52951 EAP DRM KnowledgeNotes Working Paper Series No. 15 disaster risk management in east asia and the Pacific Providing social Protection and livelihood suPPort during Post- earthquake recovery By Tara Vishwanath and Xiaoqing Yu1 © The World Bank/Mara Warwick introduction Providing basic income and employment support is an essential component of the government efforts to rebuild the province of Sichuan from the devastation caused by the earthquake. The primary objective of such policies is to protect the most vulnerable house- holds in the affected communities. These policies can also have benefits in terms of rejuvenating local economic activities by creating purchasing power in affected areas, as well as rebuilding severely damaged basic infrastructure by integrating select reconstruction activities with social protection programs. This note focuses on two main approaches: cash transfer and public works programs. After the South Asia Earth- quake in 2005, Pakistan used a cash transfer program to protect the vulnerable and help regenerate local economies. To illustrate how a public works program can be a flexible instrument for providing short-term income support while at the same time contributing to the recovery of essential public infrastructure, the experience of several coun- tries is introduced. Building on these country experiences, the note discusses key lessons relevant for China. cash transfer Programs A cash transfer program that is developed in response to a natural disaster offers direct assistance in the form of cash to the target group. It is often designed for a finite period of time until economic activities resume and generate em- ployment opportunities. The key features of cash transfer programs and the experience of the cash grants introduced in Pakistan in 2005 are summarized below. 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). This note was prepared for the Government of China as part of a series of good practice notes on post-disaster recovery following the Wenchuan Earthquake that struck on May 12, 2008. Content was coordinated by the China and Mongolia Sustainable Development and Country Management Units of the World Bank. The focus is on sector-specific lessons from past post- earthquake recovery programs in different countries around the world. 2 disaster risk management in east asia and the Pacific Transfer amounts per household should take design into account what is needed on average to cover An effective cash transfer program requires the follow- ing main design components. basic necessities. A reference point for estimating such needs is the officially established poverty Eligibility conditions line. The exact payment duration for cash The eligibility criteria for a cash transfer program that transfers should be specified. uses household-level targeting should include all po- tentially vulnerable categories of the disaster-affected population, be simple, be easily verifiable, and with- out significant administrative burden to implement. In Pakistan, three criteria defined the eligible households: (i) five or more children, including orphans; (ii) headed recipients by a woman; and, (iii) one or more disabled members. Temporary cash support programs can be (i) univer- Once criteria are established, the process for identifying sal for all disaster-affected areas, (ii) further-targeted beneficiary households can either be left to communities geographically depending on the degree of impact, or or administered by local authorities. Since communities (iii) targeted at the household level where the capacity are fractured and scattered in the aftermath of a disaster, to earn a livelihood has been lost. Geographic target- mobilizing effective community targeting is often dif- ing would be appropriate in areas where the damage ficult. For this reason, the Pakistani authorities decided is extensive and most households are affected. In areas to select beneficiaries through a well-defined targeting where the affected population is dispersed, household process. A simple targeting form collected information targeting becomes necessary. from all households in the affected areas. As informa- tion was collected, it was reviewed against the eligibility Targeted beneficiaries at the household level include conditions, and households were selected for the pro- those who are displaced and living in temporary shel- gram. A clear grievance process was implemented to ters or relief camps, as well as other especially vulnerable ensure that those households who felt wrongly excluded households (e.g., those headed by an elderly person or could appeal; local government officials had the respon- a widow, or where the main income earner has died). sibility to investigate and resolve the appeals. Additional criteria for identifying the most vulnerable among those affected should be developed by the au- Transfer amount and duration Transfer amounts per household should take into ac- thorities and informed by a careful damage and loss as- count what is needed on average to cover basic necessi- sessment. ties. A reference point for estimating such needs is the In Pakistan, cash grants were targeted at the household officially established poverty line. The exact payment level. Eligibility criteria were established and a targeting duration for cash transfers should be specified. mechanism was adopted as follows. In Pakistan, a monthly cash grant amount of USD 50 per household was paid to eligible households. It was established based on a calculation of the needs for an Providing social protection and livelihood support during post-earthquake recovery 3 average household size of seven people. A policy de- cision was made by the government that the payment would be uniform for all beneficiary households and would continue for six months. Delivery of benefit payments The delivery of payments should ensure that the pro- gram serves to alleviate cash constraints of the vulner- able. Beneficiaries should be able to access payments without high transaction costs in terms of dealing with intermediaries and travel-time costs. If identification cards (IDs) are needed to access the benefits, IDs should be provided to those who have either lost or never had © Photos.com one. Options for distributing payments include banks, post offices, and other institutions. The flow of funds should be transparent and auditable. The Pakistani government opted to make benefit pay- portantly, a clear process to (i) set policy direction and ments through banks and arranged for beneficiaries to parameters, including establishing the eligibility criteria open bank accounts for free. However, the accessibility and determining the amount, duration, and phasing out of banks was problematic in remote areas and caused of payments; and, (ii) oversee the targeting process and payment delays. In addition, some households (e.g., the mechanisms for addressing grievances and appeals. those headed by older women and widows) were also hard to reach. In the absence of a regular social assistance program prior to the disaster, Pakistan implemented the mecha- Program costs nisms to administer the cash grants. A comprehensive The cost of the program should include: (i) the benefit manual specifying the detailed eligibility criteria, rules cost, which requires estimating the number of benefi- for validation and appeals, and the accountabilities of ciaries and (ii) the implementation cost for data collec- different tiers of government was developed before tion, monitoring, and general administration. The latter implementation. A complete database of all households is usually around 10 percent of the program cost. that applied for the program was created, which enabled In Pakistan, a damage and loss assessment of lost liveli- the information to be cross-checked with the national hoods combined with data from household surveys es- identification system. With such a systematic database, timated that about 250,000 households were eligible to it was easier to extend the program to the most vulner- be covered at a total cost of USD 85 million over the able households and eventually to transfer them to the six-month period. regular social safety net programs. Implementation arrangements Phasing out the program A clearly defined process for implementation is neces- To avoid dependency on subsidies, a clear and transpar- sary for a successful cash transfer program. Most im- ent exit strategy needs to be defined prior to initiation 4 disaster risk management in east asia and the Pacific resources, the programs can also be implemented by small-scale private contractors, nongovernmental orga- nizations, Social Investment Funds (SIFs), or Commu- nity-Driven Development (CDD) programs. A public works program offers several appealing fea- tures that can help address challenges arising from nat- ural disasters. n Income transfers can be provided to affected popula- © The World Bank/Mara Warwick tions and help households meet consumption short- falls and other immediate needs. n Much-needed infrastructure in disaster-affected ar- eas can be created or restored. For example, debris removal, repair of community water supply and sanitation schemes, repair or construction of public buildings like community centers, and minor road of the program. The exit strategy will help ensure that repairs. the program does not deter the beneficiaries from look- n Specific geographic areas can be easily targeted. The ing for regular employment. affected communities and poor households can ben- When phasing out the transfer, adopting different ap- efit directly from the transfer of income and indirect- proaches for different population groups could be consid- ly from the physical assets that the program creates ered. For healthy recipients, the program can move from and/or maintains. unconditional to conditional transfers. Conditions can be n The labor intensive nature of public works program based on work (e.g., participation in a public works pro- and the low level of income imply that the program gram) or actions that would prepare the beneficiaries for can target the neediest through self-selection and in- employment opportunities. For the most vulnerable who cur limited administrative costs. Overall, the program are incapacitated (e.g., the elderly, widows, orphans, and is flexible, can be easily scaled up, and can mobilize the disabled), the cash transfer can be delivered through resources quickly. the regular social welfare programs, and if necessary at an enhanced level for a period of time. Public works programs have been widely used in the af- termath of natural disasters and major conflicts. Coun- Public works Program tries such as Ethiopia, Honduras, India, Indonesia, Public works programs have been important instru- Kenya, and Madagascar have all implemented similar ments to counter the impact of disasters in developed programs to counter the impact of various shocks. In and developing countries. They typically provide un- Indonesia after the 2004 tsunami, some 18,000 people skilled labor with short-term employment on projects participated in public works programs in approximately like road construction and maintenance and other basic 60 villages. It made quick and safe disbursement of as- infrastructure projects. Often funded with budgetary sistance possible. Assistance was delivered on a wide- Providing social protection and livelihood support during post-earthquake recovery 5 spread basis in emergencies and had positive impacts at The type of public works selected should be the individual and community level. targeted to disaster-affected regions, be based on the needs of specific communities, and produce design To realize the full potential of a public works program infrastructure that is owned and managed by during post-disaster recovery, the program design needs the communities or government. The assets to have the following key features, following interna- created should be of maximum value to the tional best practices: people in those areas. Setting the wage level to assist the targeted population The wage rate is a key element that determines the dis- tributional outcomes. To target the poor and ensure that Determining the number of person-days they have indeed self-selected, the wage should be set of employment per household that a public at a level slightly below the prevailing market wage for works program should provide on a more unskilled manual labor. Setting wages at a low level will regular basis also ensure that such temporary work programs do not The determination should depend on the likelihood of crowd out the creation of permanent job opportunities. risks, and the degree to which people are insured. These To this latter point, the public works programs in Ar- parameters determine how much stabilization impact gentina and India, though not initiated as disaster re- the program can offer. Having a regular program in sponse programs, provide useful examples. In Argen- place can be of great benefit in times of disaster, as the tina the wage rate was set below the minimum wage program can be easily scaled up as needed. in 2000: This policy change further expanded the pro- gram, which already covered 400,000 people through Choosing the level of labor intensity to make 16,000 projects. In contrast, in the employment guar- the program cost-effective An important determinant of the cost-effectiveness of a antee scheme in the Indian state of Maharashtra, the public works program is the share of the wage bill relative wage level of the scheme increased substantially when to the total program cost.. Many factors determine the the minimum wage rate was doubled in 1988: This led share, particularly the nature of the asset created. To meet to a significant drop in the generated number of person- the objective of short-term employment relief and to en- days of employment. sure that the program is cost-effective, having a higher share of labor cost in the total program cost is desirable. Determining the content and duration of public works activities It is estimated that for most road construction projects, The type of public works selected should be targeted the cost of labor ranges from 40 to 50 percent of the total to disaster-affected regions, be based on the needs of costs. In road or drainage maintenance projects, the ratio specific communities, and produce infrastructure that ranges between 70 and 80 percent. In Argentina, the share is owned and managed by the communities or govern- of labor costs ranged from 30 to 70 percent for the public ment. The assets created should be of maximum value works program depending on the type of project. In South to the people in those areas. Korea, the share of labor costs was close to 70 percent. 6 disaster risk management in east asia and the Pacific allocations are made based on the size of the subprojects and other indicators considered important for achiev- ing project objectives. Local communities implement the approved projects, often hiring private contractors to administer the work. After Hurricane Mitch struck Honduras in 1998, the Honduras Social Investment Fund (FHIS) played a piv- otal role in responding to requests from both the local and national levels to help rebuild the country's critical © The World Bank/Mara Warwick local infrastructure. With operational flexibility afforded by its legal framework and relatively lean structure, the FHIS was able to respond to the crisis immediately. It established 11 regional offices, and its technical experts were dispatched to disaster areas within hours of receiv- ing the damage and loss assessment. They estimated the need to clean up mud and debris and to repair or replace water and sanitation systems, access roads, bridges, Implementation considerations health care centers, and schools. Recognizing the need Although labor-intensive public works programs have for quick action, the FHIS greatly simplified its stan- the potential to create short-term employment and in- dard subproject requirements while maintaining certain come support for poor households, several important safeguard requirements to ensure accountability. Within implementation issues should be considered: 100 days, the FHIS approved 2,100 projects with a total n How are projects selected? value of USD 40 million. Within a year, about 3,400 emergency subprojects were financed. The immediate n How widely is self-selection practiced by partici- focus of the FHIS on restoring economic activities and pants? basic social services prevented the disaster from further n How does the fund flow? aggravating poverty. Labor accounted for about 70 per- cent of cleanup activities and 25­30 percent of the value n How well is the program monitored? of most subprojects. The FHIS created about 100,000 Some of the large national or subnational programs person-months of employment in the first three months tend to be supply driven, implemented by local bod- after Hurricane Mitch. ies, but subject to predetermined and centrally devised guidelines. Others, especially the relatively small proj- additional recommendations ects managed under the umbrella of a SIF/CDD pro- The key design principles and features that have been gram, are demand driven in nature. Communities sub- discussed in this note are important recommendations mit ideas for potential projects to the SIFs, which then for China's policy makers to consider in designing the screen the ideas for viability after a quick cost­benefit social protection programs in response to disasters. In analysis. Local authorities and program managers apply addition, the following points should be highlighted: directly to higher-level administrations for funding, and Providing social protection and livelihood support during post-earthquake recovery 7 cash transfer programs Given the very modest level of protection that the rural Cash versus in-kind assistance: Given the magnitude wubao and dibao programs offer, it would be justifiable of the disaster and the need to assist affected and vulner- to provide beneficiaries with an enhanced level of ben- able households swiftly, developing a quick cash transfer efits for a period of time or provide a lump-sum grant to program that gets the needed cash into the hands of the help them reestablish their basic livelihoods. affected population has clear advantages. The indirect effect of creating purchasing power and markets in af- Public works programs fected areas was, from the quick spot-check assessments Build on existing administrative infrastructure: It conducted, visible in the case of Pakistan and would be seems sensible to build on the public works programs expected to have the same effect in China. supported by the National Poverty Alleviation Pro- gram and the Ministry of Labor and Social Security. Universality versus targeting: The need to reach a large This would ensure that the basic program administra- population in a very short period of time implies that tive structure is well in place and that key operational a universal benefit for those in the affected area may guidelines are developed. It also would allow for quick be an appropriate measure compared to the adoption implementation of a public works program to support of sophisticated targeting mechanisms. However, it is the next stage of reconstruction. important to recognize that such a universal benefit has to be time-bound and will need to be transitioned to a Design and manage an effective public works pro- more targeted approach. For this purpose, specifying a gram: As discussed earlier, realizing the benefits and timetable for the short-term support in a very transpar- limitations of a public works program is important. As ent manner is critical. short-term income support, key policy parameters need to be designed accordingly. A public works program is Exit strategy and integration with existing safety net not a long-term employment program and cannot be schemes: The fact that China has preexisting safety net expected to serve as the vehicle for long-term human- programs (e.g., wubao and dibao) is a huge advantage. capital investment. The institutional knowledge and capacity is readily available, and adjustments can be made to support the Develop community-driven programs: Community- affected individuals and households through the existing driven development programs are in their early stage of instruments. Moving forward, policy makers may need development in China. The State Council leading group to further differentiate those affected by the earthquake on poverty reduction has been working with the World and identify those requiring social assistance. Among Bank to experiment with this approach. At the same this group, it may be necessary to: time, there are extensive experiences worldwide of this model as well as rich literature on their impact. It is time- n Consider introducing preconditions (e.g., requiring ly for China to take stock of international and its own ex- participation in the public works program) for those perience. China could consider using such participatory who have the physical ability to work and assist them approaches in its public works programs to support the in finding productive employment opportunities. post-disaster recovery and reconstruction. n n Assist those eligible for wubao in receiving commu- nity- or institution-based care. end note 1 The note benefited from the writings of Kalanidhi n Assess the eligibility of the poor for dibao and extend Subbarao, and David Warren. assistance through the system. east asia and the Pacific region The World Bank 1818 H St. NW, Washington, D.C., 20433 http://www.worldbank.org/eap Special thanks to the partners who support GFDRR's work to protect livelihoods and improve lives: Australia, Canada, Denmark, European Commission, Finland, France, Germany, Italy, Japan, Luxembourg, Norway, Spain, Sweden, Switzerland, United Kingdom, UN International Strategy for Disaster Reduction, USAID Office of Foreign Disaster Assistance, and the World Bank.