The tsunami which hit Maldives on 26 December, 2004 was a nation-wide disaster which caused severe damage to the physical infrastructure of many islands. The tsunami has set back the high levels of social progress and prosperity achieved in recent years. Total damages are estimated to be US$470 million, 62% of Gross Domestic Product (GDP). Of these losses, direct losses are $298 million, or about 8% of the replacement cost of the national capital stock. Severe damage was caused to houses, tourist resorts, boats and other fishing equipment, schools, health facilities, transport and communication equipment, water and sanitation, and electricity infrastructure. There has also been substantial damage to agricultural crops and perennial trees. Farms, homestead plots, and aquifers have been salinized. The physical damage has led to severe human suffering inasmuch as large segments of the population have lost their dwellings, lifetime assets, savings, and sources of livelihood. About 7% of the population is now living in temporary shelters or with relatives.
The total damage estimate of US$470 million does not, however, include a very real and critical cost that would demand additional financing, namely the cost of environmental damage and substantial soil erosion on many affected islands that to a great extent rely for their livelihoods on agriculture and home based market gardening; these costs could not yet be quantified as detailed surveys are still under way.
The transmission of the physical damage into an economic shock occurred to a large extent via contraction of the tourism and fisheries sectors, which sustained the largest losses. Lost tourism and fisheries income will cause GDP growth, employment, and government revenues to contract this year. The revival of the Maldivian economy depends critically on how fast the two leading sectors, tourism and fisheries, recover. Public financing for the reconstruction of lost or damaged assets and infrastructure, and for providing temporary income support to the affected, will be critical.
In terms of impacts on the Government's long-term development strategy, the tsunami has reinforced the established policy of encouraging voluntary population movements to less vulnerable islands, which has now assumed even greater urgency than in the past. This policy aims to mitigate the risks of future tsunamis and rising sea levels, help realize economies of scale in the provision of public and private services in the atolls, strengthen service quality in the atolls, improve welfare, and help retain the population in the atolls.
The government has made a commendable effort to provide swift relief to the affected and is now engaged in planning and executing a reconstruction program. Reconstruction of public assets and restoring lost government revenue will require financing of $364 million, most of which will need to come from external sources in grants and highly concessional loans. This document spells out in some detail the physical damage and human suffering caused by the tsunami, the recovery strategy, and financing needs. A set of accompanying annexes discuss impacts of the tsunami on individual sectors in greater detail.
Location and Risk Factors
1. Geography - The Maldives is a chain of Indian Ocean islands spread over a distance of 900 kilometers, located between northern latitude 4 to slightly south of the equator. The land area, which covers about 26 geographic atolls, is grouped into 20 administrative atolls. The population of the Maldives is about 300,000. The country faces two main geographic challenges: (a) the presence of a highly dispersed land mass of very small size, resulting in a highly dispersed population, and (b) the low altitude of the islands. The country has 1,190 islands, of which 198 were inhabited prior to the tsunami. Of these islands, only 28 have a land area greater than one square kilometer. One-third of the inhabited islands have a population of less than 500 and 70% of the inhabited islands have a population of less than 1,000. This extremely low population density makes the Maldives unique, even among small island archipelagic states. It also raises the cost of delivering social services and of public administration, as there is hardly any scope to generate economies of scale. Because of the low altitude of most of the islands, rising sea levels may cause many islands to disappear, render some inhabited islands ecologically vulnerable, and other islands to become too densely populated to sustain their population. The greater Malé area-already home to 70,000 people or almost one quarter of the population-is of specific concern because of increasing strain on social and public services caused by continuing inmigration from other parts of the archipelago.
2. Risks - The main risk factor stems from the extremely low elevation of all Maldivian islands: the average elevation is 1.5 meters above sea level. This increases the risks from the tsunami and from global warming. Of 198 inhabited islands, 88 face perennial beach erosion. Wide dispersal of population across very small and remote islands results in diseconomies of scale, high transport costs, and poses unique challenges to development, recovery and relief efforts. Normally, Maldives does not suffer from high risk of natural disasters-the cyclones which affect other parts of the Indian Ocean bypass the Maldives. As a consequence, Maldives has focused on its main perceived long-term risk: global warming and rising sea levels.
3. The tsunami traveled at over 700 kilometers per hour and reached Maldives at 9:20 AM on 26 December 2004. From around 9:15 am, tidal waves generated by the tsunami struck the islands. Tidal waves ranging from 4 to 14 feet were reported in all parts of the country. More than 1300 people suffered injuries; 83 people are confirmed dead and another 25 are missing and feared dead. Unlike other countries affected by the tsunami, Maldives experienced a disaster of national proportion. Thirty nine islands were significantly damaged and nearly a third of the Maldives' 300,000 people were severely affected. Fourteen islands were completely destroyed and had to be evacuated. Nearly 12,000 people have been displaced from their islands, and another 8,500 people are temporarily relocated to other places on their own island; thus 7% of the population of Maldives were displaced. The force of the waves caused widespread devastation of shelter and infrastructure in the atolls. Flooding caused by the tsunami wiped out electricity on many islands, destroying also their communication links. Water supply was disrupted in about 15% of the islands and 25% had major damage to the essential infrastructure such as jetties and harbors that links these islands with Malé . Electricity supply in many affected islands has yet to be restored. The impact on an economy largely based on tourism, fisheries, and agriculture will be substantive. Livelihoods of thousands have been undermined and will continue to suffer.
Context of this report
4. Context - Immediately, following the tsunami, the Government contacted the World Bank and the Asian Development Bank (ADB) to request their support in developing a joint assessment of the tsunami damage and recovery needs. The first assessment mission went to Maldives during early January 2005 where it was joined by the UN System, making this a joint assessment by the three organizations. The Japan Bank for International Cooperation (JBIC) joined the latter stages of the mission. A follow-up mission finalized this assessment between February 1-7 2005, revising the initial estimates based on new data and extensive comments received from the Government and other partners. The team would like to thank its principal counterparts in the Government for the cooperation extended. The team's work was also facilitated by visits from senior management including the Secretary General of the United Nations, the President, Vice President and Country Director of the World Bank, and the Country Director of the Asian Development Bank. The Team was led by Qaiser Khan from the World Bank and Meriaty Subroto from the ADB. Moin Karim was appointed as the Coordinator for the UN system. The list of team members is provided at the end of the main report.
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