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The Economics of Disaster Mitigation in the Caribbean Quantifying the Benefits and Costs of Mitigating Natural Hazard Losses

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The Economics of Disaster Mitigation in the Caribbean Quantifying the Benefits and Costs of Mitigating Natural Hazard Losses The Economics of Disaster Mitigation in the Caribbean Quantifying the Benefits and Costs of Mitigating Natural Hazard Losses La Economía de la Mitigación de Desastres en el Caribe Resumen Ejecutivo Disponible en Español WORKING PAPER Inter-American International Organization of Development Bank Monetary Fund American States The World Bank iii © All rights reserved 2005 by Organization of American States Washington, D.C. DISCLAIMER This report was prepared by the Office for Sustainable Development and Environment of the Organization of American States with contributions from the Inter-American Development Bank, the International Monetary Fund and the World Bank. The views expressed in this document are those of the individual authors and do not necessarily reflect the views of the General Secretariat of the Organization of American States, nor its member countries. Furthermore, the views expressed in the contributions from the contributing institutions do not necessarily reflect the ideas, plans or policies of those institutions. The OAS welcomes this publication as a means of encouraging further discussion of natural hazard issues in development planning, but the contents of this publication should not be reported as representing the views or policies of any organizations mentioned herein. TABLE OF CONTENTS ACKNOWLEDGEMENTS................................................................................................................... V PREFACE ........................................................................................................................................VI EXECUTIVE SUMMARY ..................................................................................................................IX INTRODUCTION............................................................................................................................... 1 Natural-Hazard Events and Natural Disasters in the Caribbean............................................. 2 Disaster Management in the Caribbean Before 1990 ............................................................. 3 The Progress Since 1990.........................................................................................................4 Organization of the Document................................................................................................ 6 CHAPTER I: THE ECONOMIC CONSEQUENCES OF NATURAL DISASTERS IN CARIBBEAN COUNTRIES ..................................................................................................................................... 9 Introduction............................................................................................................................. 9 1. Macroeconomic Effects of Natural Disasters ................................................................... 10 2. Policy Options for Mitigating the Impact of Natural Disasters ........................................ 13 3. Summary and Conclusions ............................................................................................... 16 CHAPTER II: NATURAL HAZARD RISK IDENTIFICATION, RISK INDEXING, AND RISK MANAGEMENT AT A NATIONAL LEVEL ....................................................................................... 21 Introduction........................................................................................................................... 21 1. Risk Indicators .................................................................................................................. 21 2. Natural Hazard Risk Assessment for Planning and Financing – The Americas Program of the IDB.................................................................................................................................. 25 3. Use of Risk Indicators for Financial Planning.................................................................. 30 4. Conclusions and Recommendations ................................................................................. 33 CHAPTER III: NATURAL HAZARD RISK MANAGEMENT IN NATIONAL AND SECTOR DEVELOPMENT PLANNING........................................................................................................... 37 Introduction........................................................................................................................... 37 1. World Bank strategic framework for natural hazard risk management............................ 38 2. Key lessons in natural hazard risk management............................................................... 41 3. Recommendations............................................................................................................. 42 CHAPTER IV: NATURAL HAZARD MITIGATION OPTIONS AND THEIR IMPLEMENTATION THROUGH NATIONAL DEVELOPMENT......................................................................................... 45 1. Natural Hazard Information – a necessary but not sufficient component of mitigation implementation ..................................................................................................................... 46 2. Implementation of the Mitigation Option through International Development Assistance – the initial implementation option in the development context........................................... 48 3. Implementation of National Mitigation Options – using the national development agenda as an opportunity for investing in mitigation........................................................................ 55 CHAPTER V: THE ROLE OF GOOD GOVERNANCE AND INSTITUTIONAL INTEGRITY IN REDUCING RISK............................................................................................................................ 61 Summary and Conclusions ................................................................................................... 71 THE WAY FORWARD.................................................................................................................... 74 Overview............................................................................................................................... 74 i Recommendations.................................................................................................................77 ANNEXES....................................................................................................................................... 79 Annex 1 – IMF.......................................................................................................................... 80 Appendix 1-A........................................................................................................................ 80 Appendix 1-B........................................................................................................................ 81 Annex 2 – IDB.......................................................................................................................... 82 Appendix 2-A........................................................................................................................ 82 Annex 3 – The World Bank...................................................................................................... 96 Appendix 3-A........................................................................................................................ 96 Annex 4 – OAS....................................................................................................................... 100 Appendix 4-A...................................................................................................................... 100 ii ACRONYMS CAPRADE Comité Andino para la Prevención y Atención de Desastres CARICOM Caribbean Community and Common Market CEPREDENAC Centro de Coordinación para la prevención de los Desastres Naturales en América Central CDB Caribbean Development Bank CDERA Caribbean Disaster Emergency Response Agency CDM Caribbean Strategy on Comprehensive Disaster Management CDMP Caribbean Disaster Mitigation Project CHAMP Caribbean hazard Mitigation Capacity building Program CHS Committee on Hemispheric Security – OAS CIDA Canadian International Development Agency CRED Center for Research on the Epidemiology of Disasters DDI Disaster Deficit Index DRI Disaster Risk Index ECLAC Economic Commission for Latin America and the Caribbean ECCU East Caribbean Currency Union EIA Environmental Impact Assessment EM-DAT Emergency Disaster Database FONDEN Fondo Nacional de Desastres Nacionales (México) GDP Gross Domestic Product GFDL Geophysical Fluid Dynamics Laboratory GIS Geographical Information Services IASP Inter-American Strategy for Policy on Vulnerability Reduction, Risk Management, and Disaster Response IDB Inter-American Development Bank IDEA Americas Programme of Instituto de Estudios Ambientales IFIs International Financial Institutions IMF International Monetary Fund IPCC Intergovernmental Panel on Climate Change ISDR United Nations International Strategy for Disaster Reduction iii LAC Latin America and Caribbean LDI Local Disaster Index NASA National Aeronautics and Space Administration (USA) NGO Non Governmental Organization NHVI Natural Hazard Vulnerability Indicator NOAA National Oceanic and Atmospheric Administration (USA) OAS Organization of American States OECD Organization for Economic Co-operation and Development OFDA Office of U. S. Foreign Disaster Assistance – USAID OSDE Office for Sustainable Development and Environment OVE IDB Office of Evaluation and Oversight PCDPPP Pan Caribbean Disaster Prevention and Planning Program PVI Prevalent
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