100-year storm event may occur as often as every two to five years by the end of the century. So, those areas are out of the question too.
And the situation is only going to get more difficult.
South Asia, of course, is no stranger to natural disasters. The recent tragic earthquake in Kathmandu, for example, killed more than 8,000 and caused damage to the city’s infrastructure that will take years to fully repair. And, as the region’s urban population continues to grow, more people will be put in harm’s way given that much urban expansion is projected to occur in high-risk areas.
Unfortunately, like other developing nations, South Asian countries’ responses to major disasters have been largely reactive. More often than not, a lack of preparedness and resources has meant that relief efforts have only begun after the arrival of international teams and funding.
There are several things South Asian nations can do to address the situation. Identifying risk at the city level is a must. With the help of urban planners, engineers and academics, cities can revisit urban design policies and ensure enforcement of building codes and land-use plans. That way they can minimize or prevent further building in risk-prone areas and reinforce structures resilient to various hazards. Building institutions and collecting data is another must. Countries with strong institutions for mitigating disaster risk can mainstream data collection and availability. The good news is that, in response to recent major disasters, such as the 2001 Gujarat earthquake or the 2004 Indian Ocean tsunami, all countries in the region have developed national disaster risk management plans or have included urban resilience in their national development plans.
But the most effective approach to disaster risk management is insuring for disaster. As Jeffrey Sachs puts it, natural calamities pose quantifiable risks and there is enough precision to allow for insurance coverage. Natural hazards like earthquakes are not one-time events, but occurrences that return with calculable probabilities. Estimating these probabilities will require investment in historical disaster records, disaster modeling and assessments of the vulnerabilities of infrastructure and buildings. Insurance allows countries to be ready to finance a response to a high-impact disaster before it happens, preventing them from cutting into scarce budgets set aside for services and infrastructure. Usually, insignificant but recurring disasters are covered by reserves or contingent credit. High-impact, less-frequent disasters can be insured in capital markets.
In recent years, the World Bank’s South Asia team has focused on developing disaster insurance mechanisms. One notable project was developed in Sri Lanka in 2014 and provides a line of credit that can be drawn on partially or in full if the country declares a state of emergency after a natural disaster.
To download the World Bank’s Flagship report “Leveraging Urbanization in South Asia; Managing Spatial Transformation for Prosperity and Livability” go to: https://openknowledge.worldbank.org/handle/10986/22549
Thanks Rana for an insightful blog and for stressing the point of the importance for South Asian cities to better manage hazard risk as they grow bigger fast. Urbanization in South Asia over the next decade will likely be the single most important driver of disaster risk in that subcontinent, and better spatial and physical planning, that you also draw attention to, probably the most important way to deal with that growing problem as.
Your statement that "the most effective approach to disaster risk management is insuring for disaster" would need a good deal of specific context or qualification to be accurate. It seems to me that on this point Jeffrey Sachs hasn't gotten his basics right. Most of the current disaster risk in World Bank client countries is not insurable. The countries simply have too high physical vulnerability, too many exposed assets, and too week risk management systems, which generates and regenerates disaster risk to a degree that there is no insurance solution for it. It is fairly straight forward to understand why: Insurance business needs to make a profit to be a business. That means that there is a multiple on the actual expected loss that the insurance company will charge through the premium to cover its costs of doing business and to make a profit. The multiple depends on market conditions and the uncertainty around the actual insured risk, but is for catastrophe risk rarely less than 2. That also means that on average over time, any government seeking to insure against disasters will be paying the insurance company at least twice as much in premium as the actual value of the insured assets, which makes it easy to see, why a very large part of a country's risk is much more effectively dealt with through risk reduction than through insurance.
Insurance solutions are a promising market based approaches to disaster risk management. And the World Bank is a global leading development partner with the capacity to help governments understand how to use insurance markets more effectively for disaster risk management. For instance, if applied correctly could help discipline public and private sector risk behavior which could have risk reducing impacts over time. Insurance solutions at a sovereign level can help mitigate budget variability which has benefits for economic planning and stability. Many governments could increase their insurance coverage or lower their insurance premiums by better organizing how the insurance of their public assets are managed. Thanks again for a great blog and for drawing attention to this fascinating and important challenge. Niels
Thanks Rana for the blog and Neils for raising a very pertinent point related to the cost of insurance. In crisis situations. affectees expect the governments to pay for the damages and help recover. So essentially it means that the governments have to maintain a credit line with the IFIs as insurance line when needed. But in crisis situations, the IFIs and donors always chip in to support in the form of soft loans and grants. If so why would one keep an insurance line by paying premiums in anticipation. If the insurance line will come from private banks or institutions, then perhaps it will be very difficult to keep such a big insurance line and premium given that the damages from disasters are in billions. If it has to be private insurance by citizens themselves, then it may make sense to some extent but again that will need investment in behavioural change of masses and building the necessary systems and infrastructure.
What's perhaps is more important to invest in building community resilience. A few days torrential rains will always result in collapse of mud and other such houses in Pakistan. The affectees are always the poor. It may perhaps cost much less to the governments and communities if building codes would be implemented and if poor households could be helped in building resilient shelters. Thank you, Shakeel