UNDRR - Media - 47587
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i P O L I C Y B R I E F 2 0 2 0 Multiple benefits of DRR investment Reducing risk and building resilience against floods and droughts in Sub-Saharan Africa UN Office for Disaster Risk Reduction
Transcript of UNDRR - Media - 47587
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P O L I C Y B R I E F 2 0 2 0
Multiple benefits of DRR investmentReducing risk and building resilience against floods and droughts in Sub-Saharan Africa
UN Office for Disaster Risk Reduction
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© United Nations Office for Disaster Risk Reduction 2020.All rights reserved.
UNDRR wishes to express profound appreciation for the work provided by IIASA and the support provided by the National Authorities for disaster risk reduction/disaster risk management and by the United Nations Country Teams in the respective countries.
Coordinators: Roberto Schiano Lomoriello (UNDRR), under the overall supervision of the Risk Knowledge Programme Officer and of the Deputy chief of the Regional Office for Africa.
Authors and Analysts: Junko Mochizuki, (IIASA), Research Scholar, Muneta Yokomatsu, (IIASA), Guest Research Scholar, Elizabeth Tellez-Leon, (IIASA), Research Scholar, Peter A. Burek, (IIASA), Research Scholar, Mariia Nikotova, (University of Vienna), Graduate Student
Contributors: National consultants (Charles Msangi for Tanzania and Mubiana Mutumba for Zambia), and CIMA Research Foundation.
Cover photo: © Jiro Ose / UNICEF shared https://creativecommons.org/licenses/by-nc-nd/2.0/legalcode
Design and layout: hofergrafik°Printing: United Nations Office atNairobi Publishing Services Section
Published in March 2020
The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country or territory or of its authorities or concerning the delimitations of its frontiers or boundaries. The designations of country groups in the text and the tables are intended solely for statistical or analytical convenience and do not necessarily express a judgment about the stage reached by a particular country or area in the development process. Mention of the names of firms and commercial products does not imply the endorsement of the United Nations. Citation: UNDRR (2020), Multiple benefits of DRR investments – Reducing Risk and Building Resilience against floods and droughts in (Country)
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DRR investments can be designed for multi-purpose uses bring co-benefits for sustainable development
Structural and non-structural measures contribute to reducing immediate impacts of disasters in terms of human and direct economic losses
As communities, regions and countries become safer to invest in, economic activities will be enhanced
US$ 6.3 million
US$ 6 million
US$ 7.2 million
Multi-purpose dam for flood reduction
ANGOLA
TANZANIA
ZAMBIA
Ind i rec t Benef i t % o f GDPDi rec t Benef i t
8.5% of GDP
8.8% of GDP
7.6% of GDP
US$ 12.7 million
US$ 21.8 million
US$ 8.4 million
ANGOLA
TANZANIA
ZAMBIA
Ind i rec t Benef i t % o f GDPDi rec t Benef i t
3.6%
10%
2.2%
IMPROVED CROP VARIETY FOR DROUGHT RISK REDUCTION
MULTIPLE BENEFITS OF DRR INVESTMENT
Enhancing Economic Potential
Avoiding Direct Impact
Generating Development Co-benefits
Green marketing is a practice whereby companies
seek to go above and beyond
YOUR TITLE 03
Multiple benefits of DRR investment: Reducing risk and building resilience in Sub-Saharan Africa
The case for investing in reducing disaster risk
Africa’s progress towards sustainable development requires that governments, development partners, the private sector, and communities recognize the multiple benefits of investing in disaster risk reduction (DRR). Economic appraisals of disaster risk reduction investment options are becoming common practice globally. The plethora of options available for structural and non-structural disaster risk reduction investment makes it necessary to quantify the costs and benefits associated with investment options, to allow for the transparent evaluation of alternative options.
Investing in disaster risk reduction not only protects lives and assets, but can also yield additional benefits that can enhance the wellbeing and resilience of African countries. Under the program, “Building Disaster Resilience to Natural Hazards in Sub-Saharan African Regions, Countries, and Communities” financed by the European Union, this project endeavored to bridge the knowledge gap and encourage active discussions of future disaster risk reduction investments. By evaluating selected examples of flood and drought risk management options based on both direct and indirect benefits, the project analyzed the costs and possible economic gains of this type of investment in Angola, the United Republic of Tanzania and Zambia.
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US$ 6.3 million
US$ 6 million
US$ 7.2 million
ANGOLA
TANZANIA
ZAMBIA
Ind i rec t Bene f i tD i rec t Benef i t
8.5% of GDP
8.8% of GDP
7.6% of GDP
US$ 12.7 million
US$ 21.8 million
US$ 8.4 million
ANGOLA
TANZANIA
ZAMBIA
Ind i rec t Bene f i tD i rec t Benef i t
3.6% of GDP
10% of GDP
2.2% of GDP
Enhancing Economic Potential
Avoiding Direct Impact
Generating Development Co-benefits
Green marketing is a practice whereby companies
seek to go above and beyond
YOUR TITLE 03
Benefits of multipurpose dams for flood risk management
Flood is a recurrent hazard in Angola, the United Republic of Tanzania and Zambia, where it is estimated to annually affect on average 25,500, 45,000, and 20,000 people (approximately 0.1%, 0.08%, and 0.11% of the total population) respectively. Multi-purpose dams are typically used for hydropower generation and water storage, but when managed properly, they can provide the added benefit of improved downstream flood regulation.
An ensemble model analysis of water discharges with and without dams was used to estimate how the risk of floods can be mitigated. An analysis of existing multi-purpose dams revealed that annual average losses due to floods could be reduced by approximately US$ 6 million in Angola, US$ 6 million in Tanzania, and roughly US$ 7 million in Zambia.
To understand the economic efficiency of DRR investments, the direct benefit of multi-purpose dams, together with revenues from generated power, can be compared to their construction and maintenance costs. The indicative benefit cost ratio of such investments are estimated to be approximately 1.42 for Angola, 1.44 for Tanzania, and 1.43 for Zambia under a discount rate of 5%, assuming that other negative and positive externalities (such as environmental impact) do not exist, and when dams with similar effectiveness in terms of disaster risk reduction are expanded across these countries.
The indirect benefit showed that compared to the business-as-usual of no disaster risk reduction policy scenario, the construction of additional multiple-purpose dams over the next three decades is also expected to bring a number of co-benefits in the form of enhanced savings and investment, hence economic growth, additional power production, and better access to water (see country-specific case study for additional information). Combined, these benefits will increase the countries’ respective GDPs. The total growth effects of investment are estimated at 8.5% of GDP for Angola, 8.8% of GDP for Tanzania, and 7.6% of GDP for Zambia.
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US$ 6.3 million
US$ 6 million
US$ 7.2 million
ANGOLA
TANZANIA
ZAMBIA
Ind i rec t Bene f i tD i rec t Bene f i t
8.5% of GDP
8.8% of GDP
7.6% of GDP
US$ 12.7 million
US$ 21.8 million
US$ 8.4 million
ANGOLA
TANZANIA
ZAMBIA
Ind i rec t Bene f i tD i rec t Bene f i t
3.6% of GDP
10% of GDP
2.2% of GDP
Enhancing Economic Potential
Avoiding Direct Impact
Generating Development Co-benefits
Green marketing is a practice whereby companies
seek to go above and beyond
YOUR TITLE 03
Benefits of introducing improved crop varieties for drought risk management
Drought occurs frequently in all three of the countries investigated, routinely exposing households to food security risk. On average, drought annually affects approximately 7.6 million people in Angola, 11.8 million in Tanzania, and 7.19 million people in Zambia (or approximately 31%, 22%, and 41% of the total population) respectively, with an estimated direct economic losses of about US$134 million, US$140 million and US$75 million for the nations of Angola, Tanzania and Zambia, respectively. In light of the anticipated effects of climate change and socioeconomic development, economic exposure is estimated to rise, causing considerable threats to local livelihoods.
An analysis of drought tolerant and shorter-cycle crop varieties show that annual average losses for maize due to drought can be reduced from the current level of US$12.7 million, US$24.7 million, and US$8.5 million to US$1.1 million, US$2.9 million, and US$0.07 million for the three countries, respectively, when drought tolerant crop varieties are adopted. When shorter-cycle varieties are used, annual average losses may be reduced to US$3.9 million, US$19.3 million, and US$0.5 million, respectively. Assuming that the introduction of improved crop varieties enhances yield in non-drought years, the benefit-cost ratio of improved crop varieties is expected to be approximately 2.52 (drought tolerant) and 2.48 (shorter-cycle) for Angola, and 2.04 (drought tolerant) and 1.90 (shorter-cycle) for Tanzania under the discount rate of 7%. For Zambia, indicative costs of insurance against agricultural drought risk (covering the risk of 5 to 50 year drought events) were estimated in which reduction in the cost of premiums are estimated at US$9.8 million (drought tolerant) to US$9.3 million (shorter cycle) when adopting improved crop varieties.
An indirect benefit assessment of improved crop varieties also showed that such disaster risk reduction investment fosters countries’ economic growth potential. Compared to the business-as-usual of no disaster risk reduction policy scenario, the introduction of improved crop varieties (equivalent to the effectiveness of shortcycle varieties) throughout the agricultural sector increased the respective countries’ GDP. The total growth effects of investment are estimated at 3.6 % of GDP for Angola, 10% of GDP for Tanzania, and 2.2% of GDP for Zambia in the period analyzed.
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Policy highlights:
• Countries can benefit from disaster risk reduction investments, regardless of whether a disaster strikes. Multi-purpose dams typically used for hydropower generation and water storage, for example, can provide the added benefit of improved flood regulation downstream when managed properly.
• An evaluation of drought tolerant and shorter-cycle varieties of maize showed that the annual average losses for maize due to drought could be reduced significantly, while investment in disaster risk reduction measures over the next three decades will notably enhance agricultural production. This could in turn foster economic growth potential and encourage savings and investment.
• The methods described in this brief will help decision makers and relevant stakeholders evaluate how much economic benefit a country is expected to gain in the future if they invest to safeguard houses, productive assets, and public infrastructure.
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Methodological note: Direct and indirect benefit assessment
Different types of disaster risk reduction investment options have different channels through which they affect hazard, exposure, or physical vulnerability, thereby reducing disaster risk. The construction of dikes and dams, for example, may directly alter the flow of water, thereby affecting the extent and frequency of flood hazards in certain geographic areas. Likewise, an introduction of land use zoning can alter the spatial pattern of settlements, thus reducing exposure to hazards in various locations. The direct benefits of disaster risk reduction may be quantified using the replacement cost of assets as a measure of disaster damage.
Instead of valuing the reduction in disaster damage using the above method, the indirect benefit of disaster risk reduction quantifies the present value of future earnings that a productive capital is expected to bring overtime. A dynamic macroeconomic model may be used to estimate additional benefits that can be expected from changes in the saving and investment behavior of firms and individuals over time, along with other “co-benefits” of disaster risk reduction investments, such as better access to services like water, electricity, and the protection of environmental quality (for additional information please refer to the technical annex for the respective countries).
Disaster RiskBefore
DRR Investment
Disaster RiskAfter
DRR Investment DRR INVESTMENT
Probabilistic Risk Model
Hazard Exposure Vulnerability
Macroeconomic Variables Before
DRR Investment
Macroeconomic Variables Before
DRR Investment DRR INVESTMENT
Dynamic Macroeconomic Model
Domestic Sector • Production• Consumption
• Saving and Investment• Disposable Income• Tax• DRR Expenditure
Foreign Sector • Import• Export• External Borrowing
Multiple benefits of DRR investmentReducing risk and building resilience in Sub-Saharan Africa
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