Introduction
The risk of a disaster can cause economic losses even before a disaster strikes. Investing in disaster resilience, therefore, can yield a ‘triple dividend’ by (1) avoiding losses when disasters strike; (2) unlocking development potential by stimulating innovation and bolstering economic activity in a context of reduced disaster-related background risk for investment; and (3) through the synergies of the social, environment and economic co-benefits of disaster risk management investments even if a disaster does not happen for many years.
The devastating effects of disasters are experienced regularly and are widely documented: Lives are lost, economies suffer, essential infrastructure is destroyed, firms lose assets and markets, households become trapped in poverty, and their welfare is severely reduced with effects on education, health and income.
These losses devastate communities and nations in the short term, and impede development potential in the long run. However, strong evidence also suggests that the mere possibility of a future disaster has real impacts on present-day decisions and economic growth. Excessively risk-averse households and firms avoid long-term investments in productive assets, entrepreneurship is restricted, planning horizons are shortened – and development opportunities are lost.
Despite widespread awareness of these rising losses, investment in ex-ante Disaster Risk Management (DRM) remain low. Part of the reason for this lies in the way in which decisions are made about DRM investment. Short political mandates induce policymakers to take a gamble and put off investments to build resilience. As with investment in voluntary insurance, resilience is perceived as a ‘sunk’ cost if disaster does not strike.
However this perception is flawed. Even if a disaster does not occur for a long time, investing in DRM yields real benefits in both the short and long term. Reducing disaster-related ‘background risk’ enables forward-looking planning, long-term capital investments, and entrepreneurship. In addition, and regardless of whether a disaster hits or not, DRM investments generate co-benefits as a result of the ‘spill-over’ of social, economic and environmental benefits arising from DRM investments themselves.
These benefits are in addition to the avoided loss and damage, when a disaster strikes. Put simply, not investing in DRM is a missed opportunity for social, economic and environmental progress.
The post-2015 Hyogo Framework for Action provides a platform for national governments to make joint commitments to reduce risk, underpinned by a targeted commitment to invest, especially at a local level. The DRM community now needs to scale up efforts to communicate the many incentives for investment in DRM and the integration of risk concerns into development. Highlighting the triple dividend of resilience can help play a central role in the process.
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