dr. arup banerji - world bankpubdocs.worldbank.org/en/295001481606333918/110614... · dr. arup...
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Public Seminar
“Social Risk Management for Mitigating Social
and Economic Impacts from Natural Disasters”
November 6, 2014
Tokyo DRM Hub & World Bank Tokyo Office
Dr. Arup Banerji
“Social Risk Management for Mitigating Social and Economic Impacts from Natual Disasters”
Comments by
Yasuyuki Sawada
University of Tokyo1
Rikuzentakata in May 2011
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Summary
Comments
1. Cost effectiveness of hybrid programs?
2. The market, state, and community trinity
3. Japan’s experience
4. Use of innovations?
2
Outline
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Summary
Comments
1. Cost effectiveness of hybrid programs?
2. The market, state, and community trinity
3. Japan’s experience
4. Use of innovations?
3
Outline
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• We are exposed to (increasing) social and disaster risks (idiosyncratic to covariate)
• SRM and DRM to strengthen resilience and risk management (i.e., risk reduction, mitigation, and coping)
• Naturally, a hybrid program of SRM and DRM (see Sawada (2007), “The impact of natural and manmade disasters on household welfare” Agricultural Economics).
– Brazil’s Bolsa Familia program
– Ethiopia’s PSNP
– Mexico’s PET, Philippilnes’ 4P, and Pakistan’s FECT
• Institutionalization of such hybrid programs
• Japan’s experience?
4
Summary
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Summary
Comments
1. Cost effectiveness of hybrid programs?
2. The market, state, and community trinity
3. Japan’s experience
4. Use of innovations?
5
Outline
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• CCT with self-selection mechanisms minimize inclusion and exclusion errors in poverty targeting.
• Many success stories in post-disaster situations – EGS & NREGA in India,
CFW Japan
• Yet, it may be quite expensive (see right).
• Need a broader framework which nests SRM/DRM nicely. 6
Cost effectiveness of hybrid programs?
RCT-based cost comparisons to extend
schooling by one year (USD, in log)
(Source) JPAL
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Summary
Comments
1. Cost effectiveness of hybrid programs?
2. The market, state, and community trinity
3. Japan’s experience
4. Use of innovations?
7
Outline
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Basic Problem:Reconciliation of resource fluctuations & livelihood
(consumption) smoothing
• A variety of informal and formal (or market & non-market) risk management or insurance mechanisms– Ex ante risk management
• Investments for resilience
• Production and income risk diversifications
– Ex post risk coping • Consumption reallocation
• Credit transactions
• Dissaving of precautionary assets
• Human assets
• Private and public transfers
• Disasters: unforeseen contingencies which generate unexpected sharp decline of resources
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Admittedly, we are exposed to risks
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The Market, State, and Community Trinity
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The Market, State, and Community Trinity
SRM/DRM
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(Source) Munich RE
Sawada and Nakata (2008)
Very Weak Market Mechanisms
How can we overcome this?How can we strengthen the trinity?
Role of SRM and DRM?
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Summary
Comments
1. Cost effectiveness of hybrid programs?
2. The market, state, and community trinity
3. Japan’s experience
4. Role of innovations
13
Outline
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Case of Yamakoshi Village
• Chuetsu earthquake of Oct 23, 2004
– 6.8 on Richter scale
– 68 people lost; and 28.3 billion USD lost
• Look closely at Yamakoshi village
– A mountainous village
– Two main industries: paddy production & "Koi" carp breeding.
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Case of Yamakoshi Village• Few human losses but huge home damages
Professor Mitsuyoshi Yoshie
Tokyo Metropolitan University Soil Mechanics Laboratory
http://geot.civil.ues.tmu.ac.jp/archives/eq/index-j.html
Source) Sawada and Shimizutani (2008) and Ichimura, Sawada, and Shimizutani (2007)
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Case of Yamakoshi Village
Census data by Ichimura, Sawada, and Shimizutani (2007) combined with
GIS geological information and government records
– Earthquake insurance participation rate was 82.2%!
Sensitivities of five coping strategies: Market
Receiving insurance payouts
Borrowing
State
Receiving public transfers (DRM)
Community
Private donations (Gienkin)
Private transfers
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Cases of Kobe, Yamakoshi, and Sendai
(Source) Sawada and Shimizutani
(2008), Ichimura, Sawada, and
Shimizutani (2007, 2012)
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Cases of Kobe, Yamakoshi, and Sendai
• A hybrid of SRM and DRM to complement effective insurance
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Summary
Comments
1. Cost effectiveness of hybrid programs?
2. The market, state, and community trinity
3. Japan’s experience
4. Use of innovations?
19
Outline
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Use of Innovations?• Use of technologies
– (a sort of ) PPP in SRM and DRM to strengthen the trinity?
• MF (microcredit and microinsurance) in SRM and DRM
• Verifications and matching by technologies
• Use of ICT and branchless banking networks
– Index insurance contracts written against aggregate events (as opposed to indemnity-based insurance)
• Weather index risk transfer products
• NDVI-based index insurance to tackle droughts
• Macro index insurance (CCRIF and PCRAFI)
• “The last one mile problem” due to human behavior
• Care for psychosocial impacts