6th SEAS

Towards a Stronger, Dynamic & Inclusive South Asia

2-4 September 2013, Colombo, Sri Lanka

Side Event ESCAP Policy Dialogue Building Resilience to Natural Disaster and Major Economic Crises

Dr. Mia Miki Chief/ ARTNeT Coordinator Trade Policy and Analysis Section TID, ESCAP

Study is available from www.unescap.org/publications

Focus of this summary

What is resilience (to multiple shocks)? Are Asia-Pacific economies resilient and why does it matter? What to do to build/improve resilience?

What is resilience?
The capacity of countries and their people to withstand, adapt to, and recover from natural disasters and major economic crisesand to continue to lead the kind of lives they value.

Asia-Pacific faces multiple, overlapping/ sequential, and increasingly large shocksnew normal for the region

A woman digs out potatoes Tuesday in her former garden, ravaged by wildfires that also burned her house, in Verkhnyaya Vereya village, Russia. Source: European Presphoto Agency

Traders frantically signal trades at the Chicago Mercantile Exchange. 1999 file photo. REUTERS/Scott Olson

A man with his child while escaping floods in Risalpur, Pakistan. http://newredindian.wordpress.com/2010/08/25/ social-inequality-worsens-the-impact-of-the-floods-in-pakistan/

A rescue worker carries an elderly resident across a surging river in New Bataan, Philippines, two days after Typhoon Bopha hit the province. Photo: AFP

Lehman Brothers collapsed in September 2008. Some 6,000 of the bank's creditors are still waiting for payouts. Photograph: Linda Nylind for the Guardian

Aug. 29, 2012 photo, Unemployed educated Indian women stand in a queue to register themselves at the Employment Exchange Office in Allahabad, India. (AP Photo/Rajesh Kumar Singh)

Flickr. All rights reserved by getolympus.

The region faces increasingly complex shocks

Spatial Areas

Temporal Rates, Durations and frequencies

Slow Long

Jurisdictional Administrations

Cross-scales and crosslevels Interactions

Globe

Decades

Intergovernmental National

Regions

Annual

Countries

Seasonal

Provincial

Cities

Daily
Fast Short

Localities

Source: ESCAP based on Cash, David W., W. Neil Adger, Fikret Berkes, Po Garden, Louis Lebel, and Per Olsson (2006). Scale and Cross-Scale Dynamics: Governance and Information in a Multilevel World. Ecology and Society 11 (2): 8.

Disasters by region (1980-2011)

200 150

- Asia-Pacific is the most disaster prone region in the world - and the most affected:
2 Mill killed 4x Africa 25x E, NA

100 50 0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Asia Pacific Latin America and Caribbean Europe

Africa North America

People affected (per 1,000 population)

People affected

Asia Pacific

Asia Pacific

Africa Latin America and Caribbean Europe North America 0.6 0.5 0.4 0.3 0.2 0.1 0 0

Africa Latin America and Caribbean North America Europe 500,000 1,000,000 1,500,000 2,000,000 2,500,000

Source: ESCAP based on data from EM-DAT, 2000-2012: The OFDA/CRED International Disaster Database

350

Economic damage
300

Expon. (Economic damage)

Japan: Great East Japan Earthquake United States: Katrina Storm

Billion dollars 2005

250

- Economic losses from disasters are rising globally $293 billion in 2011 In Asia-Pacific

200

Japan: Kobe Earthquake Algeria: El Asnam Earthquake Spain: Floods

Turkey: Earthquake

150

100

Iran: ManjilRudbarEart hquake

China: Drought

Japan: Chetsu Earthquake

China: Sichuan Earthquake

50

0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

and low-income countries are the most affected - Vulnerable groups in particular in Sri Lanka 80% of Tsunami victims were women

Low income Lower middle income Upper middle income High income
0.0 0.2 0.4 0.6 0.8 1.0 1.2

Economic damage (%GDP) (2006-2010)

Though Asia-Pacific has not been breeding grounds for financial crises.
Number of financial crises starting in a given year, period 1971-2012
40 Asia-Pacific 30 Other regions

20

10

1971

1973

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2007

2009

2012

The region has been hit hard

Growth rates of GDP and exports of Developing Asia-Pacific (percentage)
30 20 10 0 2006 -10 -20 -30 2007 2008 2009 2010 2011 2012 (p)

GDP

exports services

exports merchandise

2010
1993

-World has become highly connected through trademore exposed to trade shocks While the region has diversified 1. Increasing share of trade is in volatile parts & components 2. Trading partners business cycles are increasingly synchronised
Higher bilateral trade-value partners participating in 75% of global trade
16 14 12 10 8 6 4 2 0 1998

World exports of merchandise goods ($ trillion)

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Capital goods
Source: ESCAP

Consumption goods

Intermediate goods

Other goods

Who is affected by economic crises and disasters?

- Poor and vulnerable are hardest hit - They often experience multiple, repeated shocks from various sourcesall forms of

economic crisis, natural hazards, climate change impacts

- Each shock erodes the capacity to cope with the next shock - Coping strategies may look resilient but could be detrimental to long term resilience
Evidence of resilience Living off savings Internal migration for opportunities Adapting business strategies Cutting back nonessential spending; delaying large purchases Extending working hours Working more jobs Striving to keep kids in school Returning to education or training Communal meals Mutual support groups; support from family and friends Saving-credit groups Evidence of vulnerability Cutting back basic consumption; fever and less nutritious meals Cutting back essential nonfood consumption including soap and shampoo Forgoing health care; switching to traditional healers Sale of assets needed for livelihood Accumulation of unserviceable debts School dropouts; child labor; switching from private to public schools High-risk income-generating activities Depletion or breakdown of community support mechanisms Theft; crime; drug selling Divorce and abandonment Increased alcohol and drug use Lower resilience to other shocks

The New Normal

The world faces multiple, simultaneous, sequential and increasingly large shocks.

Are we ready?

Is the region ready to face multiple shocks?

More often response is ad hoc and after the shock Blind spots of policymakingdifficulties in internalizing risks Cognitive failures: underestimate probability of relatively common risks; overestimate the knowledge of things you have no expertise in; fail to consider risks to future generations Tendency to treat problems in isolationthough multiple shocks call for multi-sectoral solutions, systems thinking Risk management requires more knowledge and new decision making toolsscenario analysis, vulnerability identification, participatory approaches to decision-making

Key policy messages

-Macroeconomic frameworks need to factor in disasters; build the capacity to
handle overlapping shocks
Overarching goal should to be arrest the spread of a shock to the real economy, labour markets, and poor and vulnerable populations Macro stabilization should be interpreted flexibly during shocks Balance between short-term macro stability and long-term development

--Social policy should build on good coping strategies and minimize bad coping

strategies
Universal social protection floor ++ approach - social safety nets in place before a shock; be flexible to accommodate multiple shocks Governance is crucial: rethinking fiscal decentralization; strengthening local governance and participatory approaches to decision-making

Key policy messages: protect critical sectors and supply chains

-Integrated approach to addressing land-water-energy nexus within the context of

climate adaptation
Stakeholder involvement in decision making Adaptive governanceknowledge, experience, flexibility to be integrated into policy, institutions

--Identify critical infrastructure; integrate DRR into infrastructure projects (in high risk areas); capitalize on resilient land use planning

-Firms, governments both have responsibilities to protect supply chains

Much needed capacity building for business continuity planning Risk transfer tools PPP support for disaster preparedness

Awareness building, Pricing, Regulation, Application of technology play crucial roles to address the lack of knowledge, lack of understanding and internalising of risks, much to learn from each other

Key policy messagesRegional cooperation is of strategic importance

Regional policy coordination--regional coordination of macroeconomic policies, and financial sector policy Regional pooling of resources and systems for effective monitoring and early warning Regional pooling of risks Bridging cross-regional cooperative mechanisms and initiatives Reducing risks and uncertainties through exchange of data and information regionally

Building Resilience
Regional Cooperation

Critical Infrastructure

The capacity of countries and their people to withstand, adapt to, and recover from natural Supply Economics of disasters and major economic Chains Resilience crises so that their people can continue to lead the kind of Financial lives they value. Cooperation Land, Water, Energy Community Resilience

Thank you
ounce of prevention is worth a pound of cure Failure to prevent and mitigate risks has tragic and costly consequences both for crises and disasters