March 11 marks the sixth anniversary of the Tohoku earthquake and tsunami in Japan. The human and economic consequences of this event have tragically illustrated that even the best-prepared and most advanced countries face the threat of natural disasters, and that natural risk can never be reduced to zero. The world will see more disasters in the future, and needs to prepare for them.
In particular, we need to protect the poorest and most vulnerable, and enable them to better cope with and recover from these shocks.
This is the main conclusion of the World Bank and Global Facility for Disaster Reduction and Recovery (GFDRR) report, "Unbreakable: Building the Resilience of the Poor in the Face of Natural Disasters," which challenges how we traditionally view the economic toll of natural disasters.
The impacts of disasters -- including floods, droughts, earthquakes, typhoons, and other natural events -- are familiar to all, claiming lives and burdening both developed and developing economies. According to the United Nations, assets lost to natural disasters worldwide exceed $300 billion each year.
But such economic costs do not tell the entire story. This measure -- one that focuses on asset losses alone -- does not capture the impact on livelihoods and future prospects for those living in poverty. Conservative estimates indicate that natural hazards force some 26 million people into poverty each year -- among them, for example, were 2 million people who fell into poverty when Typhoon Haiyan hit the Philippines in 2013.
A loss of, say, $1,000 in storm damages does not affect a rich person as deeply as it does a person living on only a few dollars per day. Poor people often lose all of what took them years to accumulate. Myanmar's 2008 Cyclone Nargis, for example, forced many poor farmers to sell off land and lose their main source of income. While richer individuals can reduce nonessential consumption, poor people are often left with no choice but to reduce food intake, health care, or education. Such cuts to basic necessities affect well-being, sometimes permanently: for instance, undernourishment stunts physical and cognitive development in children.
We need to measure disaster damages to take into account the disproportionate vulnerability of poor people. When we do, our estimate of the global cost of natural disasters grows by 60%, from $300 billion to $520 billion per year. East Asia and the Pacific are acutely impacted, with regional disaster losses totaling $200 billion per year. That is almost 40% of the world total.
The "Unbreakable" report demonstrates the need for continued and urgent action at the national, regional, and household levels, and identifies practical and promising solutions.
First, early warning systems can save lives and help industries and households prepare for future events, reducing economic losses. Immense progress has been made in some countries. This was illustrated when Cyclone Phailin made landfall in the Indian state of Odisha in October 2013. A similar storm that hit the same coastline 14 years earlier caused massive devastation, killing more than 10,000 people. In 2013, however, the official death toll was 38, with close to a million people evacuated.
The improvement was the result of years of advances made by the Odisha State Disaster Management Authority and the state government. Their efforts were coordinated with local communities and organizations, including volunteer teams and local champions who knew what needed to be done when the time came to act. We need to continue this work to ensure everybody benefits from such warnings.
Even the most advanced countries can improve. Take the case of Japan, where authorities were able to issue a tsunami warning just three minutes after the 2011 earthquake. They nevertheless dedicated significant effort and investment in learning from the event to improve the accuracy, timeliness, and messaging of its systems, and to share these lessons with the rest of the world.
A second pillar is building the resilience of populations so that people can recover better and faster when disaster strikes, thanks to safeguards such as social safety nets, insurance products, and savings accounts. Here again, progress -- while insufficient -- can be observed. The number of countries with conditional cash transfers to the poor has increased dramatically, from 27 in 2008 to 64 in 2014. And the number of people with a bank account increased from 51% to 62% between 2011 and 2014.
These changes increase the resilience of the population. In Bangladesh, the Chars Livelihoods Program protected 95% of recipients from losing their assets after the 2012 floods. And in Mexico, beneficiaries of the national cash transfer program are less likely to withdraw their children from school after a shock.
Now a new generation of social protection systems is emerging. These safety nets are designed to respond very rapidly to natural disasters by increasing the amount of transfers and covering more people after the shock -- so that people do not have to rely on desperate actions like forced migration, reduced food intake, or child labor. These systems have been extremely efficient in countries like Ethiopia and Kenya, helping poor farmers cope with recent droughts for a cost that is small compared to that of a humanitarian intervention. They now need to be generalized in other vulnerable countries.
In addition, sounder infrastructure, safer land use policies and tougher building codes make for more resilient environments. The challenge here is immense. The world will see the construction of 1 billion new dwelling units by 2050. With current practices, the number of buildings in flood zones or unable to resist to earthquakes will soar, especially in Asia where cities are growing fast. In Nepal's capital Kathmandu, the number of buildings that could collapse in a large earthquake nearly doubles every 10 years. New building norms and land use plans will not be enough: Enforcement is critically important and remains difficult, especially for informal housing and in poorer countries.
Benefits from targeted intervention can be large, for instance targeting safer schools, hospitals, and other public buildings. In the Philippines, retrofitting 40% of Metro Manila public school buildings could save around 19,000 students if an earthquake occurs on the West Valley Fault.
We tend to see improvements in locations that have been hit, for instance with better early warning systems now in place in Indonesia and the rest of the region affected by the 2004 tsunami. The time is now to become more proactive and build resilience before a large disaster strikes, not after. This is the objective of the Japan-World Bank Program for Mainstreaming Disaster Risk Management in developing countries, which was launched in 2014.
The "Unbreakable" report proposes a global "resilience policy package" to do just that. The package could help countries and societies save more than $100 billion per year worldwide, according to estimates.
The evidence is undeniable: Reducing disaster risk not only saves lives and protects the poor, but is also good economics.
Stephane Hallegatte is a lead economist with the Global Facility for Disaster Reduction and Recovery at the World Bank. He joined the World Bank in 2012 after 10 years of academic research on the economics of natural disasters and risk management, climate change and green growth.