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Investing in people or building more stuff: which is better for reducing disaster risks?

14 December 2011

This is a guest post from Chris Anderson, Oxfam’s global adviser on disaster risk reduction

While the global humanitarian response system is more effective and sophisticated than ever before, in its current form it’s being outstripped by the pace of increasing risks.

The answer is Disaster Risk Reduction (DRR), which makes great financial sense if done well. But what does ‘well’ mean and why does risk reduction receive so little investment. According to the Global Humanitarian Assistance report 2011, for every US$100 spent on official humanitarian assistance in the World’s top 20 recipients, only 75 cents – or 0.75% – goes on disaster preparedness and prevention.

Most visible among risk reduction measures are the large-scale technological schemes to control the damage of natural phenomena, which are undoubtedly necessary. The US$3.15 billion that China spent on flood control between 1960 and 2000 is estimated to have averted losses of about US$12 billion – a ratio of roughly 1 to 4. The Rio de Janeiro flood reconstruction and prevention project in Brazil yielded an internal rate of return exceeding 50% and a mangrove-planting project in Vietnam (see pic) aimed at protecting coastal populations from typhoons and storms yielded an estimated benefit/cost ratio of 52 over the period 1994 to 2001.

Less obvious perhaps but no less wise is the investment that enables people themselves to become more resilient to the shocks and stresses they face, long after the concrete mixers or aid workers have gone home.

Here, cost-benefit analysis (CBA) is trickier than for big infrastructure projects, but developing the resilience and ‘agency’ of individuals and their communities often produces far higher and longer lasting benefits and should be given equal if not higher value. This is particularly the case for people who have little or weak government to support them and whose livelihoods are insecure.

With failed embankments in Pakistan and Bangladesh and inadequate sea defences in New Orleans, we have dramatic evidence that costly hardware schemes decided upon by primarily economic and technological principles not only can fail spectacularly, but worse can increase risk by lulling people into a false sense of security, or by benefitting one group to the detriment of another.

A study by Courtenay Cabot-Venton, commissioned by Oxfam America and Tear Fund, analysed a selection of CBA studies and found that investing in engagement and ‘soft’ resilience measures with communities over the longer- term can reap significant benefits. Whereas much development programming typically runs for one to three years, the analysis of a British Red Cross project in Nepal shows that returns can often be doubled if a small amount of support, such as refresher training, or maintenance on physical works, is provided over a longer term period of 10-15 years.

The study warns against over-emphasizing immediate economic rates of return in cost benefit thinking. The opinion of people on the ground on whether hard or soft resilience-building interventions have more value to them varies hugely over time. If asked soon after a new physical asset has been provided, then people tend to value it highly. But wait until more time has passed, and the asset has perhaps fallen into disuse, and people value less tangible investments to build their own capacity far more. It’s logical then that when physical hardware interventions are developed along with the end user, and conducted in a transparent and accessible manner, the impact and sustainability improves greatly.

Interventions that bring wider development gains and enable people to adapt to unpredictable risk and changes are generally going to be more cost effective and more sensible in relation to uncertainties such as climate change. Supporting ‘no-regrets options’ that reduce people’s vulnerability more generally – such as the conservation of a natural wetland that sustains nutrition levels of local populations through fish protein, provides them with water in times of drought, helps with flood control, as well as offering income generating opportunities – makes sense in the face of the range of unpredictable risks that many face. These need to be given far more priority in planning and investment alongside physical schemes to control the impact of predicted events.