Financial aspects of Financial aspects of risk reduction in health risk reduction in health

facilitiesfacilitiesVulnerability reduction of health Vulnerability reduction of health

facilitiesfacilitiesSession 4.2Session 4.2

World Conference on Disaster ReductionWorld Conference on Disaster Reduction18-22 January, Kobe, Hyogo, Japan18-22 January, Kobe, Hyogo, Japan

Thursday 20 January (Nunobiki Room, 15-17 hours)Thursday 20 January (Nunobiki Room, 15-17 hours)

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General considerationsGeneral considerations

• Cost-benefit analysisCost-benefit analysis– The Latin American experience in The Latin American experience in

promoting safer hospitals (ECLAC’s promoting safer hospitals (ECLAC’s contribution)contribution)

– Loss of valuable assets and need to Loss of valuable assets and need to reinvest instead of expand deficient reinvest instead of expand deficient coverage of social servicescoverage of social services

– Loss of productivity and competitiveness Loss of productivity and competitiveness due to the human toll and insufficient due to the human toll and insufficient medical attention (DALYs analysis)medical attention (DALYs analysis)

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Need to expand Need to expand researchresearch

• The work of CREDThe work of CRED– Documenting disasters: lives lost Documenting disasters: lives lost

or affected population tend to be or affected population tend to be well established vs. Insufficient well established vs. Insufficient comparable data of economic comparable data of economic impact of risk in health facilitiesimpact of risk in health facilities

• Compare budget of health Compare budget of health services vs. economic and social services vs. economic and social cost of their lack or insufficiencycost of their lack or insufficiency

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The risk formulaThe risk formula

• Hazards (measurable in absolute Hazards (measurable in absolute terms, classifiable by type, terms, classifiable by type, statistically determined recurrence)statistically determined recurrence)

• Complex hazards and their Complex hazards and their exponential damage impactexponential damage impact

• Vulnerability (as emerging from Vulnerability (as emerging from socioeconomic, political, and socioeconomic, political, and physical conditions)physical conditions)

• Risk as the function of both hazard Risk as the function of both hazard and vulnerabilitiesand vulnerabilities

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The materialization of risk and The materialization of risk and the need for physical and the need for physical and

financial protectionfinancial protection• Save livelihoods and Save livelihoods and

protecting infrastructureprotecting infrastructure• Profiles of human toll, damage Profiles of human toll, damage

and losses point to need for and losses point to need for new, diverse forms of new, diverse forms of financing disaster riskfinancing disaster risk

• Face vulnerability of small, Face vulnerability of small, less diversified economiesless diversified economies

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As affected in Aceh and North As affected in Aceh and North Sumatra Sumatra (Indonesia, Dec. 26, 2004)(Indonesia, Dec. 26, 2004)

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Summary table of damages and losses (Billion Rupiah)

  Total Damages Losses Private Public

Housing 13,365 13,004 361 13,617 2,572

Education 1,194 1,110 84 84 1,110

Health 854 767 87 216 638

Culture and religion 776 776 0 219 557

Transport 4,984 3,632 1,352 1,542 3,442

Communications 203 176 27 80 123

Energy 632 631 1 10 622

Water and sanitation 277 247 30 170 106

Flood control, irrigation and sea protection works 2,058 1,229 829 1,229 829

Agriculture and livestock 2,090 780 1,310 1,811 278

Fisheries 4,751 944 3,807 4,729 23

Industry and trade 4,153 1,549 2,604 3,988 163

Environment 5,105 1,437 3,668 5,105 0

Governance and administration 829 779 50 0 829

Bank and Finance 130 130 0 130 0

TOTAL IMPACT 41,401 27,191 14,210 32,930 11,292

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Summary table of Indonesia damages and losses--Earthquake and Tsunami in Aceh and North Sumatra--

(Billion Rupiah)

Damages27,19166%

Losses14,21034%

Public and Private damage an losses

Private32,93074%

Public11,29226%

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Impact of 2005 Impact of 2005 Hurricane season in the Hurricane season in the

CaribbeanCaribbeanHurricane season 2004. Damage distribution by

country

Hurricane IvanCayman Islands

56%

Hurricane Jeanne

Haiti5% Hurricane Ivan

Jamaica10%

Hurricane IvanGrenada

15%

Tropical Storm Jeanne

Dominican Republic

5%

Hurricanes Frances and

JeanneBahamas

9%

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Damage profile in the Damage profile in the Caribbean Hurricane 2004 Caribbean Hurricane 2004

seasonseason

Composition of damage and losses

Productive Sectors

35.2%

Infrastructure 15.6%

Social Sectors 47.5%

Environment

1.3%

Emergency and relief

0.4%

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• Damage and losses in the health Damage and losses in the health sector as percentage of totalsector as percentage of total

GrenadaGrenada 0.46%0.46%

JamaicaJamaica 2.06%2.06%

Dominican RepublicDominican Republic 0.97%0.97%

HaitiHaiti 1.62%1.62%

Cayman IslandsCayman Islands 0.66%0.66%

BahamasBahamas 1.27%1.27%

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Make actual health Make actual health costs visiblecosts visible

• Normally assessments show only Normally assessments show only assets lost in health infrastructureassets lost in health infrastructure

• Actual loss of servicies is Actual loss of servicies is insufficiently reflectedinsufficiently reflected

• Social costs of lack of health services Social costs of lack of health services on the population, on production, on on the population, on production, on the community, are not quantified the community, are not quantified explicitly but reflected in losses in all explicitly but reflected in losses in all other activitiesother activities

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Risk managementRisk management

• Risk reduction, risk mitigation, risk Risk reduction, risk mitigation, risk spread and risk transferspread and risk transfer– Physical implications: stronger requirements Physical implications: stronger requirements

in new installations, reinforcement of crucial in new installations, reinforcement of crucial services providing infrastructureservices providing infrastructure

– Social implications: lack of health facilities Social implications: lack of health facilities reduces productivity, competitiveness, reduces productivity, competitiveness, employment and income and the social fabricemployment and income and the social fabric

– Economic implications: insurance and other Economic implications: insurance and other mechanisms of risk spreading and mechanisms of risk spreading and transferringtransferring

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Financial Catastrophic Financial Catastrophic instrumentsinstruments

• CAT bondsCAT bonds• Disaster contingency fundsDisaster contingency funds• InsuranceInsurance

Are they applicable to the health Are they applicable to the health sector?sector?

• Generate financial leverageGenerate financial leverage• Reduce dependency on central Reduce dependency on central

budgetbudget

Thank youThank you

www.eclac.clwww.eclac.cl/mexicowww.cepal.orgricardo.zapata@cepal.org