58793 EAP DRM KnowledgeNotes Working Paper Series No. 20 disaster risk management in east asia and the pacific ImprovIng the resIlIence of lIvelIhoods to natural dIsasters By Sandeep Poundrik IntroductIon Earthquakes, floods, cyclones, and such other hazards each year affect approximately 200 million people. De- veloping countries absorbed 98 percent of these disas- ters and accounted for nine out of ten disaster-related © The World Bank/Curt Carnemark deaths in the period 1991­2005. In fact, low and mid- dle income countries suffer more severe and widespread degradation than do wealthy countries, whose insur- ance market covers highly valued property and where sophisticated tools report absolute economic loss. To make the obvious apparent, the US$40 million losses caused by Hurricane Andrew in the United States rep- resented 0.3 percent of GDP, while one tsunami in the Maldives decimated 66 percent of GDP. Natural disasters, in terms of sheer loss, disproportionately impact low and middle income countries.7 how do We define risk, hazard, and vulnerability? This note uses the disaster management definitions agreed in the 1979 United Nations Workshop: Risk­the effect of disaster Hazard­the external cause, such as potentially damaging natural phenomenon like floods Vulnerability­the internal cause, the internal factors, which affect susceptibility to harm like the internal strength of a bridge.10 Experience shows that the poor are the most affected by natural disasters. The reasons for this are manifold and inter-related: Dwelling sites more prone to the effects of disasters like floods and hurricanes Houses less-well constructed, thus pre-disposed to destruction Few assets and savings compounded by lack or paucity of insurance This working paper series is produced by the East Asia and Pacific Disaster Risk Management Team of the World Bank, with support from the Global Facility for Disaster Reduction and Recovery (GFDRR). The series is meant to provide just-in-time good practice examples and lessons learned from projects and programs related to aspects of disaster risk management. 2 disaster risk management in east asia and the pacific Low education and skill base impeding post disas- men died.5 These groups also find it much more diffi- ter livelihood recovery, and limiting alternative em- cult to recover their livelihoods after disasters. ployment options Rural vs. Urban: Urban households may face more More likely to suffer from malnutrition and ill health risks due to the denser populace, lower social health bonding and support systems leading to more individu- Politically marginalized in general, therefore little say alistic behavior, and low disposable assets, especially in in disaster protection policies and expenditures.18 slums. Rural households face difficulties in communi- The East Asia and Pacific region is highly vulnerable cations, lack of reach of the government and financial to the impacts of natural disasters from earthquakes to institutions, and fewer opportunities to diversify eco- floods and droughts. Since 1990 the region has experi- nomic activities. Livelihood planning needs to be modi- fied accordingly. enced more than US$473 billion in damage from natu- ral disasters and over 2 billion people have been affected. Spatial: Populations may be displaced or may remain The World Bank provided approximately US$1.5 billion in their homes after a disaster depending on the extent for post disaster interventions between 2004 and 2007. of damage to homes or severity of water levels, etc. Res- toration of livelihoods is dependent on the duration of These hazards affect the livelihoods of the vulnerable displacement and what can be done in the displaced population, both in terms of assets and income. House- locations. It is more difficult for the affected people holds in disaster-prone areas can be ex ante equipped to to sustain and recover their livelihoods, if they are dis- prepare for the disasters so that they recover quickly af- placed and they need more support in such situations. terward. Similarly, steps can be taken ex post to help the vulnerable recover their livelihoods. This note focuses on ex What can be done to prepare households in advance? ante strategies to make livelihoods more resilient to disasters. Improving emergency preparedness for disasters in- cludes many things like building shelters, relocating Which Factors Affect the Resilience of the Target people to safer areas, using disaster-resistant construc- Population? Many factors affect the vulnerability of tion technologies, retrofitting buildings, etc. Ex ante households to exogenous shocks such as natural disas- activities and, in particular, those related to sustaining ters and should be taken into account while devising livelihoods are the focus of this report. See figure 1 for programs for livelihood restoration. Issues like gender, more details. age, and disability are increasingly being recognized as important parameters to consider when disaster risk Although poor people have limited incomes, they have management strategies are designed or implemented. assets and capabilities that can be used to reduce their vulnerability to disasters. These assets can be applied in Population Profile: Factors such as gender, age group, variety of ways to manage risks. Ex ante risk manage- and disability affect the vulnerability of households to ment includes: a large extent. Older people are generally more affect- ed and are more prone to health risks, isolation from Prevention or risk reduction: actions to reduce the families, lack of mobility, and nutrition losses during probability of high risk events (e.g., relocation from disasters. Children, and particularly poor children, bear a disaster prone area) the brunt of disasters. Nutritional deficiencies, lack of Risk exposure and sensitivity reduction: actions to strength, lack of education and knowledge to cope with reduce the exposure of households to given risks or disasters, and abuse and exploitation make them par- increase adaptation strategies (e.g., asset and liveli- ticularly vulnerable. Persons with disability face lack of hood diversification) services and information, especially in countries with Risk compensation or risk mitigation: ex ante ac- poor infrastructure. Natural disasters are also dispro- tions to provide compensation in case of a risk-gen- portionately deadly for women. In the Southeast Asian erated loss or financial measures (e.g., formal insur- Tsunami of 2004, three to four times more women than ance, holding of savings, social networks).16 Improving the resilience of livelihoods to natural disasters 3 figure 1: types of responses to disasters and delivery mechanisms responses to disasters delivery cash transfer mechanisms social funds process ex-ante measures ex-post measures public Works Improvement Input subsidy Building shelters adaptation financial strategies measures micro finance disaster resistant technology resilient farming more accessible practices Banking relocation to safe areas micro-Insurance Insurance diversification Index-based Insurance Why ex ante measures? Bangladesh and myanmar: Why does disaster preparedness matter? While relief operations after disasters have been the norm, focus is shifting to ex-ante strategies to pre- How are the measures being proposed here different pare households for impending disasters, especially from normal development practice? Shouldn't the con- in disaster-prone areas. A DFID study contends that centration be on normal development programs for the $1 spent on mitigation results in savings of $2­$4 in poor without bothering with this disaster preparedness disaster impacts.1 Even considering these estimates angle? In other words, wouldn't development leading to be approximate, ex ante strategies can lessen the to economic prosperity automatically lead to better di- impact of disasters and prepare communities to cope saster preparedness? Not necessarily. better. First, recent experiences show that even people Disaster responses are likely to be more effec- above the poverty line may be more vulnerable to di- tive if they are based on programs and mechanisms sasters for lack of diversification and inability to cope in place before a crisis occurs. During a crisis, con- with difficult situations. Second, life and asset losses straints multiply due to lack of fiscal resources and in countries with similar development indicators di- instruments, information problems, and weak institu- verge widely depending on their disaster prepared- tional capacity. The disaster impact on households ness. was found to be significantly mitigated by such ac- In Bangladesh, ex ante measures to cope with di- tions as the accumulation of human capital .12 sasters, like building cyclone shelters, had positive outcomes. In 2009 Cyclone Aila caused only about 200 casualties, because about 600,000 people were evacuated to cyclone shelters. Conversely, Cyclone Nargis caused about 138,000 fatalities in Myanmar. Poverty is, thus, not the only or indeed necessarily the primary factor contributing to vulnerability.14 4 disaster risk management in east asia and the pacific adaptatIon strategIes ing credit available, for example. An important thing to consider is that all the adaptation strategies are very site Climate change is expected to increase the vulnerabil- and context specific, precluding generic solutions. Local ity and risks of the poor in developing countries. Poor communities with the support of development organi- households are likely to be more at risk due to increased zations and other agencies can devise optimal solutions weather-related events and poor urban development for the specific area. practices that could lead to increased flood impacts.5 Households may find their traditional asset and income case study base eroded and more at risk from disasters. By adapting global Initiatives to Improve adaptive to increasing and regular natural disasters like floods and capacities droughts, they can spread their risks and reduce losses. In Senegal and Burkina Faso, locals have improved While poor communities are increasingly becoming their adaptive capacity by using traditional pruning and aware of these changes and trying to adapt, they are fertilizing techniques to double tree densities in semi- constrained by a lack of resources, knowledge, and skills. arid areas. Similar practices in Madagascar and Zimba- The respective vulnerability and adaptive capacity are bwe have helped in holding soils together and reversing influenced largely by factors like ability of households to desertification. In other African countries, measures for diversify their livelihoods or migrate, flow of informa- adaptation to droughts, heat waves, and sea-level rise tion and goods, access to social capital, physical infra- have been taken such as drought-resistant varieties of structure, and natural resource conditions.14 Adaptation crops, reduction in herd and farm sizes, and crop and includes many channels like changing natural resource animal diversification (Nigeria, Mali, and Sudan).5 management, raising awareness, technology change, and early warning systems. Of particular import for the In Maharashtra, India, farmers are coping with increased poor to make their livelihoods more resilient to disas- exposure to drought by investing in watershed develop- ters, nevertheless, are two main strategies. ment and small-scale water-harvesting facilities to col- lect and conserve rainwater. And, in Bangladesh, women farmers are building "floating gardens," vegetable gardens Resilient Crops and Farming Practices grown on hyacinth rafts in flood-prone areas.15 Farmers can change agriculture practices to make them more resilient to frequent droughts and floods. This can include measures like using more resilient seeds, crop diversification of livelihoods to non-farm diversification, water and soil conservation, or similar sectors improved farming practices. Diversification of income sources away from agriculture advantages: Adopting flood- or drought-resilient to other non-farm activities can reduce the impact of crops will reduce the risk and ensure income even in the natural disasters. It can be in the form of establishment aftermath of disasters. of a business, participating in the local labor market, or securing a job in cities or abroad. requirements: Poor households may need support in terms of knowledge and technology. They also need Advantages: Income diversification, particularly the financial resources to implement resilient technologies, development of non-farm sources of income, can put as well as equal access to institutions and infrastructure households in a much better position to cope with di- to carry out these activities. sasters. Diversification provides access to secure income streams that can be used to avoid debt, maintain con- What needs to be done? Government agencies and sumption, and retain or rebuild assets.14 social funds/community-driven operations can support the communities to implement effective diversification Requirements: Support in terms of information shar- and adaptation strategies. This may include information ing, capacity building, market access, training for jobs, and knowledge sharing, technology transfer, and mak- equitable access to social capital, and financial and in- Improving the resilience of livelihoods to natural disasters 5 frastructure resources is required for the poor to diver- fInancIal rIsK mItIgatIon sify their livelihood activities. strategIes What needs to be done? Heltberg et al.16 proposed Another mechanism to strengthen the resilience of liveli- a multi-sectoral approach to support diversification hoods is to ensure the flow of income, replacement of as- among communities and protect their livelihood sourc- sets, and availability of cash in the face of disasters. A few es. This includes access to skills/knowledge, policies key ways to mitigate financial risk are discussed below. to stabilize consumption by market interventions, im- proved disaster preparedness, and other measures. More immediate action can be taken by supporting local Micro Finance Institutions government agencies and development organizations, The emergence of micro finance institutions (MFI) has which can then educate and support communities for made an impact on the availability of credit in many adaptation and diversification in vulnerable areas. developing countries. One of the main requirements of poor households during and after disasters is credit for sustaining them until their normal incomes are restored. migration and remittances Informal institutions like relatives or local moneylend- Another very important coping mechanism for house- ers are unreliable and often very expensive; formal insti- holds in case of disasters is remittances. Migrant tutions (banks) are difficult for the poor to approach. In remittance flows increase in the aftermath of natural disasters or other difficult times like economic crisis contrast, MFIs act to supply the required funds in times and act as safety nets for households. In a study of of need. Though the number of borrowers varies from Bangladesh, Burkina Faso, Ethiopia and Ghana, it 30 million served by 675 organizations as per the Mi- was found that households receiving remittances had crofinance Information Exchange (MIX-2004) to 152 higher post disaster consumption, concrete instead of mud houses, and better communication access. million borrowers served by 3,000 institutions as per They also relied on remittances rather than selling CGAP's estimates for 2004, the numbers are substan- productive assets.11 tial. The disadvantage of MFIs is the liquidity crunch they face when the number of members needing credit increases exponentially due to disasters. case study Advantages: Micro finance institutions bridge the gap India: diamond cutting and polishing between formal and informal institutions to some ex- tent by flexibility, approachability, and moderate inter- A case study of farmers in the drought-prone areas in est rates. MFIs and self-help groups can be of great help Gujarat and Rajasthan, India found that the key strate- to households when they need funds during and after gies adopted to cope with drought were an intensified disaster. Informal institutions like friends and relatives focus on animal husbandry, a further dependence on may themselves be victims of disasters and formal bank- wage labor, increased migration, and the development ing facilities may not be available in such situations. of non-agricultural livelihood sources. A good example Requirements: MFIs with adequate coverage, a focus of a non-farm livelihood source is the diamond cutting on the poor, lending experience, database and financial and polishing industry, where the average daily earning management systems. Even sound MFIs will face li- (Rs.300) is four times the normal manual labor rate. quidity crunches during a disaster, as most of their cli- India has approximately 800,000 workers in the indus- ents will need money. For example, in 1998, flooding in try and earns Rs.100 billion per year in foreign exchange Bangladesh caused extensive damage and loss among through diamond processing.14 While the development members of savings and credit programs. The loan re- of the diamond cutting and polishing industries is at- covery rate in Bangladesh fell to 43 percent from 92 tributed to many factors, it presents the case for the po- percent, and the program itself was in great difficulty.5 tential of labor intensive activities as alternative income Funding sources for emergency lending should be avail- sources for the poor. able to support the MFIs in times of disasters. 6 disaster risk management in east asia and the pacific What needs to be done? cal pre-hazard interest rates and extended to two years with increasing interest rates. This facilitates a cash- i. MFIs will face liquidity crunches after disasters ready lending instrument for clients in times of emer- due to very high demand for money. Governments gency. For example, the Salvadoran MFI Apoyo Integral and agencies can help increase their liquidity needed funds due to Hurricane Stan and the eruption during times of need by making additional funds of the Ilamatepec Volcano; it was given US$750,000 as available. Pre-qualification of NGOs can be done an emergency loan. Apoyo Integral was then able to for- using reputed credit agencies to avoid delays during give interest, suspend fees, and extend payment terms disasters. Agreements can be signed for a fixed according to client needs.1 By April 2007, the Emer- period with pre-determined credit limits, procedures gency Liquidity Fund had pre-qualified 47 MFIs in 13 for fund use, and repayment requirements. Latin American and Caribbean countries. ii. Money can be put in emergency reserves in areas with recurrent disasters (e.g., monsoon floods) by the MFIs or by savings and credit groups. There Mongolia: Micro Finance Development should be clear guidelines on ownership and Fund operation of these emergency funds. The purpose of the Micro Finance Development Fund iii. MFIs can buy insurance or form insurance funds. In (MFDF) is to help alleviate rural poverty in Mongolia. India, a federation of self-help groups encouraged The MFDF supports micro finance institutions as long by the micro finance institute PRADAN operates as their funds are channeled to poor households in rural its own disaster insurance fund linked to a state areas. It also provides linkages with other programs like insurance scheme. index-based livestock insurance.5 iv. Clients of MFIs can be asked to prepare contingency Insurance plans to deal with disasters, as has been carried out Insurance can be an effective mechanism to protect the successfully in Burkina Faso. poor against hazards. While the formal insurance mar- v. MFIs can be helped to increase their product range ket in developed countries is advanced, the same cannot with a focus on disaster-specific credit in vulnerable be said of developing countries. Currently only 1 per- areas. Help can be given to increase the coverage cent of households in low and middle income countries with better database management, awareness have formal insurance coverage against disaster risks, generation, and ICT support. compared with 30 percent in high income countries.5 Two types of insurance are discussed: micro insurance and index-based insurance. case studIes latin america: emergency liquidity Micro Insurance facility Micro insurance modifies formal insurance to meet the needs of the poor.. It provides low income households The Emergency Liquidity Fund (ELF) identifies, pre- with easy and accessible life and health insurance, and selects, and lends to well-managed, efficient micro fi- can also be extended to cover livestock, assets, etc. In nance institutions (MFI). Primarily supported by the case of loss of life, micro insurance makes speedy pay- Swiss State Secretariat for Corporate Affairs and the ments, sometimes in installments. In many instances, Inter-American Development Bank, the US$10 mil- it uses local self-help groups to verify claims and make lion fund is managed by the financial consulting firm initial payments. A network of community organiza- Omtrix and grouped with other funds to spread costs. tions is used to publicize the scheme, verify claims, and In times of disaster, EFI is reputed to be fast disburs- make payments leading to reduced transaction time and ing--seven to ten days as compared to a six-month costs. evaluation process for the 2004 Asian Tsunami. Fur- thermore, loans can be taken for six-month terms at lo- Improving the resilience of livelihoods to natural disasters 7 ensuring that the poor are treated equitably and to cover a tale of two towns: disaster reduction costs in the initial years. Bypassing growth and development What needs to be done? Coverage of poor families in In 2005, Hurricane Katrina hit the Gulf Coast of Unit- vulnerable areas can be increased by involving govern- ed States, resulting in the Mississippi River breaching levees surrounding the City of New Orleans and tak- ment agencies, insurance companies, development or- ing an estimated 1,570 lives. The most serious dam- ganizations, and donor agencies. Focus on awareness age was felt by the city's poor who lived in vulnerable generation for more coverage and speedy payment of areas, retained no or low insurance, and depended on the government to be evacuated. This kind of loss in claims is required. The scheme should have well-de- such a wealthy nation with advanced communications fined eligibility requirements as well as premium and and technology was an eye-opener. benefit schedules. The services of existing development In Maharashtra, India, the Village of Darewadi de- organizations and self-help groups can be utilized for flected recurrent disaster with local initiative. Until awareness generation, enrollment in insurance schemes, the 1990s, the villagers struggled perpetually with drought and its limiting effects on crop cultivation and verification of claims, among others. The payment (3­4 months a year). In the dry season, water was procedure should be simple and fast. Payments can be brought by trucks for daily use. Then all changed. made in installments with two to three stages of verifi- With the support of local NGOs and German govern- cation so that immediate funds are available when the ment funding, the villagers adopted a series of water and soil conservation measures. Now agriculture is need arises. possible 9­10 months a year with no trucks required in summer.8 case studIes Admittedly, the two places cannot be more dif- India, the philippines, and turkey: life ferent. Nonetheless, the long-standing notion of de- velopment and higher living standards to offset the and catastrophic Insurance targeting the impact of a disaster is brought into question. The re- poor and vulnerable silience of low income places to disasters poignantly offsets their wealthy counterparts. Indira Jeevitha Bima Pathakam (AABY ) in the State of Andhra Pradesh in India is a micro insurance program for rural landless agriculture laborers, and household members age 18­69 years. The State and federal gov- Advantages: Micro insurance makes insurance benefits ernment each pay a percentage of the premium (Indian available to the poor by reducing red tape, decreasing Rs.200 per member, about US$4.40) to a public sec- insurance premiums, and improving access and speedy tor insurance company, the Life Insurance Corpora- payments in the case of death or disability. This helps tion. The insurance payments are Rs.30,000 (US$640) households cope with disasters when they face loss in for natural death, Rs.75,000 (US$1,600) for acciden- terms of life, health, or assets. tal death or total permanent disability, and Rs.37,500 Requirements: Coordination and linkages between (US$800) for partial permanent disability. To encour- insurance companies, development organizations, and age higher education, the insured family may receive government agencies may be required, as social capital a scholarship of Rs.300 per quarter for two children generated by development organizations can be used to studying in 9th to 12th standard. The program is being reduce transaction costs. While insurance companies implemented with the help of women federations and can use their professional expertise to run the programs, self-help groups, and has covered 3.8 million landless laborers in Andhra Pradesh. Further details and reports development organizations are better equipped to of the scheme are available at the program website: reach the poor and convince them of the benefits of the http://www.aaby.ap.gov.in/About-English.aspx. schemes. Among poor families, the uptake of insurance on a full premium basis may be low initially. Funding In the Philippines, Pioneer Life Inc. provides life insur- from donor agencies or governments to at least partially ance to the families of migrant workers with a grant cover the premium is likely to increase the coverage. from the International Labor Organization (ILO). Hence, the role of government is both to be a watchdog Called OFW Family Savers and Welfare Club, it sup- 8 disaster risk management in east asia and the pacific ports financial literacy, micro insurance, and savings Where it is available, take steps to increase coverage, products.1 improve database management, and accelerate the re- imbursement of claims. Governments, development The Turkish Catastrophe Insurance Pool (TCIP) was organizations, and insurance agencies can play an ac- established in the aftermath of 1999 Marmara Earth- tive role in this program. Insurance directly provided to quake. The government mandate of compulsory ca- households comes with a wide asymmetry of knowledge tastrophe insurance has resulted in TCIP selling ap- and resources.17 Insurance companies will also face very proximately 3 million earthquake insurance policies to high transaction costs. Community links to develop- homeowners annually at a market-based rate. ment organizations can help to overcome these difficul- Index-Based Insurance ties as well as to ensure a proper feedback mechanism Index-based weather insurance has been successfully for the community. implemented in many cases for insuring crops against drought. Now it is being tried for insurance of other assets case studIes like livestock. Insurance is based on a publicly observable mongolia and India: Index-Based index such as rainfall or the mortality rate of livestock livestock and Weather-Based crop in a region, and households are compensated on the ba- Insurance sis of a predetermined threshold. If the rainfall is below Since 2005, Mongolia has been running an index-based or the mortality rate is above the threshold, households livestock pilot in three provinces, with the government are given payments without requirements like individual and insurance industry sharing the risk with herders verification, which requires lengthy documentation, etc. with a US$7.75 million credit from the World Bank. Advantages: Transaction costs are lower due to the The project combines social insurance, self-insurance, non-requirement of individual verification, which also and market-based insurance. Herders retain small losses, means lower premiums for the beneficiaries. There is no which do not affect the viability of their business (self- incentive for moral hazard, as the payoffs are not linked insurance); private insurance companies take up the larg- to the yield of individual farms or the mortality of a er losses (market-based insurance); and the government particular household's livestock. In addition, an index- takes the risk of catastrophic losses as the final layer (so- based insurance system in a drought-prone area encour- cial insurance). The herders pay a market premium rate ages households to opt for riskier but higher yield crops, for the insurance, and the insurance index is linked to because the risk is largely covered. This in turn increases the historical livestock mortality data in the region. In- productivity. The potential for investment is further surance companies pay out to the herders whenever the complemented by the non-requirement of emergency mortality rate in the region exceeds a specific threshold. reserves for crop damage. The payments are not linked to the individual herder's losses but to the overall mortality rate in the region. This Requirements: A reliable index-based measurement system avoids or at least reduces moral hazard and ad- system and an efficient database and information man- verse selection, as individual losses are self-insured and agement systems. A simple and well-publicized proce- only when the region suffers as a whole do the herders dure for payments in case of a disaster is also neces- receive compensation from the insurance companies.5 sary. An absence of efficient database management and In India, the development organization BASIX has clear-cut procedures may lead to delayed payments, implemented a successful weather-based crop insurance creating mistrust among farmers and preventing them product with ICICI Lombard. BASIX used its existing from receiving the funding when most needed. If pay- relationship with farmers to promote insurance prod- ments are not timely, the farmers or herders will not pay ucts; it also developed a comprehensive database and the premiums for future coverage. information management system that streamlined da- What needs to be done? Introduce index-based in- tabase management, administration, and information surance in countries or areas where it is not available. verification. It also used the marketing strategy of be- Improving the resilience of livelihoods to natural disasters 9 ginning with a local leader, community meetings, and The only requirements are technology for mobile bank- then individual follow-ups to convince farmers. The ing or similar systems and a regulatory framework to organization acts as a link between the farmers and support branchless banking. insurance company and distributes insurance for the What needs to be done? Banks can be supported for insurance company.1 As per the BASIX website, 5,199 launching mobile or branchless banking facilities. While claims of Indian Rupees 4.36 million had been settled more funding is needed to directly support the testing as of December 31, 2009. of new models, indirect support in the form of sharing knowledge and technical assistance could be launched. More Accessible Banking Development organizations can raise awareness and act For many families in the Maldives, the 2004 Asian Tsu- as agents for the banks in remote and non-viable areas. nami meant a loss of the lifetime savings kept in their homes (BBC, 2008). This could have been avoided if case study banking facilities were available in the area, yet making the philippines: smart money and globe banking services available to the poor in vulnerable and g-cash remote areas is a challenge. For this lack of service, the poor are not able to secure their savings, which discour- Smart Money and Globe G-Cash in the Philippines ages savings in general. Even if some savings are placed are some of the early successes in this sector. Smart with relatives or friends, they may not be available during Money was launched in 2000 by SMART communica- disasters as the friends/relatives may also be affected. tions. This product has undergone many iterations but essentially it gives the consumer the facility to deposit, While poor households can be encouraged to save withdraw, and transfer money as well as a few other through different means, here the discussion focuses on services from their cash account using a mobile phone the solution to one of many problems that the poor face: without having to visit the SMART office or bank. where to keep their savings. Some of the problems of The consumer also has an option to take the associated providing banking in remote and rural areas are non- debit card. All fees are transaction based and an annual viability of branches, safety concerns, and communica- fee is charged for the debit card. The product is run by tion problems. One way of solving this problem is to use SMART jointly with Banco De Oro, a leading bank technology like mobile phone banking, where custom- of the Philippines. The role of SMART is that of a se- ers use their mobile phones to make transactions. cure transport system for SMS messages; all banking is transacted by Banco de Oro. SMART money transac- Advantages: Mobile phone banking would not only tions total about US$100 million per month now. enable the poor to access funds during an emergency but will also encourage savings by providing a safe op- Another example is G-Cash offered by Globe in the tion. Transforming the saving habits would equate to Philippines. The services are similar though a different the poor having emergency reserves to cope up with di- approach. Globe runs the product on its own and is thus sasters. This branchless banking also encourages com- responsible for all financial transactions. G-Cash is said petition among banks and increases innovation. Largely to have 1 million customers.9 untapped in developing countries, this sector could pro- Similar examples are M-PESA in Kenya and the World vide a large customer base for commercial banks. Bank-supported US$7.7 million mobile phone banking Requirements: Coverage of mobile phones in rural ar- project in the Maldives. They make banking services eas is already quite good and increasing very fast. For accessible in remote areas using mobile phones.1 example, a developing country like India, with a popu- lation of about 1.2 billion, had a telephone subscriber delIvery mechanIsms base of 638.05 million in April 2010, of which 601.22 million are wireless phones, as per the May 2010 release How do we implement the measures discussed above of the Telecom Regulatory Authority of India (TRAI). for livelihood resilience or ex post measures in case of 10 disaster risk management in east asia and the pacific disasters? These mechanisms become a key issue for and delegated powers. Rigid work processes and gov- timely and efficient delivery of services. If they are ernment consent run counter to their basic premise of not effective, the best-designed programs may be for streamlined efficiency. Capacity building of staff is also naught. This section discusses one option for the de- necessary to ensure quick response in an emergency. livery of services in detail, as well as steps to make the Programs should be run on the principles of commu- process efficient and effective. nity empowerment, which links multi-sectoral poverty reduction and income improvement with disaster man- agement. Disaster management should be made an in- Social Funds/Community-Driven tegral component in all activities/programs run by the Development Operations fund in order to situate the fund and the community in Social funds are typically managed by local NGOs, a ready response in case of emergency. government agencies, autonomous bodies, or commu- What needs to be done? Social funds established nity groups and are normally established to intervene by national governments or donor agencies should be in the areas of livelihoods, education, health, etc. Their used to cope with disasters employing the communi- flexibility and simplified procedures are well suited to ty-driven risk management approach. The capacity of the disaster context. From the point of view of disas- social funds needs to be suitably enhanced to respond ter preparedness, social funds can be very effective tools to disasters by integrating training, simple and flexible of pre-disaster preparedness activities like information procedures, and disaster preparation and response com- dissemination, training, community organization, and ponents in all programs. Social funds can also provide livelihood diversification, as well as a delivery mecha- linkages to micro finance and micro insurance programs nism for post disaster operations. The combination of by acting as facilitators and coordinators. social funds and community-driven development op- erations are the main instruments by which the World Bank provides assistance in developing countries. In social safety nets fact, US$14 billion was channeled through social funds Government-run social safety net programs are in- struments for transferring cash or in-kind benefits to over an eight-year period (2000­2007). In an evaluation beneficiaries. In times of disasters, they can be used of its disaster management projects, the World Bank to transfer benefits to people who are not normally found social funds to be the most flexible and innova- covered. In addition to their role as a transferring tive instruments during disasters, in addition to making mechanism, they can also act as insurance mecha- nisms, preventing low consumption and stabilizing a significant contribution towards reducing disaster risk. asset bases. According to Alderman and Haque21 certain conditions need to be fulfilled if Social Safety Net programs are to act as insurance mechanisms. Advantages: The operational autonomy, simple proce- First, they should have counter-cyclical budgets so dures, and implementation capacity of social funds cre- that they can scale up their operations in times of need and scale back subsequently. Many low income ate a fast-disbursing mechanism when disasters strike. countries do not have the resources to afford public Social fund teams have the capacity to respond rapidly transfers to a significant percentage of their popula- because they not only live in the area and know the local tion. They can maintain a core social protection pro- conditions, but also have contacts within the local com- gram that is able to expand and respond in times of crisis. Second, they should be able to target transi- munity and among government agencies. Social funds tory needs rather than permanent poverty. Although can be used to channel funds from federal governments publicly supported safety nets do not automatically or donor agencies. Lastly, the community-based disaster serve an insurance function, their presence in normal years can act as a scaffold to scale up operations in risk management approach establishes long-standing event of excess need. Third, they should have a flex- relationships within and among the community, super- ible implementation strategy.21 seding the top-down approaches of the past. requirements: Social funds should be given suf- ficient operational autonomy with simple procedures Improving the resilience of livelihoods to natural disasters 11 case studIes nents during the cyclones of 2004. Its procedures were tanzania, pakistan, and madagascar: simplified and modified in order to respond to emer- social action, poverty alleviation, and gencies vis-ą-vis allowing higher advances, contracting community development funds out services to experienced NGOs, and streamlining procurement rules.5 Tanzania Social Action Fund (TASAF) was established in 2000 by the Government of Tanzania in order to reduce poverty and improve livelihoods. A community-driven What Can Be Done to Make the Ex Ante development program, TASAF-I had three components: Response Quick and Efficient: Steps to Small-Scale Social and Economic Infrastructure, Social Improve Delivery Mechanisms Assistance to Vulnerable Groups, and Capacity Build- Rescue and relief operations are launched by govern- ing of Village Councils and Community Committees. ment and non-government agencies post disaster, and The present program, TASAF-II, has two main compo- include immediate relief works as well as rehabilitation nents: National Village Fund (NVF) and Capacity En- and reconstruction. After the initial response to fulfill hancement (CE). The NVF targets poor communities humanitarian needs like evacuation, food distribution, for social and market services, food insecure households health camps, and camps for the displaced, the focus for livelihood improvement, and vulnerable individuals shifts to reconstruction and livelihood recovery. A de- (orphans, the disabled, the elderly) for improved access tailed knowledge note on post earthquake measures is to increase incomes. The CE component focuses on the already available in this series. The focus here is on a capacity building of local governments and communities. broad overview of the pre-emptive steps that govern- Tanzania suffered around 65 natural disasters between ments can take to put the infrastructure and processes 1980 and 2008, including 26 epidemics, 24 floods, and in place and ensure quick response when an emergency 6 droughts. Of those affected by disasters, droughts ac- actually occurs. counted for about 90 percent. The Government of Tan- zania with the World Bank has launched a US$220 ethiopia: livelihoods Integration unit million project, of which US$30 million is allocated to a social protection component through TASAF-II for The Government of Ethiopia established the Liveli- hoods Integration Unit (LIU) in 2006 with the objec- 42 food insecure local government authorities and is- tive of moving the Ethiopian early warning system from lands. The component covers public works programs for an indicator- to a systems-based approach. The LIU's the able bodied and community-based conditional cash working methodology was the Household Economy transfers, livelihood restoration, and income-generating Approach, which applies the core components of di- saster risk reduction--risk, hazard, vulnerability, and activities for the vulnerable. Communities request and capacity--in the context of livelihood security. Opera- implement subprojects. By end March 2010, the number tionally, the LIU analysis system has three basic com- of beneficiaries covered under public works programs in ponents: Livelihoods Baselines, Hazard Analysis, and Outcome (or Risk) Analysis. The Outcome Analysis 172 subprojects was 43,068. A good practice, social funds is conducted using the tool Livelihoods Impact As- can be used as a vehicle for rolling out livelihood restora- sessment Spreadsheets (LIAS), with the priorities of tion activities in the aftermath of disasters.4 predict, prevent, and prepare.10 Pakistan Poverty Alleviation Fund (PPAF) was able to respond quickly to the earthquake in 2005. PPAF Eligibility requirements and preparation of benefi- worked with its partner organizations and after the ini- ciary lists: Clear-cut guidelines on eligibility for dif- tial reallocation of US$5 million, another US$100 mil- ferent types of disasters prevent controversies and stave lion was given to PPAF by the World Bank to expand off future discontent. The guidelines should state the its activities in infrastructure, livelihood restoration, and income limits, definition of households, and special training.5 criterion for the disabled, women-headed households, Madagaskar Community Development Fund (CDF) was or other vulnerable groups (the elderly, children, HIV/ supplemented with additional social protection compo- AIDS). Eligibility requirements should be simple and 12 disaster risk management in east asia and the pacific easy to verify. Preparation of beneficiary lists after di- sasters is time-consuming and difficult for reasons of India: right to Information act and Jankari communication and external pressures. It is better to call center prepare lists of beneficiaries in each village/town in ad- The Government of India passed the Right to Infor- vance, and update them at fixed intervals of approxi- mation Act in 2005 to promote transparency in the workings of public authorities, whereby the general mately six months or a year. Though these lists cannot public can seek information contained in government be prepared for high severity­low frequency disasters records by filing an application and paying a small fee (major earthquakes), they are very useful for low sever- (except information related to national security, etc.). All government offices have designated Information ity­high frequency disasters (floods and hurricanes). Officers, who are required to provide responses in a The pre-approved beneficiary lists may also act as a prescribed period or face penal consequences. And, screening mechanism to finalize lists after disasters. an elaborate system of appeals and Information Com- missioners was instituted to resolve disputes. The lists should be clearly demarcated for small geo- The State of Bihar used technology innovatively to graphical units in order to facilitate precise targeting in reach people living in rural and remote areas, estab- the event of disasters. Involvement of local public rep- lishing the call center Jankari. When people call, the request for information is converted to an application resentatives in the preparation of the lists will make the and transferred to the relevant Information Officer. process more transparent and also reduce the burden on This service was used extensively in the aftermath of public officials. These lists can be prepared and pub- the 2008 Bihar floods to ascertain the actual materials distributed in relief. A good practice, legal provisions lished at regular intervals so that relief operations can can be used to make the administration of disaster- be launched immediately after disasters. related works more transparent and responsive.20 Sanctioning authorities: It should be clearly pre- scribed who is competent to sanction relief operations in case of disaster. This can be required for sanctioning with such transportation agencies as railways, storage cash transfers, starting public works, or inputting subsi- facilities, and local transport. Storage facilities in re- mote areas should be developed for emergencies. dies. A matrix of sanctioning authorities with financial limits should be prepared with well-defined powers and Identification of projects: Projects for public works responsibilities. programs, especially in case of disasters like droughts, can be indentified and prepared in advance. In the ab- Amount and duration: The amount and duration of sence of these plans, it will take time to identify projects, cash transfers and input subsidies needs to be prescribed prepare technical estimates, get sanctions post disaster, and published for public information. The amount can and delay public works programs. be calculated on the basis of food and other require- ments of a family to sustain itself without any additional Materials banks and procurement: Procurement source of income. The amount and duration can also agreements or rate fixation of input and equipment also vary for different types of disasters. These norms should can be carried out annually (e.g., before the flood sea- be widely circulated so that people know what to expect son) to facilitate the speedy delivery of benefits in case in case of disasters. of disasters. Another option may be to establish mate- rial banks or food storage depots in vulnerable areas, Delivery process: Delivery of payments in a transpar- since the logistics of transporting food and materials ent and quick manner is very important. The availabil- post disaster can be difficult. ity of cash in remote areas in case of disasters can be a problem. Hence, arrangements with banks have to be Budget procedures: Financial procedures to make made in advance. Giving checks may be easier but may funds available in context of disasters are often cum- not solve the problem of cash requirements and may bersome and delay the ex post operations for relief and delay the actual realization of benefits to the affected rescue. It is crucial to design a new or amend existing families. Distribution of goods like grains presents fur- financial procedures to meet post disaster needs with ther difficulties and requires elaborate arrangements fast-disbursing funds. Improving the resilience of livelihoods to natural disasters 13 Measures to ensure transparency and proper feed- thousands of lives saved in Bangladesh during Cyclone back mechanisms: Relief and reconstruction work Aila due to the constructed cyclone shelters sharply means a wide transaction of funds. It is important to contrasts with the loss of an estimated 138,000 lives put in place mechanisms to minimize chances of leak- in Myanmar due to Cyclone Nargis. These examples ages and favoritism. Some basic steps include: highlight the importance of ex ante measures for disas- ter preparedness. a. Involve local public representatives, community leaders, and non-government organizations in the In addition, it is not only the very poor communities screening of beneficiaries and distribution of relief but also other middle income households who lose materials; have the respective representatives meet livelihoods due to disasters in the absence of coping regularly throughout the year. mechanisms. More and more evidence supports the b. Make provisions to publish detailed information contention that middle income families may sometimes about the distributed materials and money as be even worse off; they have no alternative safety net frequently as possible. and all government-driven relief measures are naturally focused on the very poor. Hence, appropriate targeting c. Make the distribution system simple, and publish mechanisms are of the utmost importance and commu- the norms and procedure for public information. nity involvement may be a channel to identify all vul- d. Make provisions for a public grievance communi- nerable groups and cover them in the programs. cation and response center with published phone numbers to receive all complaints; an efficient sys- While ex ante measures are important, delivery mecha- tem to enquire into complaints that seem prima nisms to implement these programs are equally impor- facie genuine and to take action on the reports is tant, if not more. The best designed programs may not necessary. achieve significant results if the delivery mechanisms underperform. conclusIons Various ex ante measures and steps to improve the de- livery mechanisms discussed in this paper may be a way With the change in global climate, the severity and fre- forward to make communities better prepared to cope quency of natural disasters is clearly increasing. Experi- with natural disasters and to sustain and recover liveli- ence of recent disasters and work done in this field has hoods quickly. shown that ex ante risk reduction programs offer higher returns for the investment in terms of a reduction in the loss of lives as well as assets as compared to ex post end notes programs. While estimates of the ratio of money spent 1. Jacobson, K., A. Marshak, and M. Griffith. 2009. In- on disaster preparedness to benefits in terms of lower creasing the Financial Resilience of Disaster-Affected disaster impacts vary from 1:2 to 1:6, it is generally ac- Populations. Washington, DC: OFDA, USAID. cepted that ex ante measures produce better returns to 2. Vishwanath, T. and X. Yu. 2008. Providing Social Pro- investment in terms of money and lives saved. tection and Livelihood Support during Post-Earthquake Recovery. Good Practice Note. 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Wash- ington, DC: World Bank. east asia and the pacific region The World Bank 1818 H St. NW, Washington, D.C., 20433 http://www.worldbank.org/eap Special thanks and appreciation are extended to the partners who support GFDRR's work to protect livelihoods and improve lives: ACP Secretariat, Australia, Belgium, Brazil, Canada, Denmark, European Commission, Finland, France, Germany, India, Ireland, Italy, Japan, Luxembourg, the Netherlands, Norway, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States, UN International Strategy for Disaster Reduction, and the World Bank.