Natural disasters and their economic cost – Part 2

by Maxwell Haywood 24.JUN.11

In my last article I showed the extent of economic cost linked to natural disasters in other countries. This week I will look at St. Vincent and the Grenadines.

It is highly unlikely that the international media will cover the ravages from natural disasters that financially poor and small-island and developing nations like SVG experience.{{more}} Maybe this is because disasters experienced by SVG do not force the Dow Jones Industrial Average, the Standard and Poor’s 500-Stock Index or the Nasdaq Index to fall and rise.

The disaster in SVG would not impact the global economy in the same way that the disaster in Japan affected the world economy. But the domestic economy of SVG has been severely affected.

The duration of the recovery and reconstruction in SVG could be quite long and could result in the expenditure of millions of dollars. All is not lost, though. Proper disaster risk management could help in stemming the tide of economic loss.

Economic cost for SVG

In a press conference on Friday, April 15, 2011, Prime Minister Dr. Ralph Gonsalves stated that in response to the floods, SVG will try to secure financial resources amounting to about EC $100 million. Under normal circumstances, that money could have gone into other development projects. According to the Searchlight, “The estimated cost to repair the damaged systems has been put at between EC$1 and $1.5 million….Over 1,200 feet of pipeline was lost at the Perseverance water system which supplies water to residents from Byera, north to Tourama, and 800 feet at the Jennings system.”

Kenton Chance in an article in the month of April 2011 states that “Hurricane Tomas damaged 1,200 houses, sending hundreds into emergency shelters, destroyed the nation’s banana trees and left an estimated EC$65 million (US$24 million) in damage to the agricultural sector last October.”

Other infrastructure components such as roads and bridges have also been badly damaged.

According to some reports I have seen and heard, many Vincentians lost their personal belongings and possessions. These losses represent economic cost at the personal and family levels. Not many of these people will be able to easily rebuild quickly because of the financial cost.

Furthermore, SVG already has a relatively high debt level and disasters will only make it harder to manage the deficits. Moreover, SVG’s dependency on tourism and agriculture makes it very vulnerable to natural and man made disasters.

The government has indicated the amounts and sources of financial assistance. Venezuela has provided $ 9 million; The Jamaica company Tank-Weld provided $5 million worth of building materials; US$ 2 million was given as a grant from Taiwan; US$1 million from the government of Qatar; financial resources were provided by Australia, Brazil, Libya, The Mustique Company, and Lime; ALBA is expected to provide a loan of US$ 20 million; the government will also approach the Caribbean Development Bank for a loan of US$ 12 million; and the European Union is expected to provide Budget Support worth $14 – $15 million.

The sum total of those funds represents a significant amount of money to be allocated just for disaster response.

Natural disaster risk management

All of this points to the need for proper disaster risk management. Disaster preparedness is a multi-sectoral issue. All sectors are affected, which means all sectors must participate in the disaster preparedness and response process. Also, national budgets must reflect this integrated nature of natural disaster risk management.

Government has a major responsibility to ensure that the necessary development planning modes and processes integrate disaster and environmental issues. Due to the human and economic cost of natural disasters, it is important that the many-sided character of natural disasters is reflected in national development planning processes.

Many natural disasters are made worse because of the weak capacity of countries and local communities to prepare and respond to disasters. In many instances, communities are vulnerable to natural disasters, because of lack of development standards in practice.

There is a deep urgency for environmental awareness and a culture of disaster preparedness. People must be aware of disaster risks and their role in managing those risks.

After Tomas in 2010, and the floods of 2011, it is quite clear it cannot be business as usual in SVG. Disaster risk reduction must now be brought fully into the development planning processes in SVG. Natural disaster risk management will help to reduce the cost of disaster response, among other benefits.