Saturday, 27 June 2009

Managing risks for optimal development

Firstly, as adverse climatic conditions persist, rural-urban migration explosion ensures, the population of Owerri city, Nigeria is expected to more than double between the years 2010 and 2070; growing from almost 1.5million to about 3.5million.That growth will result in twice the municipal water demand, which is projected to increase
from about 400,000 acre-feet per year in 2010 to 820,000 acre-feet per year in 2070. During the same period, the total water supply in Owerri is projected to decrease by 300,000 acre-feet per year due to various factors, such as reservoir siltation and reduced river flow etc. Faced with a growing population and diminishing water supply, Owerri will need to develop new water supplies and encourage alternative technologies such as Rain Water Harvesting to complement available water sources to support productive water use for the urban poor as a proactive risk management strategy.

Secondly, increasing changes in rainfall patterns as a result of climate change is already threatening local rice cultivation and making it pretty difficult to plough rice fields after the very first rain in Uboma. The resulting harvest shrinkage and diminishing income, is being further exacerbated by endemic water mismanagement and inappropriate land use by farmers which have led to massive soil erosion and loss of the soil’s productive capacity. Also, limited potential for dry season rice cultivation through soil and water conservation, and the non-employment of rain water harvesting technologies have continued to widen the increasing demand-supply gap for rice. The consequence is threatened food security and livelihood for hundreds of local rice farmers and people in Uboma and other parts of Nigeria that hitherto had rice supplies from these farms.

Thirdly, unpredictable high intensity rainfalls now persist in Port Harcourt and other Nigerian cities, resulting in mass flooding of neighborhoods. In these areas, one recurring problem is the overflow and clogging of latrines, as well as the erosion of pit and septic tank structures. The major problems arising from these are surface water contamination and loss of accessibility to the latrine during flood. Often, the most affected are the urban poor who live in densely populated neighborhoods where households share on-site latrines located outside their living rooms. For women in such areas, this is an issue as loss of access also translates to loss of privacy for defecation. The result is that most residents are now compelled to “wrap and throw” their excreta into runoffs; and further worsening the health risks and retarding local gains in sanitation coverage.

Often perceived as “acts of God,” natural catastrophes have frequently been overlooked in policy planning.
On an aggregate level, the consequence of this limited planning is a serious challenge to socioeconomic
development as scarce funds are diverted from longer-term development objectives to short-term
emergency relief and reconstruction needs. Despite recent calls to mainstream Disaster Risk Reduction (DRR) little effort has been exerted on how such resiliency principles can be mainstreamed into planning procedures for development projects such water supplies, agriculture and even infrastructure as cited above etc.
In this regards therefore, a new analysis tool that measures how resilient a household is under severe stress will help design aid for beneficiaries based on the extent of their vulnerability. The concept was developed by the UN Food and Agriculture Organization (FAO) and the Department of Agricultural and Resource Economics at the Florence University, in Italy, using data from the Occupied Palestinian Territory (OPT). "The Palestinians have been living under incredible stress for a long time; everyone is vulnerable there. Despite that, they continue to live and work in that situation - they are a particularly resilient community," said Luca Alinovi, a senior economist at FAO, explaining why they used the OPT to develop the tool. The Palestinian Central Bureau of Statistics also provides "incredible amounts of data - the bureau conducts at least two to three surveys every year, unlike most countries," he added, which contributed to refining the analysis tool. The early warning systems approach tries to predict crises, while the resilience framework tries to assess the current state of health of a food system and hence its ability to withstand shocks should they occur. Resilience in humanitarian terms is a "measure of the ability of a system to withstand stresses and shocks in an uncertain world" and has only recently started being applied as a concept in food security issues, according to a paper by Alinovi and his collaborators on the project. "The idea is that this concept could complement the early warning systems (EWS) approach. The EWS tries to predict crises, while the resilience framework tries to assess the current state of health of a food system and hence its ability to withstand shocks should they occur," said the paper. Data is collected according to the five pillars of the conceptual framework of the tool: existing social safety net, access to public services, assets, income and food access, households' capacity to adapt, and stability of food supply. The data is then converted into numerical variables, which help present the level of resilience on a logarithmic scale. "The level of resilience, as calculated, can help determine the kind of interventions needed in acute food shortages - cash or food aid - in that particular country," said Alinovi. "It also helps design long-term aid interventions." The FAO plans to implement the tool in Kenya and perhaps Sudan in the coming months. Also, in a series of three country study exercises carried out by the World Bank in 2002; the incorporation of the probability of loss from natural disasters into a flexible macroeconomic modeling platform was central. In doing so, it first estimates annual expected losses due to natural catastrophes for each country. The results are an annual expected loss of $320 million a year for Argentina (representing 0.025% of capital stock), $64 million a year for Honduras (0.49% of capital stock), and $22 million a year for Nicaragua (0.43% of capital stock).
The country exercises then estimate the macroeconomic impacts of these direct losses. The Argentina example identifies potential sources of post-disaster financing and displays probabilistic projections of the macro-economic impacts of the diverted funds. The Honduras and Nicaragua examples consider the case in which access to post-disaster financing may be limited. These exercises demonstrate that an inability to finance probabilistic annual losses to capital stock can stagnate expected future economic performance. The Nicaragua analysis extends the Honduras exercise by examining the impact of natural catastrophes and limited post-disaster financing on the poor. The results of the last exercise show that an inability to finance probabilistic annual losses to capital stock can stall or defeat poverty reduction measures.

Finally, the study examines how the modeling for each country can be used to assist policy makers interested in
exploring alternative funding sources for post-disaster reconstruction, like catastrophe insurance.
Three central messages emerged in the preparation of this study. The first lesson learned is that planning
for the impacts of catastrophes is possible. The country examples illustrate how these probable losses can be incorporated into development planning. The second lesson is that the ability to finance losses following a catastrophe is crucial to recovery. Hence, planning for catastrophes is also essential.

The major policy recommendation that emerges from this study is that risk management must be a formal
component of development planning for countries with high natural catastrophe exposure. Through
planning, countries can reduce some of the negative impacts on development and improve the situation of
the poor during and after crises. Such risk management involves three major steps: risk identification, mitigation and financing.

Countries must identify potential sources and assess potential costs of natural catastrophe risk. For example, the potential effects of natural catastrophes should be included in infrastructure investment decisions, in Country Assistance Strategies (CAS) of the World Bank, and in the debt repayment projections at the core of Highly Indebted Poor Country (HIPC) proposals. Countries must weigh the costs and benefits of mitigation and risk financing measures. The evaluation of risk management measures is particularly important for two areas: planning for the protection of infrastructure and the livelihoods of the poor. The international donor community should provide greater incentives for proactive risk management in countries affected by natural catastrophes. In particular, it should focus on the incentives and support necessary to foster risk identification, mitigation and risk transfer programs.

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