Attachments
INTRODUCTION
The April 2015 earthquake that struck the Nepalese region of Gorkha killed nearly 9,000 people, injured more than 16,000 and destroyed hundreds of thousands of homes across the country. In addition to the human suffering it caused, the magnitude 7.8 quake had an immediate economic impact estimated at as much as half of Nepal’s $20 billion GDP. The ensuing internal displacement had further consequences for the economy that until now have not been quantified.
IDMC launched a research project in 2017 to assess the economic impact of internal displacement in terms of livelihoods, housing and infrastructure, health, education, social networks, security and the environment. As part of our research, we developed a new methodology to estimate lost production, which we have applied here to the Gorkha earthquake.
ESTIMATING THE IMPACT OF INTERNAL DISPLACEMENT ON PRODUCTION
Estimates of the economic impact of internal displacement are rare and tend to focus on the cost of providing emergency assistance and temporary shelter for internally displaced people (IDPs). This, however, is only the tip of the iceberg, and overlooks longer-term effects on the wider economy, including lost production.
Displacement disconnects people from their work for days, weeks and sometimes months or even years. Following the Gorkha earthquake, the UN warned that agricultural production would be significantly reduced, potentially leading to food insecurity, unemployment and reduced incomes.
One approach to estimate this lost production is to postulate that displaced workers are unable to pursue their economic activity for the duration of their displacement. Housing destruction levels can be used to assess the duration of displacement, which is otherwise rarely reported. Severely damaged homes will take longer to be repaired or rebuilt, consigning their inhabitants to longer periods of displacement. Lost production can then be calculated by combining the number of displaced workers, the duration of their displacement and an indicator such as GDP per capita.
THE DISABILITY-ADJUSTED LIFE YEAR APPROACH
This methodology builds on the disability-adjusted life year (DALY) approach used in public health to quantify the number of years lost because of diseases, disability or early death. One DALY corresponds to a lost year of healthy life, calculated as of the number of years lived with disability added to the number of years of life lost because of premature mortality. Such estimates tend to rely on historical data.
The DALY approach has been used to estimate the non-monetary impact of disasters in terms of life years lost because of an event,6 and to assess subsequent lost economic production. Until now, however, it had not been used to estimate the economic impacts of internal displacement. |
DATA REQUIREMENTS
In order to apply this methodology to a real displacement situation, data is needed to estimate hazard, exposure and vulnerability characteristics.
Hazard data must be given in terms of an intensity measure that correlates well with the expected damage to residential buildings, such as ground motion for earthquakes, water depth for floods or gust speed for cyclonic winds. Such measures should ideally be accompanied by a dispersion measure to account for uncertainties.
Exposure databases are needed to identify the buildings subjected to damage and characterise them by construction materials, structural system, number of storeys, main use and number of inhabitants.
Vulnerability functions associate hazard intensities with expected damage and losses for each of the building classes in the exposure database. To assess internal displacement, they are based on thresholds which assume that once a certain hazard intensity has been reached, the buildings become inhabitable and all of their occupants become displaced.
Figure 1 below shows an example of such a function for earthquakes, in which damage becomes such that all homes are made uninhabitable when peak ground acceleration in the affected area is around 0.2g.