IMPROVING THE EVIDENCE BASE ON

THE COSTS OF DISASTERS

PRELIMINARY RESULTS OF AN OECD SURVEY

OECD-EC-Placard Joint Expert Meeting on Disaster Loss Data

Catherine Gamper, Public Governance and Territorial Development Directorate, OECD

27 October 2016

0

50

100

150

200

250

300

350

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Ann

ual e

cono

mic

loss

es in

US

D b

illio

n

• Past decade: USD 1.5 trillion in economic damages from man-made disasters (industrial accidents, terrorist attacks) and natural disasters (primarily storms and floods)

• Increase in economic damages believed to outpace national DRR investments…

• … though this claim cannot be supported by data as there is hardly any available, especially on an internationally comparative level

• The development of standardised and comparable accounting frameworks for DRM expenditure and disaster losses can:

– Support the evaluation of economic benefits of DRR investments

– Faciliate cross-ountry comparisons

– Systematic indicators on global DRR objectives can be built

Why we need to better account for costs

of disasters

Source: EM-DAT: The OFDA/CRED International Disaster Database, Université catholique de Louvain, Brussels, Belgium, www.emdat.be (accessed 14 November 2013).

Economic losses due to disasters in OECD and BRIC countries, 1980-2012 (USD Billion)

Australia

Bangladesh

Bolivia Chile

Costa Rica

Egypt

Estonia

Ethiopia

Fiji Finland

France Germany

Greece

Haiti

Honduras India

Indonesia Iran

Italy

Jamaica

Japan

Kenya Madagascar Malawi

Mexico

Mozambique

Nepal

Netherlands

New Zealand

Norway

Pakistan

Philippines

Poland

Portugal

Slovenia

Thailand Turkey

United Kingdom United States

Venezuela

Yemen

0.5

1

1.5

2

2.5

3

3.5

2.7 3.2 3.7 4.2 4.7

Ave

rag

e D

ea

th T

oll

pe

r D

isa

ste

r 1

98

0-2

01

3 (

log

)

Real GDP per Capita, Year 2010 (log)

Significant decrease in fatality rates from disasters with increasing income 1980-2013

OECD Non-OECD

• Resilience against disasters in OECD countries is high , but higher income countries still experience large economic losses

• Policy makers need a good understanding of past losses to face this challenge and understand better whether their DRR investments are effective

Recording disaster losses

Source: Source: EM-DAT: The OFDA/CRED International Disaster Database, www.emdat.be - Université catholique de Louvain - Brussels - Belgium". Data for OECD and BRIC countries (1980-2012). Figures are shown true to the year of the event. OECD Stat National Accounts GDP per capita in US$, constant prices, reference year 2005

Source: EM-DAT: The OFDA/CRED International Disaster Database, www.emdat.be - Université catholique de Louvain - Brussels - Belgium; OECD (2013), “Gross domestic product (GDP) MetaData : GDP per capita, US$, constant prices, reference year 2005”, National Accounts OECD Statistics Database, accessed on 14 November 2013, http://stats.oecd.org/

– Desk-based review of national and international loss data bases:

– International loss data: • Information on social and economic losses recorded in most major international databases

(EM-DAT, DesInventar, ..), although sources vary (government reports, media, IO”s)

• Although definitions of economic losses, given it is not clear to what extent the records follow them because no primary data sources are used

• Recorded loss amounts, are similar for some events and less so for others

OECD work on the measurement of the

costs of disasters: initial findings (2014/15)

4

Economic losses (in USD billion) recorded in:

International databases Other national or hazard-specific databases

Name of

database/Event

EM-DAT

sigma NatCatService National Oceanic

and Atmospheric

Administration

(NOAA)

Dartmouth

Flood

Observatory

US Sheldus

Chile

Earthquake,

2010

30 33.28 (out of

which insured:

8.88)

30(out of which

Insured: 8)

30 Does not

apply

Does not apply

Hurricane

Sandy, 2012

50 73.78 (out of

which

insured:36.89)

65 (out of which

insured:30 )

Property damage:

24.91

No estimate No estimate

Hurricane

Katrina, 2005

125 173.44 (out of

which

insured:80.37)

125 (out of which

Insured: 62.2)

Property

damage:42.53;

crop damage: 1.93

60 Property

damage:74.27;

crop

damage:2.12

→ It is difficult to conclude that differences are due to different economic loss estimation methods

COMPARISON OF ECONOMIC LOSSES

ACROSS INTERNATIONAL AND

SELECTED NATIONAL DATABASES

• National loss data (sample countries : Japan, Australia, Canada, Italy, Slovenia, USA)

– Loss data not consistently available across OECD members

– Variables included relatively similar (casualties, insurance costs, property losses, damages to crops or livestock)

– Economic loss estimations only recorded by half

– Recordings are more consistent in national compared to international databases (systematic questionnaires used etc.)

– Differences in governance: • E.g. Slovenia organised centrally

• E.g. Italy different institutions for different hazard s– no single multi-hazard loss database

– Some countries have exhaustive loss recordings for specific hazards, e.g. Japan for floods • Process similar to Slovenia

• Distinguishes public and private losses

5

OECD work on the measurement of the

costs of disasters: initial findings (2014/15)

• Review of national and international approaches and datasets regarding disaster losses and damages found:

– Significant progress in accounting for a number of social loss indicators (e.g. fatalities from disaster), but ambiguity remains for other social loss indicators (such as affected population)

– Efforts to calculate economic losses remain inconsistent and incomparable across countries (only 30-40% of disasters in OECD countries reported with economic loss figures)

• A review on the expenditure side of the costs of disasters found that countries need:

– A common language to collect data on public and private expenditures for disaster management

– A central repository (such as the national accounts) that clearly distinguishes and accounts for risk management expenditures

6

OECD work on the measurement of the

costs of disasters: initial findings (2014/15)

• OECD survey on disaster losses: – Loss data collection

– Complementary online survey

• Desk-based review of countries’ approaches to ex-ante economic loss assessment methods

OECD work on the measurement of the

costs of disasters: ongoing work

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Objectives:

Test initial research against the actual reality of OECD countries’ efforts to collect national and international disaster loss information

Gain a better understanding of the underlying methods of data collection as well as the national procedures in place for collecting disaster loss information

Understand the data’s use in informing DRM decisions

Survey design:

– First part: data collection instrument, based on a pre-filled Excel data sheet, which countries had to verify, complement or replace by a different database all together

– Second part: standard online questionnaire that sought to gather more information on the methodology to calculate economic losses, the procedure to collect information, and the use of the results for policy making (multi-hazard approach)

OECD Survey of Disaster Loss and

Damage Data

8

SURVEY RESULTS

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• 17 countries responded to the online survey:

– Australia, Austria, Canada, Denmark, Estonia, Finland, France, Israel, Japan, Mexico, Norway, Poland, Slovak Republic, Sweden, and Turkey (OECD countries)

– Colombia, and Costa Rica (enhanced partnership countries)

• 12 countries provided socio-economic loss data:

– 5 countries validated or complemented the pre-filled Excel spreadsheets:

• Estonia, Finland, Norway¹, Sweden and Mexico²

– 7 countries provided the Secretariat with an alternative official dataset

• Australia³, Canada, Colombia⁴, France , Japan⁵, Mexico⁶ and Turkey

• Complementary review of ex ante loss estimation methods:

– 7 countries covered: Denmark, France, Germany, India, Japan, the Netherlands and the USA

Current status

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¹ (provided us also with the sources) ² (validated data previous to the official dataset) ³ (lacks official total economic losses)

⁴(1998-2015) ⁵ (only water related disaster damages for 2012 in pdf) ⁶ (2000-2015)

• Criteria for recording social losses vary across countries:

– Finland, Sweden, Turkey, Colombia and Mexico recorded deaths and missing separately

– Canada's database includes deaths but not missing people

– Colombia, Mexico and Turkey also report the number of affected people with a specific variable

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Social loss data collection methods

Economic loss data collection methods

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DEDICATED NATIONAL BODY FOR DISASTER LOSS DATA COLLECTION

No 29%

Yes 71%

Note : Question asks " Is there a process by which your country has a ministry, agency or other government body that periodically collects data on economic losses (direct or indirect) from disasters?"

• Economic loss data seems to be collected by many countries, but information is not always centralised in one national database

– Nationwide databases : Japan, Mexico, Colombia, Turkey (municipal & regional level) and

Canada (regional level)

– Finland: each ministry is responsible for collecting the economic losses depending on the hazard type

Economic loss data collection methods

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• Multi hazards databases are not always available and few countries collect economic losses on man-made disasters:

– Canada, Mexico, Finland, Turkey cover natural & man-made disasters; Canada’s multi-hazard database also includes terrorist threats

• The time period for recording economic losses with a consistent methodology ranges between over a century for Canada to 16 years for Mexico

Economic loss data collection methods

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• Countries methodologies for collecting economic losses vary substantially:

– Difference between direct and indirect economic losses is not well established:

– Turkey, France and Japan stated that losses are separately estimated

– Costa Rica, Colombia, Austria and Poland stated that economic losses are only estimated for direct losses

Economic loss collection methods

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Economic loss data components

Country Total costs Insured

losses

Emergency

costs

Direct tangible losses Losses due to

business

interruption

Australia x

Canada May include also

indirect losses

Colombia x Buildings damaged/destroyed (houses,

schools, hospitals, community centres);

Roads damaged, Damaged agricultural

area in ha; Cars lost.

Finland May include also

indirect losses

Houses and hospitals

France x Houses and hospitals

Japan Only direct

losses

x x x x

Mexico May include also

indirect losses

Buildings (houses, schools, hospitals)

collapsed/damaged; Damaged

Agricultural Area; Km of roads damaged.

Sweden May include also

indirect losses

x x

Turkey Only direct

losses

Buildings collapsed/damaged; Damaged

Agricultural Area; Cattle Loss

Estonia Not clear from the data provided

Norway May include also

indirect losses

x x

• A similar picture emerges regarding the distinction between privately and public ly accrued economic losses:

– The distinction between public and private losses is often made for the purpose of compensating economic losses (as it is done e.g. in France and Finland)

– Good practice: Mexico provides a consistent methodology that distinguishes publicly and privately accrued losses

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Economic loss collection methods

• Criteria for triggering economic loss estimation differ substantially

• Many countries have specific criteria and thresholds for economic loss data collection

– Canada uses a specific threshold (10 or more people killed, 100 or more people affected, national emergency, historical significance)

– France uses an intensity scale established through a legal basis

Economic loss data collection methods

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• There is room for improving the collection of data on disaster risk management expenditures:

– Austria, Colombia, France, Japan and Turkey provided approximate yearly DRM expenditures in national currencies

– Good example: Colombia records both disaster response spending and disaster risk reduction investment by fiscal year

Disaster risk management expenditures

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• Direct economic loss estimation methods:

• Impact models where used to assign probability of exposure to assets and crops

• Market values of assets and crops together with replacement costs (for assets) were used to estimate total economic losses

• Indirect economic loss estimation methods:

• Input-output models were used to estimate the economy-wide effects of an initial change in economic activity

• General equilibrium models used to estimate (unemployment, GDP losses etc.)

Highlights the value of conducting ex-ante economic loss assessments to inform DRR investments & to prioritise DRM efforts at large

Review on ex-ante socioeconomic loss data

estimation methods

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– Continue country data collection

– Evaluate potential for conducting cross-country comparisons

Going forward

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Catherine.gamper@oecd.org