The Chronology of a Disaster: A Review and Assessment of Acting Early on Household Welfare PDF

1. Introduction When shocks strike they have an immediate and direct impact on life, income, and assets. This review does not aim to quantify these losses but rather to quantify the welfare gain to households of intervening early to replace lost income and assets. The...

1. Introduction When shocks strike they have an immediate and direct impact on life, income, and assets. This review does not aim to quantify these losses but rather to quantify the welfare gain to households of intervening early to replace lost income and assets. The impact of a shock on household welfare is the cumulative effect of the initial income or asset loss and the impact of a series of entitlement failures in the local economy that is triggered by this initial loss (Sen 1981; Devereux 2007). Much of the literature on the impact of shocks has focused on the cumulative welfare impact, and little attention has been given to the progression of entitlement failures and the timing of their impact. As a result, it has been difficult to quantify the welfare benefit of intervening earlier rather than later to miti- gate the impact of the shock. Two strands of literature can be usefully brought together to generate some initial indicative estimates of the timing of a shock’s impacts, and thus the likely benefit of acting early to mitigate these impacts: 1. Post-disaster and vulnerability assessments that explain how the impact of different disasters unfolds, that estimate losses from assets and income, or that present data on coping mechanisms used 2. Micro econometric studies that assess the cost imposed by coping strategies on income and growth An initial assessment of this literature was undertaken in Clarke and Hill (2013) for drought in Africa. This paper extends and updates this review by (i) adding new studies published in the last five years; and (ii) including studies outside of Africa and considering other types of disaster in addition to drought—specifically floods and earthquakes in Asia, and earthquakes, cyclones, or hurricanes in small island states (Pacific, Caribbean). 8 THE CHRONOLOGY OF A DISASTER We find that across settings and types of shock considered by this paper, the most prevalent coping mechanism used by households was to reduce food consumption. This finding is consistent with a well-published literature showing that variability of income over time impacts child nutrition and can be linked to stunting, a condition that causes irrevocable harm by impairing brain development, leading to lower cognitive and socioemotional skills, lower levels of educational attainment, and hence lower incomes. We use data on consumption losses and nutrition outcomes collected in the months after a disaster to detail the timing of this impact to the extent possible. The data on which to draw is limited, but clear patterns do emerge. The timing of the impact is quite different for rapid-onset shocks like earthquakes, floods, and hurricanes, which destroy both income and assets, than it is for drought, a slow-onset shock primarily impacting income. In the case of earthquakes, floods, and hurricanes, nutrition is impacted immediately and improves after a few months. High-frequency data collected during six droughts in eastern and southern Africa shows that after drought, nutrition (on average) decelerates more rapidly than at other times, from 5 months after the start of harvest until 11 months after the start of harvest. The reduction in nutrition was immediate, however, in the one conflict setting for which data was available (Somalia). We estimate that the cost of not getting a response in place in time to meet the consumption needs of those suffering from drought is 3.9 percent lower income (GDP) per capita in the long-run. The gain from an emergency response that is one month quicker is 0.8 percent of income per capita in the long run. The paper proceeds as follows. Section 2 sets out the framework and approach used. Section 3 presents evidence on rapid-onset events, section 4 on slow-onset events, and section 5 on prices. Section 6 offers some conclusions and recommenda- tions for future data collection. 2. Framework and approach 2.1. FRAMEWORK In looking at the economic costs of disasters, it is useful to separate those that arise from the loss of assets (such as loss of a family home in an earthquake) from the loss of income (such as the loss of family farm income due to drought-induced crop damage). This distinction is a bit stylized, as some asset losses result in income losses. Each of these costs has an immediate impact on welfare, but the cost of the loss can escalate if additional income-earning opportunities are lost, or if costly coping strategies are undertaken. The possible channels of a welfare impact from the loss of private assets are depicted in figure 2.1. It is possible for asset losses to have little impact on welfare or income growth if households are able to deplete savings to replace assets, or if they can increase income from other sources with little cost (such as by working additional hours or receiving transfers from family members). These are shown as light circles in the diagram. However, many of the other strategies used by house- holds can be costly and can impact a household’s present welfare or its ability to improve its welfare in the long run; these are represented by the shaded circles. Families may take loans to replace assets, and for poorer households with little access to formal banking channels, these loans often come with high interest. Household members sometimes increase income by taking on additional work that carries a high cost, including risky work such as prostitution. Households can also divert resources from productive investments, such as investments in their child’s schooling or inputs for the next crop. Or they may sell productive assets such as livestock to replace the asset lost. Sometimes households reduce consumption to replace a lost asset. This approach has immediate impacts on welfare; for children, pregnant women, or lactating mothers, it can also have long-run effects on physical and cognitive development. The direct and indirect impacts of disasters may have a greater effect on women and girls than on men and boys, and there is evidence that females are more likely 10 THE CHRONOLOGY OF A DISASTER to die, reduce their consumption, and be taken out of school than males (Baez, de la Fuente, and Santos 2010). Another important channel through which earthquakes, floods, and hurricanes can influence welfare is the alteration of the disease environment net of any parental response to child illness. These events may cause damage to water and sanitation facilities, thus increasing their association with higher contemporaneous incidence of diarrheal disease, and even typhoid and cholera (WHO 2002). Disasters can also reduce access to health facilities, and standing water indirectly leads to an increase in vector-borne diseases (such as malaria and dengue) by increasing the number of vector habitats and expanding their range. Such illnesses lower the capacity to take in and retain essential nutrients from food. Insofar as parents cannot entirely pre- vent or perfectly ameliorate these effects of illness on their children, disaster shocks will have a negative impact on nutritional status through the disease channel. Private asset loss can also have an immediate and long-run impact on welfare when productive assets are damaged and income is lost as a result. For example, loss of electricity or workspace, or loss of agricultural land to salinity in coastal flooding, can have an immediate impact on income that lasts until the lost asset can be replaced. Normal depletion of FIGURE 2.1: savings to POSSIBLE WELFARE Reduction in replace asset Increase in IMPACTS OF LOSS OF productive income from investment to other sources to ASSETS replace asset replace asset Note: WASH = water, sanitation, and hygiene. Circles with teal outline indicate outcomes with little negative impact on welfare. Red Loss of health, Increase in arrows indicate coping strategies nutrition if income from that have knock on impacts on prices and thus an indirect impact access to WASH risky sources to on welfare (good or bad for affected Loss of replace asset different households). asset Loss of income High-interest (if productive loans to asset lost) replace asset Reduction in Sale of consumption to productive assets replace asset to replace asset A REVIEW AND ASSESSMENT OF THE VALUE OF ACTING EARLY ON HOUSEHOLD WELFARE 11 Disasters can also cause income losses through other means. When public assets such as bridges and roads are damaged, market access can be limited. The loss of standing crops in the field due to disaster not only has an immediate impact on welfare, but can also have knock-on impacts that cause additional and sustained impacts on welfare. These mechanisms, shown in figure 2.2, are the same as those highlighted in figure 2.1, but they are no longer being undertaken in order to replace an asset; they are being undertaken in order to compensate for losses in income. FIGURE 2.2: Normal POSSIBLE WELFARE depletion of IMPACTS OF LOSS OF food stocks INCOME and savings Reduce (incl. small Note: Circles with yellow outline Increase income investments in ruminants) indicate outcomes with little from other sources future production negative impact on welfare. Red (legal, beneficial) arrows indicate coping strategies (e.g., seeds) that have knock on impacts on prices and thus an indirect impact on welfare (good or bad for different households). Reduce Increase income investments in from risky sources health care (prostitution, Loss of theft) income Reduce Sell investments in productive education assets Take Reduce high-interest consumption loan Insofar as households are spatially dispersed and transport infrastructure is weak, markets in food staples may not be well integrated. Localized rainfall shocks may consequently influence food prices. These price effects can compound the the loss of income and cause others who did not lose income to suffer. If the income shock is large enough relative to the size of the market to meaningfully impact local sup- ply or demand, it has an immediate effect on prices and wages. Coping strategies can also have a knock-on impact on prices, as indicated by the red arrows in figure 2.2. If supply of labor increases, wages can fall. Similarly, if there is oversupply of assets (e.g., livestock) or other goods (e.g., charcoal and wild products) that are sold to make up lost income, prices for these assets can fall. 12 THE CHRONOLOGY OF A DISASTER There are three broad mechanisms by which early action brings economic benefits to households: One mechanism is the benefit that arises from replacing assets more quickly. This allows income losses resulting from productive asset losses to be minimized. Estimating this benefit requires an estimate of the economic return to the asset lost within a given time frame. A second mechanism is the benefit from avoiding costly coping strategies associ- ated with lost income and assets. Estimating the gains from avoiding costly coping strategies requires an estimate of the probability that each strategy is used in each month post-disaster and an estimate of the economic cost of engaging in the coping strategy. The key questions in this case are (i) how likely is it that the costly coping strategies will be undertaken; (ii) at what point (i.e., how many months) after a shock do households start to engage in the costly coping strategies; and (iii) what is the economic impact of engaging in these coping strategies? A third mechanism is the benefit from ameliorating any price impacts of a disaster. Estimating the effect of acting early on reducing the negative price effects requires an assessment of when knock-on price impacts occur and how large they are. 2.2. APPROACH: ASSESSING THE TIMING OF IMPACTS This paper reviews humanitarian and post-disaster needs assessments to answer the following questions: 1. What is the relative importance of asset and income losses following a disaster? What types of assets are lost, and what do we know about the timing of their return relative to when they were lost? 2. What is the prevalence of different coping strategies? For the most common coping strategies, what do we know about the timing of their use? 3. What do we know about the timing of price impacts? Question 1 is considered with respect to floods and earthquakes in South Asia, and with respect to earthquakes, hurricanes, and cyclones in small island states. Question 2 is considered with respect to these same disasters as well as drought in Africa. The geographical bounds for the work were chosen to make the search and analysis of humanitarian reports possible with the resources available, and based on the focus of World Bank operational work in these regions.. As Baez, Fuchs, and Castelan (2017) show, the regions focused on here are not the only ones affected by these shocks. In addition to its regional focus, the analysis for question 2 focused exclusively on assessments from 2012 to 2017. This was for two reasons: (i) we wished to expand on the review in Hill and Clarke (2013), which covers a number of reports up to 2012; and (ii) the number of humanitarian reports A REVIEW AND ASSESSMENT OF THE VALUE OF ACTING EARLY ON HOUSEHOLD WELFARE 13 BOX 1: TYPES OF REPORTS REVIEWED Post-disaster needs assessments. These are cross-sectoral needs assessments often conducted by governments with support from the World Bank in the aftermath of a sudden- onset disaster. Their goal is to quantify the value of assets lost and to estimate the income losses that are likely to accrue from the loss of these assets. PDNAs are based on sector expert assessments and take into account any available data. They often focus on the physical losses rather than the household response, but they do include a discussion of how livelihoods and service delivery are affected. Food security assessments. These are often conducted by the World Food Programme and sometimes by other United Nations agencies as well, such as the Food and Agriculture Organization of the United Nations (FAO), which carries out Crop and Food Security Assessments and UNICEF. They focus on assessing whether households are reducing consumption to cope with a shock and what other types of coping mechanisms are being used. There is often some primary data collection that supports the assessment. Vulnerability analysis and mapping reports. These are regular assessments of food security undertaken by the World Food Programme. The ones reviewed here are the monthly bulletins on the mobile Vulnerability Analysis and Mapping (mVAM) survey results. These often focus only on consumption coping mechanisms utilized by households, given that the surveys are conducted over the phone. In addition, Food Security and Nutrition Analysis Unit (FSNAU) data on admissions to feeding programs is used. available online is greater for this period. The full list of assessments reviewed is presented in annex 1, and the broad assessment categories considered are listed in box 1. Question 3 is answered using data for Ethiopia that has been used to answer this question in Hill and Fuje (2018). This is the first time data of this kind has been compiled from humanitarian and food security assessments across countries. The literature review highlights that there is considerable data available in humanitarian and post-disaster needs assessments. It is important to remember, however, that these assessments were undertaken quickly in data-constrained environments. While many of them are based on an impressive amount of information, there are a number of data limita- tions that are worth noting as caveats: ! Lack of quantification: Coping mechanisms are often discussed in reports in qualitative terms; there is no survey data to draw on to quantify the number of households using a given mechanism. It is not clear how the sites that inform the qualitative analysis have been selected, and it is also not obvious how to assess the analysis bias. It could be that places that are easier to reach and with a better emer- gency response are more likely to be visited; alternatively, it could be that places that are hardest hit are visited. 14 THE CHRONOLOGY OF A DISASTER ! Lack of standard definitions: Different agencies use different lists of coping mechanisms in their reports. It is not always clear what type of response falls into a given category. It is sometimes hard to tell whether data on a given mechanism has not collected, or whether it has been collected but was not prevalent. As much as possible, we try to make the distinction clear in the data that is reported. The coping strategy for which data is the most consistently and reliably collected is reduced consumption. In some cases, data on worsening nutrition outcomes is also collect- ed. Given the value of this data to others beyond the agency compiling the report, it would be very useful to develop more standard definitions and lists that could be used for various coping strategies. ! Lack of information on sampling: In all cases, it is not clear how representative the reported data is. Assessments often fail to describe the types of communities and respondents they include, or how the communities and respondents were selected. Again, it is not clear what type of biases will be present. It would be very helpful for assessments to provide more information on how sampling was done. Without this, comparisons across space or time can be difficult. Many of the studies rely on mobile phone surveys conducted monthly with the same set of households and using standard definitions of consumption coping that do not change across settings. In these surveys, the sample is often defined before the onset of a disas- ter. However, little information is available on how the sample was selected or on attrition rates over time.