According to a World Bank report, natural disasters are a greater impediment to ending global poverty than previously understood, responsible for pushing 26 million people into poverty and causing $520 billion in consumption losses per year globally. It is commonly accepted that natural disasters are a major driver for pushing people into poverty, for instance, In India, among the 12 percent of households in 36 Andhra Pradesh communities that fell into poverty over a 25 year period, 44 percent cited natural disasters (drought, irrigation failure, or crop disease) as one of the main drivers.
The report, ‘Building the Resilience of the Poor in the Face of Natural Disasters,’ was released at COP 22 and proposes a new model for understanding the relationship between natural disasters and poverty. The report moves beyond an understanding of the impacts of natural disasters that focuses solely on asset and production losses, and instead adopts an approach that focuses on how natural disasters affect people’s well-being. The model includes the poor who generally do not own many assets.
The proposed model quantifies the vulnerability of countries to natural hazards, taking into account the excess in vulnerability caused by poverty. The report uses this approach to calculate asset and well-being losses for multiple hazards: river floods, coastal floods due to storm surge, windstorms, earthquakes, and tsunamis. For each possible hazard, the model estimates the number of people and the value of assets affected by the event. The model then assesses the damages to these assets based on their vulnerability. The assessment is carried out separately for poor and non-poor people as asset losses are experienced differently by each group. The model also takes into account the distribution of losses in order to capture the fact that losses concentrated in a few individuals have a larger impact than the same losses shared across a large population. The model also considers the different abilities of the poor and the non-poor to cope with the asset losses by modelling the effect of asset losses on income and then on consumption. Well-being loss is expressed as the equivalent loss in national consumption.
The main example used by the report focuses on the 2005 floods in Mumbai, India, in which 4.2 million people were affected leading to an official estimate of 35 billion rupees worth in asset losses. By contrast, the model estimates the well-being losses of the floods significantly higher, expressed as a loss of 60 billion rupees. These well-being consequences are larger than asset or consumption losses because of the additional exposure and vulnerability of poor people and the fact that losses are highly concentrated on a fraction of the population. For instance, an analyses of household location and flood hazard in Mumbai shows that poor households were 71 percent more likely to have been flooded and shows that poor people lost about 60 percent more than non-poor people relative to their estimated wealth.
The paper highlights that reducing the exposure of people, especially the poor, to natural disasters can prevent these large losses in well-being and assets. At a country level, the report measures one of the highest returns for reducing exposure in India where a 5 percent reduction in exposure, for the poor saves up to 2 billion dollars annually. The report proposes a number of climate-smart policies and initiatives that can reduce exposure to natural disasters and build resilience, including those that focus on developing climate-smart agriculture, building resilient infrastructure, and promoting financial inclusion and social protection.
For instance, the report emphasizes that climate-smart agriculture can increase productivity and make agricultural production more resilient. In a randomized control trial in Orissa, a recent study showed the benefits of using a new flood-resistant variety of rice, which offers a 45 percent yield gain relative to the current most popular variety. Another example put forward by the report centres on weather-based insurance. In this regard, the report highlights that the Indian Government has been a pioneer in developing weather based insurance to poor farmers by launching a publicly subsidized weather-based crop insurance scheme in 2007 which insures more than 10 million farmers for a range of crops.
The report also emphasises the importance of investing in early warning systems and disaster preparedness. The report illustrates this by comparing the impact of two similar cyclones that made landfall in Odisha, in 1999 and 2013, with drastic different impacts, killing 10,000 people in 1999 compared to 38 people killed in 2013, mainly due to government investment and preparedness. In particular, the government of Odisha constructed disaster risk mitigation infrastructure, set up evacuation protocols, identified potential safe buildings for housing communities and worked with communities and local organizations on how to respond during a natural disaster.
This report is part of ‘The Climate Change and Development Series’ which was created in 2015 to showcase economic and scientific research that explores the interactions between climate change, climate policies, and development.
By: Bas Paris