Development Context, Challenges and Responses

SUMMARY REPORT POVERTY-RISK INTERFACE CASE STUDY

CONDUCTED BY THE RESEARCH TEAM IN IRAN FOR CONTRIBUTION TO GLOBAL ASSESSMENT REPORT, 2009

DEVELOPMENT CONTEXT, CHALLENGES AND RESPONSES

Figure 1: GDP Per Capita Growth (Percent) The economy of Iran has experienced considerable 6 developments in recent years, of course with some ups and 5 downs as depicted by Figure 1. Such fluctuations were in 4 great part resulted from fluctuations in oil export revenues 3 due to changes in the world oil prices. Besides changes in oil 2 revenues, the causes for such a fluctuating economic 1 performance must be traced back in economic impact of the 0 Revolution (1979) and the eight-year imposed war with Iraq -1

-2 (1980-88), among others. Since end of the war the economy 19 9 2 19 9 3 19 9 4 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 managed to improve. As the economy was under pressure by (Source: CBI (2002, 2003 and 2005a high population growth of 1980s, the growth rates of per capita GDP during the recovery years after the imposed war should be considered. A sectoral disaggregation of GDP indicates that considerable dependence of agricultural products to climate changes, and bearing in mind the vast drought in the said period, the low share of agriculture in GDP further dropped in favor of other sectors of the economy, from 14.3 percent in 1991 to 13.7 percent in 2004. The recovery of per capita growth rates between 1991 and 2004, compared with the low (and in some years, negative) rates of the previous decades, was mainly contributed by a steep drop in population growth. On top of that, considerable Figure 2: HDI and its components (percent) 0.8 measures were taken aimed at expansion of economic 0.75 growth rate, control of inflation, reduction of foreign debts, reduction of budget deficit, enhanced utilization 0.7 of existing economic capacities, unification of the 0.65 foreign exchange rate and reduction of economic 0.6

0.55 vulnerabilities caused by external shocks. 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Of three components of Human Development Life expectancy index Education index GDP index HDI Index (HDI), education index experienced lower (Source: CBI (2002, 2003 and 2005a growth compared to the other two, namely per capita GDP and life expectancy at birth (Figure 2). GDP index, despite its ups and downs resulting from fluctuations in oil income, enjoyed the highest growth and has been the driving force of HDI. Moreover, owing to importance of health and medical issues and special attention paid by government to these issues through significant investment in health infrastructures particularly in less developed and rural areas, life expectancy experienced an acceptable improvement. This is further highlighted by the smooth trend of life

Summary Report, Iran Risk-Poverty Case Study 1 expectancy index. The education index also experienced an increasing trend, though less speedy than the other two components of HDI. Iran is facing a big challenge in regard with economic and social needs of the growing number of population. The young people are emerging into adulthood and, together with the increasing number of migration inflows towards the large cities and economic poles of the country, will sharply augment the size of the labour force and, therefore, need new economic and social facilities like decent and secure jobs, education and health services. The economy will therefore be confronting a high supply of labour force and the phenomenon of population ageing in near future. A study of HDI and its components, disaggregated by provinces, provides a clear picture of disparities among regions and raises the necessity for planners and policy makers to pay due attention to redistribution of development resources among regions (Figure 3). Figure 3: HDI by Province (percent) 90

85 Life expectancy index Education index GDP index HDI

Source: SCI (2002a); Ministry of Education (2004); LMO (2000); Ministry of Science, Research and Technology (2004); Alizadeh et.al. (2000).

Figure 4: Population with expenditures under $1

NATIONAL POVERTY PROFILE 4 From a mere income point of view, based on a 3 poverty line of 1 dollar a day (in PPP), poverty in Iran has decreased annually by about 17.2 percent 2 in average (Figure 4). The ratio sharply dropped 1 from 3.5 percent of population in 1991 to 0.3 0 percent in 2004. Certainly, this trend was 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: SCI (2004c and 2004f); MPO and UNDP (1999 and 2004). accelerating from 1992 to 1998. Figure3: Human Poverty Index (HPI-1)

3 0 Unlike income poverty which is subject to considerable fluctuations, human poverty is 2 5 following a stable decreasing trend (Figure 3). The 2 0

Summary Report, Iran Risk-Poverty Case Study 10 19 9 1 19 9 2 19 9 3 19 9 4 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 Source: Ministry of Health and Medical Education (1999a); MPO and UNDP (1999). difference between the fluctuating trend of income poverty and the stable trend of human poverty indicates that, in spite of decreasing purchasing power (mainly due to increasing inflation) from 1998 to 2001, household expenditures for provision of human necessities have been increasing. Overall, implementing comprehensive programs aimed at improving welfare indicators and access to public services in recent decades have resulted in improvements in living standards of people in need, in particular through improvements in level of social services despite the significant fluctuations in foreign income from oil exports. Quality of national human capital has witnessed significant improvements such as reductions in under-five mortality, access to safe drinking water, higher adult literacy ratios and improved enrollment ratios in different educational levels, particularly in rural areas.

DISASTER INTENSIVE AND EXTENSIVE RISK PROFILE Due to its geo-climatic situation, Iran is a natural disaster prone country. Based on DesInventar, totally 6,559 natural hazard events were recorded in Iran for the period of 1986- 2007, which caused 74,019 deaths and 508,301 buildings affected (damaged or destroyed). In average, 3,364.5 people were killed and 23,104.5 buildings were affected per year by natural hazards during this period. Earthquake was the most frequent hazard in 1986-2007 accounting for 52.7 percent of total events. Flood accounting for 38.1 percent of all events was in the second rank. Other hazards, which totally account for 9.2 percent of events were as follow: storms (3.0 percent), landslides (1.9 percent), thunder storms (1.4 percent), snowstorms (1.0 percent), hailstorms (0.9 percent), drought (0.5 percent), forest fire (0.4 percent), avalanche (0.1 percent), strong wind (0.01 percent) and frost, liquefaction, rains and tornado (altogether 0.04 percent). Except for floods, the upward trend of climatic hazards is evident from 1986 to 2007. Landslides and storms are the major contributors to this pattern. Geologic events represented 53 percent of events, but responsible for 95 percent of recorded mortality and 73 percent of buildings affected. While climatic events represented 47 percent of events causing 5 percent of mortality and 27 percent of buildings affected. Drought, earthquake, flood and storm have been the most important hazards of the country in terms of causing various risks to the people’s lives and property. Earthquakes have been responsible for 95 percent of total mortality and 73 percent of buildings affected, followed by floods, which account for 4.5 percent of total deaths and 23 percent of buildings affected. Rudbar-Manjil earthquake (1990) and Bam earthquake (2003) were mega disasters of last two decades accounting for about 90 percent of total death. Floods in Loretsan (1991), Tehran (1987), Golestan (2001) and Kerman (1993), which totally killed 1036 people, put the flood among top 10 killer hazards of Iran for the period of 1986-2007. Drought has affected the people more than all other hazards and accounts for 37 million affected people around the country, mostly in Sistan Baluchestan, Fars, Bushehr, Yazd and Kerman provinces. Guno Typhoon (2007) affected more than 160,000 people in Sistan- Baluchestan province. Mortality trend, in general, indicates 27 percent decrease in period of 1997-2007 compared to 1986-1996. While occurrence of geologic hazard shows increasing trends up to 126 percent, but no change in climatic hazards, mortality trend reveals 25 percent and 59 percent decrease due to geologic and climatic hazards, respectively. Reasons which might explain the declining trend in

Summary Report, Iran Risk-Poverty Case Study 3 number of deaths due to geological hazards despite increasing number of events could be improved/expanded systems for detecting/registration/reporting geological hazards and increased public awareness/evacuation measures given occurred devastated earthquakes following pre-shocks in Manjil and Rudbar. The timely evacuation before the major shock prevented a high probable large death toll in Lorestan Earthquake on 31 May 2006. Despite a great diffusion of hazard occurrence across the country, there is a concentration across a small number of provinces. The least hit provinces by natural hazards, i.e. Zanjan, Markazi and Ghom, have experienced 1 to 5 natural hazard events per year. At the other end, Fars and Kerman provinces experienced 23 to 32 hazards per year. Only about 8 percents of Iran’s Shahrestans (equivalent to Districts) had no recorded natural hazards for the period of 1986- 2007. Numerous of provinces, including South and North Khorasan, Kerman, Fars, Esfahan, Khuzestan, Lorestan, Kermashah, Ardebil, Gilan, Zanjan, Ghazvin and Golestan experienced at least 10,000 buildings damaged or destroyed from 1986 to 2007. Gilan and Zanjan were the most affected provinces in this regard. Intensive/Extensive risk analysis 120.0 99.0 99.4 100.0 95.4 97.1 100.0 t revealed that less than one percent of n e 80.0 c r e p

i 60.0 t a

hazard events were responsible for 92 l u m

u 40.0 percent of total death and 62 percent of C 20.0 6.0 8.2 2.8 3.6 buildings affected. Considering cut-off 0.0 1-50 51-100 101-500 501-1000 >1000 of 50 death and 500 buildings affected, Death clas s Event Death 96 percent and 90 percent of events 120.0 120.00

100.0 98.10 100.00 94.6 97.16 account for three percent of total 100.0 89.3 91.1 100.00 82.1 t t 80.0 80.00 n n e e c c r mortality and 10.5 percent of total r e e 57.45 p p

e e 60.0 60.00 49.76 v v i i t t a a l l u u

buildings damage or destruction, m m u 40.0 u 40.00 C C respectively. This pattern is mainly due 20.0 20.00 0.3 0.7 1.1 3.3 0.0 0.00 to two major earthquakes of Rudbar- 1-50 51-100 101-500 501-1000 >1000 1-50 51-100 101-500 Death class Death class

Manjil (1990) and Bam (2003). While Event Death Event Death the climatic hazards reveals different Intensive/Extensive risk analysis, based on cumulative percent of event occurrence and death due to all-hazard pattern as about two percent and 0.5 (top), geologic hazards (bottom left) and climatic hazards (bottom right), I.R.Iran, 1986-2007 percent of climatic hazards were responsible for 43 percent of total death and 10 percent of buildings affected, respectively. Considering the cut-off of 50 death and 500 buildings affected, 98 percent and 92 percent of climatic events account for 50 percent of total mortality and 32 percent of buildings affected.

POVERTY-RISK RELATIONSHIP The number of dead people per ten thousand populations and the number of buildings destroyed or damaged for a period of 1991 to 2006 has been considered as key variables that could explain for disaster effects on human poverty. The models applied explain such effects on household expenditures to measure the economic impact of disasters. This study is not directly dealing with poverty measures for two main reasons. First, poverty is a human concept that has a wide range of components, from economic to social, cultural, environmental and even political ones. The concept of human poverty has in fact been introduced to depict all such aspects of life.

Summary Report, Iran Risk-Poverty Case Study 4 In mere economic terms, the expenditures households spend on baskets of goods and services well represent their physical satisfaction. Second, the standard poverty metrics like FGT are defined on the basis of a poverty line. For many technical reasons, poverty lines are not calculated and reported officially in Iran. While some rough estimations of the percentage of poor people are reported, they are based on the international poverty line definitions of $1 and $2 expenditures per person per day. The basic econometric model used here is

cit  i  1i (Death  cl)it  2i (Death  ge)it  3i (Buildings  cl)it  4i (Buildings  ge)it  5i (Family Size)i   i

Where cti is differences in real expenditures of the urban households (adjusted for prices using the urban CPI), Death and Buildings are the number of human losses per thousand populations and buildings damaged or destructed due to natural disasters, respectively, suffixes "cl" and "ge" refer to climatic and geologic based disasters, respectively, Family Size is included as a factor affecting people's economic well being as in many poverty studies, and subscript i refers to province and t is for time. The reported impacts of natural disasters were not considerable in a number of provinces, including Isfahan, Ilam, Khuzestan, Sistan & Baluchestan, Mazandaran, Yazd and Golestan, West Azerbaijan, Fars, Kordestan, Ghazvin, Bushehr, Khorasan and Zanjan. Therefore, these provinces are excluded from the regression analysis. The coefficients of the number of death as well as the number of buildings damaged or destroyed for the most disaster-prone provinces were significant. This suggests that in these provinces, natural disasters play a main role in economic disruptions of people's lives. In particular, Ardebil; Chaharmahal & Bakhtiari ;Khuzestan; Semnan; Hormozgan; Yazd; Kerman; Kermanshah; and Lorestan. are among the disaster-prone provinces where the estimated coefficients in number of death, number of damaged and destroyed buildings, or both were significant and consistent with the hypothesis of the study. Based on differences in demographic, climate, and style of life contexts across provinces, the results should be interpreted province by province: Ardebil: The human losses due to climatic disasters harm the economic well being of people, while those due to geologic disasters still have a positive effect on changes of household expenditures. Physical damages due to both kinds of disasters have a statistically significant negative effect on people's standard of living. Family size is not an important factor in economic situation of households in this province. Chaharmahal & Bakhtiari: As a province mostly affected by climatic disasters (mainly floods and frosts), the incidents of death due to such disasters turn to be the only channel of disaster consequences on peoples standard of living. Physical damages are not important as the buildings are subject to less damage after climatic disasters than they are during geologic disasters. Khuzestan: Human losses affect people's economic life only after climatic disasters, although not statistically significantly. Building destructions due to geologic disasters have a significant negative impact. A strange result is the positive effect of building destructions due to climate- driven disasters. One possible reason could be that geologic disasters like earthquakes almost

Summary Report, Iran Risk-Poverty Case Study 5 destroy buildings and all household's properties and wealth and, therefore, have a long term impact. On the other hand, climatic disasters cause minor damages to houses, to repair which people have to spend only part of their savings. However, the affected people can save more in a longer period of time. As a result, they may have a better and more effective life in their refurbished shelter. Family size is an important factor affecting people's lives negatively. Semnan: The number of buildings destroyed or damaged due to disasters have a considerable negative impact on people's economic status, though the effect is statistically more significant in case of geologic disasters. Human losses have a positive impact, which is more statistically significant in geologic disasters. This may be related to the age structure of dead people, in cases where the economic dependency ratio of households affected has improved. Hormozgan: As earthquake is a dominant disaster in this disaster prone province situated in Southern Iran, destruction or damage of buildings due to geologic disasters is the most important factor making people worse-off economically. However, the number of dead people due to such geologic disasters considerably improves household's consumption expenditures. Yazd: Physical losses due to geologic disasters have a negative impact on households' standard of economic life. Kerman: As a highly disaster prone province, Kerman experienced the most catastrophic disaster of the last decade nationwide, namely the Bam earthquake with tens of thousand people dead and more tan 70 percent of the city infrastructures totally destroyed. The decomposed model well explains the impact of Bam earthquake. Human losses due to both types of disasters have a significant negative impact on household expenditures. However, due to a quick response by the government as well as civil society, the city was physically reconstructed, where old constructions were substituted by new modern buildings, in course of only a few years. This is why the model demonstrates a positive estimated coefficient for the number of destroyed or damaged buildings, which is of course more statistically significant in case of geologic disasters. Kermanshah: The most important impact of disasters in Kermanshah is proved to be through building destructions/damages due to climatic disasters. The number of family members is also another factor of economic difficulties in this province. Lorestan: As expected theoretically, human losses due to both types of disasters have a negative impact on the living standard of households in Lorestan. There is the same story about the impact of physical consequences: building damages/destructions due to disasters provide households with better economic life (though the estimated coefficient is statistically significant only for geologic disasters). The reconstruction programs, mainly implemented by the government, are believed to be the main reason for such an estimation result. Northern Iran: The provinces that are situated in the edge of the Caspian Sea, including Gilan, Golestan and Mazandaran, are normally subject to sustained climatic disasters. That is why their living styles and construction approaches are adapted with such climatic conditions. As a result, people's economic welfare has not been significantly affected by natural disasters. This is what our model explains too. Of course, there is an exceptional case for Mazandaran, where climatic disasters have significant negative impact on living standards through loss of life.

Do Disasters Affect Social Well-Being?

Summary Report, Iran Risk-Poverty Case Study 6 Besides the effect of disasters on their economic well being, as depicted by household expenditures, people may also be affected by natural disasters through social channels. Health and education are two main social variables that could represent the impact of disasters on social aspects of life. The models depict differences in health and education status of people across provinces as a result of disaster-related human and physical losses as well as other conventional variables such as the average household expenditures on health and the family size.

Yi  i  1(Death  cl)i  2 (Death  ge)i  3 (Building  cl)i

 4 (Building  ge)i  5 (Family Size)i  6 (Exp.)i   i

The sample includes 28 observations, which is the number of provinces. Explanatory variables are measured as 26-year averages (covering 1980 to 2006). Two separate regressions for education and health were run. To measure education, three variables of education index (as a component of human development index, HDI), adult literacy ratio, and combined school enrollment ratio were employed. The best results were observed from a linear model with adult literacy ratio as the dependent variable. To measure the health status of household, also three variables have been used, namely the life expectancy at birth, percentage of population without access to an improved water source and percentage of population without access to an improved health care. The results for the model with life expectancy at birth as the dependent variable were more reliable. Human losses due to either of disasters result in reduction of adult literacy ratio: directly through death of literate members of the household and indirectly through missing the opportunity of education for those members of the family, who have lost their bread-winner and have to work instead of going to school. The size of family has also a negative relationship with adult literacy ratio, because in large families with high dependency ratios, besides the family head, one or more members have to work and miss the chance of education. It is noticeable that physical damages caused by natural disasters do not have an effect on literacy ratio. This must be interpreted as the very special feature of the Iranian people that they assign the first priority to education of their children, no matter whether or not their property is damaged or lost by natural disasters. Furthermore, government support is a key factor in keeping the education services unaffected after natural disasters. Provision of comprehensive education services by government, particularly in general education level, is also the main reason for statistical insignificance of the estimated coefficient for household's expenditures on education, as people do not have to pay for general education in Iran. The results for health are much similar to those for education: building damage/destruction due to natural disasters of both types has a positive relationship with life expectancy of people at birth, though more statistically significant in case of climatic disasters. Government health and settlement support for families, whose houses are damaged/destroyed by natural disasters, could be one main reason why the health status of affected households improves after natural disasters. Human losses in a family considerably lower the life expectancy of the survivors. It is interesting to observe that the value of estimated coefficient for the number of death due to climatic disasters is much greater than that for geologic disasters.

Summary Report, Iran Risk-Poverty Case Study 7 POLICY IMPLICATIONS AND RECOMMENDATIONS Studying hazard and risk profile of Iran reveals some crucial points that would be worthy to be considered in policy making for disaster risk reduction and preparedness. While earthquakes are responsible for 90% of death due to all natural hazards in Iran, occurrence of destructive earthquakes would not be a surprise to Iranian community during next decade. High levels of seismic risks, low resistant buildings and some infrastructure all over the country along with high population density in urban areas increase various risks of Iranian communities caused by earthquakes. Focusing the policies including techno-legal re-enforcements and investment of resources on structural and non-structural mitigation along with raising public awareness and strengthening the response capacity are highly recommended. It is worthy to mention that the country has taken effective steps in this regard so far. As was mentioned above, decreasing trend of mortality comparing two periods of 1986-1996 and 1997-2007, despite the increasing trend in hazard occurrence, can be explained by number of interventions which are taken by the Governmetn in effective risk management. Those measures include extensive investment in improving/renovating the non-resilient structures in less developed and rural areas through provision of soft loans and technical services, along with strengthening engineering inspecting systems throughout the country. However, with regard to available resources and knowledge for improving buildings resilience to earthquakes strengthening/institutionalizing those measures is highly required. Occurrences of climatic events in Iran have been on upward trend in line with the global trend during last decades. Nowadays, there is growing evidence that the communities are being suffered from the small scale disasters with few numbers of death and damage to properties, which is called extensive risk. Since the people and policy makers/decision makers usually follow headlines related to devastating disasters broadcasted by media, there is a concern that small- scale but recurrent events would be ignored or underestimated by disaster mangers and policy makers and even are underreported. Increasing pattern of extensive risk underpin the need to strengthening local disaster management systems through enhancement of community-based initiatives and strengthening the system at provincial and district levels. Fortunately most of the climatic hazards can be warned early. The successful experience of early warning in Guno Typhoon emphasize on strengthening of effective early warning systems. The last but least policy implication that the current study suggests is the need for strengthening the capacities of affected communities to rebuild their livelihoods than provision of non-targeted/equal subsidies/aid to all affected population. This would help preventing adverse effects on people’s well-being particularly extensive risks caused by climatic hazards. National Disaster Management Organization (NDMO) of the Islamic Republic of Iran has suggested important additional recommendations as follows: - More attention to preventive measures, - Rapid exchange of information on occurrence of disaster disasters - Re-enforcement of critical public buildings - Promotion of insurance and supportive funds

Summary Report, Iran Risk-Poverty Case Study 8 Statistical Sources: Poverty Sections: CBI (Central Bank of Iran); SCI (Statistical Center of Iran); MoE (Ministry of Education); MSRT (Ministry of Science, Research and Technology); MHME (Ministry of Health and Medical Education); LMO (Literacy Movement Organization) and UNDP HDI and reports. Risk Sections: UNDP-Supported Iran DesInventar was the main source, in which data from NDTF (National Disaster task Force), CRED, Etelaat Newsletter, FRWO (Forest, Rangeland and Watershed Organization), Ministry of Road and Transportation is entered. However, the outstanding verification process of DesInventar is yet to be completed by the NDMO/MoI (National Disaster Management organization of Iran).

This study was supported under the Government of the Islamic republic of Iran and UNDP Iran Joint Five-year National Programme Strengthening Capacities for Disaster Risk Management. It was coordinated by Dr. Victoria Kianpour, Programme Analyst, Disaster Risk Management and Recovery, UNDP Iran with inputs from Dr. Mirzamohammadi, the Leading Consultant (Poverty Section) and Dr. Ali Ardalan, Technical Consultant (Risk Section). Establishment of Iran DesInventar was facilitated by Shaswati Das (UNDP Consultant) and Abhilash Panda, IUNV with inputs from Julio Serje (UNDP International Consultant) and data was collected and entered into system by a team of local university students from Tehran University. The team was led by Amin Shamsoddini. Acting National Programme Manager: Farzaneh Agharamezanali National Programme Director: Behnaz Pourseyed

Summary Report, Iran Risk-Poverty Case Study 9