Indicators of Disaster Risk – Information Needs Washington DC, August 18, 2005 Kari Keipi, IDB

Risk Profile for Latin America and the Caribbean During the past 30 years disasters have annually caused US3.2 billion in physical losses – half or more of the total annual loan commitment of the IDB in recent years.

Why the IDB has invested resources in developing DRM indicators: To whom and for what? The Bank is challenged to keep up with disaster losses experienced by its Borrowing Members. The indicators developed is a necessary tool to generate knowledge and awareness of the importance of this risk both within the IDB and with borrowing governments and thus integrate DRM into the IDB’s Country Programming and portfolio management.

The “Americas Program” Indicators have on a pilot basis been developed for 12 countries. Argentina, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Jamaica, Mexico, Peru, and Trinidad and Tobago. Unlike most existing risk indices, the new indicators can be easily interpreted by a wide range of decision-makers in different fields, rather than only by experts. Based on composite indicators, the system consists of four major measures. The Disaster Deficit Index The Local Disaster Index The Prevalent Vulnerability Index Risk Management Index (Institutional)

The Disaster Deficit Index Formula: Macroeconomic loss / supply of funding. Supply sources: Insurance Disaster reserve funds Aid and donations New taxes Budgetary reallocations External credit Internal credit ***************** Lesson learned: the person seeking for these data must have training as an economist

The Disaster Deficit Index DDI and probable maximum loss in 100 years

Local Disaster Index The Local Disaster Index evaluates risks from the accumulated damage caused by recurrent, small-scale disasters. The index takes into account three variables: Deaths, Number of affected people, and Economic loss in housing and crops *********************************** Lessons learned: 1. Deaths and no. of damaged houses are the easiest to identify 2. Official or published information has not necessarily been more reliable than “informally” obtained data 3. EMDAT and DesInventar complement each other 4. DesInventar has been a very useful source for municipal data for Local Disaster Index

Local Disaster Index

Prevalent Vulnerability Index PVI is an average of three types of composite indicators Exposure and susceptibility (susceptible population, assets, investment, production, livelihoods, essential patrimony, and human activities) Socio-economic fragility (poverty, human insecurity, dependency, illiteracy, social disparities, unemployment, inflation, debt and environmental deterioration). Lack of resilience (inverted treatment of: human development levels, human capital, economic redistribution, governance, financial protection, collective perceptions, preparedness to face crisis situations, and environmental protection). *********************** Lessons learned: Continuous time series data on poverty and social disparities have been the most difficult to obtain

Methodology Issues  To whom and for what do we develop/provide data and indicators?  How do we define sub-indeces and weights?  How is reliability or validity tested?  Will the procedures be inductive or deductive?  Use of subjective data when objective information is not available?  Should all the data be quantitative?

Data Issues  Which methods are available to procure data when this is not officially published?  What methods are to be employed to ensure that data is comparable (between countries)?  What measures should be taken when data is missing?  How do we generate confidence in the estimates produced?

The extent to which the indicator represents reality and are relevant to development policy  Which are the exposed elements? (Stocks and flows, indirect impacts)  Distribution of losses? (public- private, poor-rich)  Relevance of maximum probable event vs. smaller often recurring event (the 500 year event vs. the 3 year event)?