 Could I ask everybody to take their seats? We're about to get started with this program. Thank you. Good afternoon and welcome to the Center for Strategic and International Studies. My name is Andrew Schwartz. I'm a Senior Vice President here at CSIS for External Relations. I want to welcome all of you to the Center today and to this terrific series that we are doing in partnership with Louisiana State University's Stevenson Disaster Management Institute that's the acronym is SDMI and everybody knows the LSU acronym because it's LSU. We are CSIS so we're gonna throw a lot of acronyms at you today. This is an ongoing series in partnership that we have with LSU and also with the Pennington Foundation. We have the CEO of the Pennington Foundation here with us today. Lori are you around? There's Lori Bertman right here who really helped us get this series started with her vision for a new series in Washington. This is the first of its kind that looks at disasters and emergency response in an ongoing basis. This is something we do basically monthly and I hope all of you will be subscribed to our our list so we can give you updates as to when the next series are going to be going on. I also want to say that this event and all of our series will you can find at CSIS.org our website. If you want to see the replay and we'll have transcripts up as well. I'd like to welcome my good friend Tom Anderson of LSU's SDMI. Tom is going to give you a quick update on what's going on with the flooding of the Mississippi River and what how Louisiana is looking at this disaster and how the Armored Corps of Engineers and the state government and locals are addressing this issue. Many of you have seen reports on CNN and other networks where the levees are cresting. This is serious business and we can you know there was the first reported death from the flood just the other day but Tom will fill you in on what's going on up to the minute because he's been getting updates from his colleagues down south. We're actually lucky that our friends from LSU could make it up here today because many of them are back home trying to work on this crisis as we speak. We also have a terrific panel today. Dan Rundy my colleague is going to moderate it and I thank all of you for coming here today and with that Tom please come up and give us an update. Good evening everybody. Thank you Andrew. It really is an honor to be working with CSIS on these very critical issues that we're facing in the world today and I want to not only thank Andrew and the team at CSIS but I'd also like to thank Stacy White because she worked on this panel just was not able to be with us this evening but she's done a great job. But I also want to publicly thank the leadership of Lori Berkman as well. She continues to be one of the great innovative thinkers in disaster philanthropy and she's been a great colleague and mentor and I can't say enough how much and how important it has been with her leadership to have the success of our institute end of this series and thank you Lori. I've been asked to make a very few brief remarks about the current situation Louisiana and the ongoing Mississippi River flood but I would be remiss not to mention how our hearts and prayers are with the people of Joplin, Missouri at this time after their city was just ravaged by tornadoes last night just weeks after a very similar cell of tornadoes ripped through Alabama and in case it was missed in the deluge of news last night tornadoes also hit Kansas and Minnesota as you already know from the press the Mississippi River flood is at historic levels not seen since the great flood of 1927 and many actions have been taken to mitigate and respond to this situation for Louisiana the Bonnie Kerry spillway just north of New Orleans and the Morganza spillway just north of Baton Rouge have both been managed and opened by the Army Corps of Engineers and are currently actually reducing the height of the river and actually achieving slightly better results than we had hoped for this is a very encouraging news I will say though that had these two spillways not been opened there is absolutely no question in anyone's mind that both Baton Rouge and LSU and New Orleans would already be under water so to the Army Corps of Engineers we are very grateful but there are still some significant economic challenges these water levels and navigational changes that happen in the river due to the changed currents as well as risk to levees by runaway barges have reduced shipping and resupply for manufacturing along the Mississippi and on Saturday Baton Rouge experienced a number of barges one containing hazardous materials hitting the Mississippi River Bridge in Baton Rouge and sinking stopping all barge traffic on the Mississippi River and as of my being here now it is still stopped while they try to dig those barges up out of the water the Bonnie Kerry and the Morganza openings have also impacted fisheries and oyster beds and the salinity in the water but they're not only affecting the fisheries and manufacturing but there are also all the families and small businesses who live in the Morganza spillway area where the Mississippi River overflow is now being directed towards Morgan City the people and businesses have been evacuated and protective actions have been taken and continue to be taken until the river subsides back to normal levels which we hope will happen sometime in July or August so this is a very long-term event and in the meantime while the water is being managed it's putting in a very lot of pressure on those levees those precious levees all the way down the system but there's also a critical cultural impact that I just want to draw your attention to very briefly and that's that this Morganza spillway and the water heading down towards Morgan City is at the very heart of Cajun country in Louisiana which is already still reeling from the BP oil spill and from Katrina but I'm very proud to report that in response to this flood Louisiana has activated its highly innovative and brand-new business emergency operations center housed at the SDMI disaster lab at LSU along with our partners in the governor's office of Homeland Security and the Department of Economic Development and the University of Louisiana Lafayette this business EOC just to explain it very briefly and why it's so innovative is a gathering of all the trade association leadership from the state from oil and gas and manufacturing to bankers restaurants and retail stores and on Friday there was a briefing directly from the Army Corps of Engineers leadership and the Coast Guard to the business community and it led to very productive conversations and information sharing both ways which was the outcome we'd all hoped for but in closing at the risk of underscoring the obvious I wanted to state a couple things that like Andrew said that we have noted in Louisiana over the years globally over three billion people live within 200 kilometers of a coastline and that figure is expected to double over the next couple of decades and these water systems and other natural resources have historically been the very engines of local and global economic activity and these are the locations where enormous investments have been made by our governments and industry or our societies have built these towns however because these populations and infrastructures are growing at such an incredible rate along these natural opportunity zones we continue to see higher costs for response and recovery from natural and man-made disasters and with these needs increasing we are also seeing the very real possibility of a future with scarcer capacities and resources due to the global economic realities and even harder to discuss we see real public fatigue growing about the size cost and recurrence of disasters around the globe and so the question is will this somehow move this conversation from the right-hand side of the problem to the left-hand side of the problem and how will these trends not only affect the economic challenges but the humanitarian ones as well and during my lifetime I was taught that the greatest threat and foreign policy challenge was nuclear war and it coined a doctrine called mutually assured destruction and I would ask this terrific panel here tonight if they would agree that we might consider the possibility that the greatest national threat and foreign policy challenge for this new century may be whether we can build a truly economically resilient world built upon a new universal doctrine of mutually assured survival. I thank the panel for being with us tonight and for the leadership of CSIS and for your kindness for allowing me to speak to you tonight thank you very much. Thank you Tom for those remarks we appreciate it we're here to talk about the economics of disaster prevention and measuring the costs and benefits of disaster risk reduction and the panel has formed around the a report that was published by both the World Bank and the United Nations called natural hazards and unnatural disasters and I think you'll hear from Olivia Mahul who is one of the contributors to the report and then you're going to hear some responses from Charles Setchel, Shabar Safi and Rod Snyder. Charles is with USAID, Shabar Safi is with FEMA and Rod Snyder is with the American Red Cross. I think that everyone would agree that the discussion around natural hazards has been a topic of increasing salience over the last five or six years. There's been any number of disasters that have cost hundreds of billions of dollars and so the discussion around prevention and the payoff of prevention and the cost-benefit analysis of prevention is a particularly salient and important one and each of the panelists have thought about these issues and there'll be a number of challenges I think that'll be that'll be brought up one will be around the issue of is it called build back better build back or build back stronger and so I think we'll have a discussion about that as well so without further ado I'm going to turn over the discussion to Olivier. Okay thank you Daniel and again thank you for inviting us and meeting me in fact this evening to talk about this this topic as you said as Daniel said I'm one of the contributors of the of the report John's report as you mentioned by World Bank UN with many other contributors about the economics of effective prevention and my contribution particularly to this report was on the financial side on how to help countries before disaster strikes in fact to have the kind of right financial instruments to respond quickly and to some extent to complement what the international community can can provide and we started the discussion slightly early having in mind that one of the key issues for governments is first not only the kind of emergency phase but also the reconstruction and the recovery phase anyway one of the key issues I like to discuss to with you today is to go back to the rationale of why the World Bank got involved in this topic and also give you a kind of very simple illustrative examples practical example on how we try to use the cost-benefit analysis to guide decision-makers when it comes to investment in in in rest reduction so we all familiar with kind of graphs showing the incidence on impact of disaster which are really increasing and this is something again we keep repeating to our audience because sometimes we tend to we tend to forget not only the kind of social impacts which is always disastrous but also the economic impacts of natural disasters and again with the concentration of facets and population in high risk areas in addition to any kind of impact of climate change we can expect in the future having more and more disasters one thing I like to emphasize here is again the impact of increased risk exposure in countries like Asia particularly South Asia where we can see a big growth more than 10% a year in some of the countries the the the economic impact and social impact of disaster will be much bigger in the future than it was in the past in at least in terms of economic in terms of economic sense and we need to they need to be prepared for this kind of major event the relevance of disastrous management at the bank in fact I would say started not too long ago the initial mandate of the bank I would say even IBRD which is one of the entities within the World Bank Group and means international bank on reconstruction and development and just the the title itself says exactly what we're supposed to do we our mandate is to help countries to rebuild to some extent or to recover to reconstruct after disasters the World Bank itself is not involved in emergency assistance which is clearly the mandate of the UN and we have to be very careful on how we define our comparative advantage here what I like to show here on this graph is that I said here about 10% of the World Bank Groups portfolio is related to disasters I must say most of them is post disaster reconstruction but more and more we can see projects where we help countries to prevent disasters to help them to invest in some physical investments before the disaster strikes it could be major investments let's say in Vietnam where we're helping government to build dykes to protect again floods and could be much smaller investments at the community level to help the communities to be better prepared in case of a disaster but the key point I like to make here is that within the big institution in the World Bank our senior management is getting more and more aware of the of the of the needs to think before the disaster and we try also to to pass that to our clients and again we keep receiving more and more requests from our clients to help them to think about disaster before this kind of major events occur one of the main drivers within the World Bank Group has been the global facility for disaster recovery and reconstruction GFDRR which is a multi donor multi donor trust fund as we call with about 30 countries and institutions involved in that and the World Bank is just hosting that it's not the World Bank tool it's just a tool set up by many donors about 30 countries as I said again to help countries to be better prepared when it comes to disasters and one of the main components of this of this program is about disaster reduction and this is exactly I think where the economy of disaster prevention comes into the picture let me give you now a kind of short illustrative example which is not exactly in the report you you mentioned Daniel but I think it's a nice concrete example on how we apprehend the cost-benefit analysis how we use it and what are the challenges we're facing when it comes to use this kind of tool to guide public decision-making on disaster risk reduction and the example I like to like to to illustrate here is about a project we started a couple of years ago in Colombia Bogota which as you may know is a highly exposed to natural disasters and particularly earthquake we've had a kind of ongoing dialogue with the bank and other institutions like the entire American Development Bank helping this country really to be better prepared in case of major disasters as said earthquake I could also say now floods as you may know Colombia was exposed I mean faced some major floods even even last year and even more more recently so they face major major disasters the project I like to highlight and then show you how we use cost-benefit analysis is in the city in the capital city Bogota it's a five year risk mitigation project it's not a big project by itself it's about 160 million dollars half of that being financed by the World Bank and half of that being financed by the government and the the key I would say actions under this project in fact is outlined in the city's tenure plan which is about risky identification risk reduction risk prevention and awareness and financial coverage so within this project we're trying to tackle all these issues and first of all the risk identification you can manage well what you can what you can really assess well so the very first step was really to help government to better understand the risks using some risk modeling techniques which are well known I would say in the insurance industry but not so well known in the I would say government environment so the first the first step was to use these tools first of all to sensitize governments about the impact of disasters not by showing just hazard maps like the one you have here but also to show them the risk maps the economic impact what could be the major impact of a 100 year events earthquake event in in Bogota and what will the impact economic impact fiscal impact social impact human impact and then how we can try to reduce this kind of impact by having some excellent prevention activities to do so we did some very basic cost-benefit ratios and again really to try to sanitize government but also to some extent to help them to prioritize so the issue we trying to do here was to identify key schools key hospitals key fire stations we the government should first retrofit we all agree that in the longer term all schools all hospitals all fire stations should be strengthened but in a five-year plan with 200 million dollars a little bit less on that what are our priorities so the idea was to try to come up with a kind of efficient effective plan in fact to invest this this this money and the the challenge we faced here which I think we're gonna discuss later when we talk about cost-benefit ratio is what are the benefits and what are the costs in that case the costs are well known this is more or less the cost of retrofitting or strengthening the buildings but what are the benefits are we talking about purely economic benefits how can we take into account the social benefits the number of lives we can save in this kind of activities and also these benefits are highly I would say uncertain you're gonna really have benefits if you have a disaster now how can you convince a mayor in a city to invest against an event that could happen one every hundred years these police stations of course have very short-term view elections so you need to to to have a dialogue within this kind of short-time frame which always doesn't fit well with this kind of longer term social benefits that such investments will will create so it's it's it's challenging and this is where we have to we have to be a bit I would say cleverly to present that in a way that they may benefit from this kind of investments within a five years in other words the kind of questions or yeah questions we got from these politicians are what is my electoral benefits of investing in this kind of in retrofitting buildings is it not better for me to build I don't know subway or maybe just to paint the buildings why should I invest in in some activities which are not always visible for my potential voters you know so this is the kind of questions we need to we need also to address when we when we deal with them this is why usually when we talk about investments going back to the slide we talk not only about structural investments but also functional investments in other words it's easier to convince a policy maker to in to retrofit a school if at the time time you help them to just repent the school and make the school looks better because this is something that can be well visible it looks obvious but again this is something that which is quite important when we are when we when we discuss with them so this kind of structural and functional investments really go work in fact together one key issue I was saying is that usually when we talk about cost benefit analysis we talk in expected terms what is the average value average benefits compared to the cost now the problem is that again as I said the cost-benefit ratio can be almost zero if you don't face a disaster if I invest in if I retrofit a building if within a kind of five-year period I don't face a disaster it could be seen as a kind of money loss so again you need to put you need to put that into perspective one tool we've been more and more using in our projects is what we call probabilistic benefit cost ratio where we try to show in fact the the risk profile of these investments depending on the return period you have in mind in other words in this kind of project we can say that every one to three years you can expect a benefit cost ratio higher than one so it's it's a good investment for the mayor if he has a five-year horizon and this benefit cost ratio of course will be we go higher if you consider higher return period meaning kind of a bigger or a larger larger disaster so we've been using this tool again to sanitize the government to tell them that it's not we're talking about extreme events when we talk about extreme events working with the average value doesn't always make sense and you need to point you need to wait that with the kind of probability of occurrence of this kind of disasters this is quite important because in the World Bank projects one of the key I would say analysis the World Bank board will ask in order to approve a project is what we call economic and financial analysis we have to show them that these investments from the World Bank from the country perspective makes sense each country is three years got a kind of limited envelope of funds I would say subsidized kind of access to credit to some extent and we have to be very careful on how we allocate these funds so particularly when it comes to prevention we need to have a kind of strong argument to show to the to the to the board of the World Bank as well as the country that these kind of investments make sense and can be compared with much more traditional investments like building roads and in fact it's it's you have to compete with this kind of projects and to show that the there is definitely high benefits in the there are high benefits in the in the short term so one thing I like to highlight just to conclude is again this concept of dealing with uncertainty dealing with a short-term horizon for policymakers versus long-term investment you have to make in terms of social investment related to natural disasters is something which is quite challenging and again any kind of economic and financial tool helping us to better sensitize and help decision makers will be quite will be quite helpful again we did it at the at the margin be something that would be further developed and again any kind of ideas research projects related to that could be quite quite welcome from the World Bank perspective thank you Olivier the discussion about determining the calculus the cost and benefit there's a story in Japan about a small town mayor who built a massive tsunami wall and for many years he was laughed at and he's now you know so there was this issue of this was built in the 70s and so if you think about that graph in terms of the payoff of that tsunami wall was 35 years later but now he that that mayor is looking like a genius for having done that so it's sort of that that sort of a calculus that political calculus and how do you how do you balance that as a particularly challenging I think a universal one Charles the floor is yours good evening thank you Stacey White wherever you be maybe for inviting me extending the invitation I appreciate that thank you as well the sites and LSU for supporting this series a very very important series of lectures and last but not least yourselves the audience thank you for showing up on this fine evening I bear gifts I don't know if you've seen the handout that I brought if that was circulated we'll get to it in a few minutes so maybe there's time to circulate if it hasn't come yet briefly I have 13 years of experience with us a id office of us foreign disaster assistance as the shelter settlements and hazard mitigation advisor I've helped design numerous projects shelter and otherwise pretty much in all of the major disaster responses of the last 13 years and many of the smaller ones literally we have sheltered millions that's the good news and the not so good news is that literally we've sheltered millions we've had a lot of integration of DRR disaster risk reduction into those programs we can go into some of that in a few minutes prior to that I was an environmental and urban planner and housing economists both by degrees and 20 plus years of experience both here in the US as well as abroad I spent six years in Indonesia prior to coming on board with often 1998 and have been back to Indonesia several times since tsunami earthquakes etc and I think to give you an idea of how dramatically times have changed and come full circle in fact when I arrived at often 1998 I was saddled with this somewhat onerous title of urban planning and urban disaster mitigation specialist which apparently violated the U urban P planning and M mitigation sections of humanitarian law and was only muttered quietly in polite audiences I changed my title after a few years of puzzled looks but I'm now considering switching back from my current humanitarian friendly title back to that earlier UP and M focus in light of the discovery and I will say that again discovery of urban areas and increasingly dominant form of human settlement in these past few years the emergent focus on mitigation and other forms of DRR and the increasingly recognized need to guide future actions in human settlements through an informed process called planning I wish my mom was still around to read the World Bank's report believe it or not for a place's emphasis on an important game changer namely cities and the need to develop governance processes and institutions to promote safer cities if nothing else it would have put to rest those long ago debates that mom and I had about whether or not I should pursue an urban planning degree wherever you are mom rest assured the World Bank has got my back and I think I want to digress a little bit that the Rockefeller Center a few years ago Bellagio report I think it was about four or five years ago brought together UN habitat UNDP World Bank all kinds of different groups organizations and came to the conclusion that we're not producing enough professionals development professionals architects engineers planners all of those types of folks that are needed to build human settlements we have a major deficit facing a very large curve growth curve so we have a significant challenge I'd like to focus attention on the use of economic analysis in our work at the US Office of Foreign Disaster Assistance or OFTA as relates to both our response and DRR activities for those of you unfamiliar with with OFTA the mandate is is very explicitly humanitarian and saving lives and reducing suffering and reducing the economic and social impacts of disasters the last phrase of that mandate which some of us call the third phrase has been interpreted over time to mean efforts to reduce various forms of risk in disaster and crisis-prone settlements this is range from short three six nine month interventions to longer term three five seven year commitments to reduce risk in numerous sectors including those associated directly with natural hazards be they floods or fires or hurricanes or cyclones or earthquakes and that list is fairly long as you well know recent examples that I have been involved in directly include flood risk reduction hurricane risk reduction promotion of seismic resistant construction and something I call settlements planning 101 basic urban planning as part of the disaster response effort one of the I hope lasting legacies of our recent response in our ongoing response in Haiti is support of Haitian diaspora professionals engineers planners architects who have worked with various ministries the Haiti Interim Reconstruction Commission and others to really help infuse a process of planning into the response and recovery effort it's something that's sorely lacking the I talked to the Minister of Planning when I was there most recently and he said he had two trained urban planners on his staff country of Haiti to we quadrupled that with our diaspora program the handout that was circulated is but one example of many off-to- projects focused in on DRR in this case a small flood risk reduction project in kinshasa DRC in the late 90s it consisted of very small a series of check dams in a watershed a very affected watershed there's a part of kinshasa that is so vulnerable to flooding and watershed erosion that it's called the islands areas just so removed from the mainstream of the urban fabric because it's just situated on very highly erosive soils so we went in with very small scale check dams made of bamboo and grass and rock and all those things I bring this to your attention means I think the the intervention between two very similar storm events really facilitated an economic analysis that we don't as you were saying before we we sometimes don't know when the payoff is this was very good in that we eliminated a lot of uncertainties associated with valuing DRR costs and benefits because we had a time frame and cause and effect uncommon so by adopting conservative assumptions and only accounting for direct economic losses one dollar of our often investment of taxpayer money in risk reduction resulted in a savings to the community affected communities of forty six dollars that's not bad that's not a bad turnaround the savings has occurred up to the present time we haven't gone back we've invested significantly elsewhere in DRC but we haven't been had to go back to that particular area and one of the important aspects I think of cost-benefit analysis is not just the numbers themselves and our return on investment and savings and what have you but really how does it affect the affected community particular communities that we were working with in in kinshasa were very extremely poor communities and very vulnerable and so our risk reduction measures resulted in a savings accumulative savings of about four hundred and twenty five dollars per family or the equivalent of about half of annual household average annual household income thereby enabling those families to purchase food and clothing and medicine and other essential items that they may have had to forego had there been another flood event so not only do we have constant cost and benefits but we have impacts and the implications of that investment again I think another if there's such a thing there's another beneficiary in the story that was OFDA we were able to husband our resources and apply them elsewhere we repeated that success in kinshasa elsewhere after floods in subsequent years to great effect as well we've had this significant return on investment small scale investments in this case and I think I would like to say that an unintended benefit and something that we often don't pick up until later after we've done the formal review is really how it how our management of water in that watershed improved watershed management really resulted in significant public health benefits as well we found a significant reduction on the order of over 90 percent in the in the incidence of cholera in the affected project area subsequent through better water management we've seen it in places like Bamako, Mali and and Noakchot and and in Jameena and other places where by just basic water management through a risk reduction type of intervention we also have these secondary impacts that are very very positive so more generally OFDA's linked economics and DRR programmatically in recent years with the creation of a new sector called economic recovery and market systems which focuses primarily on livelihoods and livelihood restoration some ERMS projects feature an input to DRR activities themselves such as revegetating watersheds to promote both enhanced water retention and livestock recovery and entail market assessments in an informal cost benefit analysis field-based more generally still I'd like to note that the World Bank's report on the on the economics of effective prevention reminds us that CBA is a useful guide quote-unquote but not the sole judge other factors should also be considered in making decisions thus although the the bank report promotes the science and business of CBA cost benefit analysis so to speak it also reminds us that there remains an element of art in CBA as well how to judge the value of life for example is far more than mere economics as report recognizes and I think correctly so in closing I noted page 20 of the report that greater exposure need not increase vulnerability of cities if cities are well managed what does managed well mean in this regard how well CBA be used to help define what well managed is and this is not a trivial matter a bit more than 50% of humanity lives in cities these days cities are more down are the dominant form of human settlement and will be for years and years to come the current rate of urban growth the equivalent of a city of 1.4 million people will emerge every week of every year for the next 20 years it's a lot of people in cities further one in six human beings currently lives in conditions depicted by the recent film slumdog millionaire everyone probably has seen that movie and current trend suggests that one in four humans will live in such conditions by 2030 we'll see in the cities of developing countries where about a hundred percent of future the next 20 years global population growth will be concentrated we'll see that doubling of population we'll see a tripling of the footprint the land footprint that has implications for risk reduction at a very very high level and the great rise of cities and city slums will entail a lot of development decisions of all kinds at a level in pace we've never seen often entailing considerations of hazard risk we need plans for urban places that are not only aspirational and inspirational but also very very operational those of us in the humanitarian community would do well to not only highlight the need for DDR in the coming years but be an active partner in identifying and managing harms way those hazard prone areas that seem to draw more and more people over time so the human settlements of all sizes can be configured and reconfigured to increase safety and reduce the cost of poorly managed settlements this will take a lot of work of course missing it seems in a lot of current discussions is the need to promote the third are of risk reduction resonance or amplification through concerted efforts at managing development processes and promoting recovery after disasters that is neither simply build back or build back perfect which seems to be a goal of many but build back safely build back stronger build back better build back however you want but do it with DRR in mind this effort will entail significant focus and resource application in support of governance programs that foster institution community level and professional capacity building this is overlooked in the extreme at the current time perhaps equally important the effort will require strategic communications programs to increase understanding of and demand for DRR and repeat that demand for DRR as a centerpiece of development and humanitarian activities and not merely as a mainstreaming initiative I think the World Bank report provides us with an insight in this regard and for that we should all be very grateful thank you for your time of patience Shabbar good afternoon my name is Shabbar Saifi I work within the mitigation programs at FEMA the Federal Emergency Management Agency most of my time I'll spend on talking about how FEMA looks at benefit cost and what is the rigor applied to benefit cost analysis for mitigation projects and programs but before I step into that realm just to give you a general sense with the number of national natural disasters you hear about nowadays through CNN we call them CNN disasters because they make the declaration before the president gets a chance to declare the disaster but there are a lot of little disasters that happen in communities all the time and FEMA responds to those disasters on a daily basis at any given time I would venture to guess there are more than hundred natural disasters FEMA is responding to throughout the year having said that just to now focus FEMA does three big things it does immediate response it does recovery and it funds mitigation for a general ballpark figure the way our grant programs are set up for response recovery and mitigation beyond all the interactions you see in the media we give a lot of grants to communities and states to accomplish these objectives and the fundamental approach we take is the community and the state has to evolve and develop these projects rather than the federal government and coming and telling you that you need a bigger bridge or a stronger house we want the mitigation to be coming up from grassroots from the community level because community is in the best position to determine and the state government is in the best condition to determine what is appropriate mitigation actions keeping in mind their hazards their vulnerabilities and the overall risk in terms of dollars and cents we are averaging in the last few years about a billion dollars in mitigation grants to communities and states every year so that's a formula we apply based on how much assistance we provide for response and immediate recovery we apply multiplier to that and say okay this state gets x number of dollars and the multiplier generally is 15% of the total expenses FEMA incurs for a given disaster having said that mitigation includes a lot of things from our perspective it includes good planning at the community level we require communities to have mitigation plans that FEMA will review and approve because when disasters strike in that community or that state we will encourage communities to use that plan as a basis for their mitigation strategy so upfront thinking and planning urban planning development issues building code issues all those aspects are discussed by the community in those mitigation plans and plans are obviously as good as how many people engage in the community in developing those plans what is the definition of mitigation FEMA's definition of mitigation is actions taken to reduce or eliminate eliminate loss of life and damage to property I will delve into over the years now again FEMA I don't know how many of you know but the amount of people are staffing at FEMA is less than the staffing of a police department in any medium-sized town today FEMA employees nationwide 5,000 people that's how big FEMA is in terms of its staffing level permanent staff so that's why one of the reasons we want communities to engage is because we are not going to be able to develop their plans for them we are not going to be able to determine which projects are appropriate to fund we are not going to be able to do benefit cost for every project they want us to fund we want communities to do that now to empower a community to do that we have to build useful tools tools that are usable and we don't need economists like at this table to run those benefit costs we don't need because if we need economies to benefit cost on every project we fund in a community then the cost of analysis might be more than the cost of the project keeping that principle in mind we have built software tools right Olivier we have built software which can be used by non-professional you don't need an engineering background or economics background you don't even need to be an expert at mitigation per se because these community officials on a day-to-day basis have different roles they could be the mayor in a small town they could be the building code official it could be the city planner these are the people coming together to play the role of figuring out what's the right mitigation for themselves the tools we have built apply to various types of hazards and they're specific to the hazards and the project types over the last 25 years FEMA has been funding mitigation grants we have a general idea of what kind of projects communities like to fund from a mitigation perspective 80% of our disasters are related to floods when a big hurricane comes most of the damage is because of flooding so we think flooding we think wind we break up a hurricane into two pieces in terms of how we look at it we look at wind damages we look at flooding damages earthquakes tornado safe rooms tornado winds recently we've had amazing incidences across the country on this issue and we have found with our experience over the years safe rooms is truly the real mitigation solution to deal with tornadoes because when a tornado comes the thing we want to worry about is not the home we want to worry about the occupants because at 250 miles per hour wind conditions most of the structures that our residences are built the way they are built in America would not survive we typically have stick frame structures we build houses with wood the great houses to survive some somewhat earthquake and some amount of wind because they're flexible but when a tornado when comes it picks up everything so over the years FEMA has funded about 20,000 safe rooms across the parts of the country where there's high probability and actually these recent unfortunate incidences have shown us that lives have been saved because of these tornadoes we are focused on lives primarily when we talk about tornadoes we are focused on lives when we primarily talk about earthquakes in terms of what we look at an appropriate level of reinforcement to a building or what kind of building to build to survive these type of disasters when we talk about floods wildfire we think as much about structures because because for wildfires and for floods generally there is a good amount of warning for us to evacuate ourselves so our concern is what when can we do to minimize the impact on the structure and the built environment at FEMA you'll see in literature a lot of time people only talk about this this principle and they use the phrase cost benefit analysis at FEMA we call it always call it benefit cost analysis because our philosophy is we are really focused on the benefits of these actions and not as much the cost and generally a rule of thumb is once we go through that probabilistic calculation that Olivier talked about similar principles we look at a benefit cost ratio if it's greater than one so if the benefits over the life of the project are going to be greater or equal to the project cost in economic terms applying you know various economic principles then we determine the project to be cost-effective once we determine to be the project to be cost-effective and it's an appropriate mitigation project and meets meet certain other requirements per the law we say that project is eligible for funding and as long as money is available in that grant program those projects get funded there are various kind of damages we would potential damages we consider when we do the calculation for what the benefit is damage to the structure damage to contents loss of function if there's a library a school building a courthouse when those buildings are non-functional there's a loss of function there's a cost to community every day of that service not being available so we incorporate that in our calculations displacement cost my home is flooded I can't live in the home so I have to go get a rental space or go live with my relatives there's a cost there's a cost society or the individual is paying for the displacement we include those costs rental if we are looking at mitigating a business then we're looking at income loss for the business loss of services if the distribution system for power or water is damaged or we are mitigating one of those issues for us not to get power or water to your given home for there's a significant cost to society the cost is not what your water bill is that our electric electricity bill is it's much more than that it's more than $100 per day per person for electricity for example economists have helped us come up with these numbers which are average nationwide again because we operating in a US domestic environment these these are hard numbers we can work with in the international environment the challenges are of course very different because the cost of these services and value of these services are different in different societies and different economies casualties we do unfortunately assign a number to injuries minor injuries major injuries and loss of life it's significant it's based on federal studies that's the value of a statistical life or a statistical injury not my life or your life okay I do speak a lot I'm gonna skip some of these slides and partly Olivier has talked about probability you know some of those things and the same principle supply we are currently started a project to quantify benefits from environmental impacts at this time we do not know what is the value of saving salmon in a certain river because I moved the house away from the banks of the river so this is just a very simple exam an example of how we look at environmental benefits and there are huge environmental elements that so we have started some work in trying to see how we can quantify those benefits and we are working with expert economists that you know come from academia industry and government talking about benefits when you talk about benefits you have to look at what is the life of a project Olivier talked about the political life of a project is how long this guy is going to have an opportunity to get reelected we are looking at physical life of a project in doing benefit cost so retrofitting a home generally we say the life is 30 years because typical homes need significant renovation in every 30 years so we have come up with these average numbers based on what engineers know about the life of these mitigation projects I have a few comments in the in the international arena which are different from from the domestic arena mitigation mitigating the risk for people and not buildings to me seems to be more important in the international arena saving lives comes first because because the infrastructure is a totally different ballgame in the international arena lack of insurance creates other additional challenges in the international arena I don't know how many of you know that is only there's the largest flood insurance company in this country is owned by the government and there is only one and FEMA runs that flood insurance program private insurance companies most of them do not sell flood insurance they of course sell on behalf of FEMA as a rider on your regular home insurance policies the software we have there are multiple versions of that and the the uniqueness of the software is it can be used but in the international arena because it's a relationship between damage and frequency so if you can quantify damage in terms of dollars cents rupees euros and you can assign a frequency to that given event and you can run this benefit cost model you don't need to know anything about the risk at that point specifically from a technical perspective so it's basically a damage frequency relationship you feed into the software and it will do a benefit cost for you it's independent of current series it's independent of you can adjust the interest rate whatever value you want to assign to the value of money calculations I'm done yep sorry thank you going last everyone stills my thunder anyways because I have very similar slides to to some of the other ones I first want to thank us CSIS for this event I also wear a hat where I'm the co-chair for the interaction disastrous reduction group and we always look for opportunities to highlight disastrous reduction and to move that agenda forward so we think this discussion around cost benefit analysis is really important and Tom we would agree with you that most of the NGOs would act would agree that say for more resilient communities is is where we want to go with the future and one of the biggest impediments to development is disasters they use a statistic that hurricane Mitch set Honduras back 10 to 20 years on the development gains so we definitely want to see disastrous reduction mainstreamed within development goals so that's a very important aspect Dan alluded to acronym so I'll start with my titles acronyms cost benefit analysis of disastrous reduction and climate change adaptation throw some acronyms that you I'm gonna start off again very similar to alleviate with disaster trends just a couple quick notes right now there's about 250 million people affected yearly by disasters 98% of them are weather related Oxfam predicts that in five years that's going to double by 50% where the average population that will be affected by disasters is 375 million which will completely overwhelm the the current humanitarian capacity so we definitely see the trend going forward some people would say that that that could be just because we're getting better at reporting but it's not if you take some of these issues just with peer population growth and urbanization which which Chuck alluded to we're going to see an increase in disasters I often talk about that unfortunately I'm in a growth business disaster management is going to continue to grow quite rapidly just because population growth and urbanization I just heard a recent statistic by 2050 right now we're about a 5050 global society 50 living in rural areas 50 living in in an urban society by 2050 that's going to be two thirds of the people are going to live in in urban settings and with the population growth that's out of 9 million 7 million are going to live in urban areas and a lot of them are going to live in marginalized areas they're going to live on flood plains they're going to live on sleep steep slopes they're going to live in shabby housing very similar to what we saw in slumdog millionaire so just just that alone we're going to have to deal with with more and more disasters and I contend that the international community is not very good yet at working in urban urban centers and Katie is a good a good wake-up call for for what we need where we need to go and get a lot better at it these strands these strands are only going to be exacerbated by climate change we're going to see an increase in the frequency and the intensity of disasters and this is and this is really going to erode the ability of households to cope what's interesting about climate change what's going to happen is right now a lot of areas where we have disasters you have historical knowledge climate change is going to change that so right now we have a hurricane belt and a lot of the communities in that have have hurricane experience that hurricane belts going to shift we had a hurricane in Argentina a few years ago had no idea what to do the tornado belt could could shift up so it not only is it dealing with more disasters it's dealing with unpredictable disasters and not having a historical knowledge of that and of course most of the impacts of climate change and where disasters are impacted the most are in developing countries with vulnerable populations and again we're going to see this expounded with huge urbanization urbanization growth into into marginalized lands and what we're seeing is that the the regular disasters are increasing and therefore that's eroding the capacity of the households to be able to become resilient it's putting them in a spiral of poverty and so we have to break out of that poverty getting to cost-benefit analysis disaster preparedness works we know this this is a good slide that proves we're getting much better at saving lives but we're still having huge economic losses we're seeing this this trend going down I think some very stark examples give you of where preparedness works more preparedness doesn't Haiti versus Chile right after the Haiti earthquake a month later two months later was the Chile earthquake very similar magnitude very similar density population of very very a stark difference between loss of life Chile has a culture of preparedness so preparedness does work I think the other good example is Japan and Ache the recent Japan tsunami hit a similar band of landmass as Ache but we had 20,000 loss of lives which is which is still huge but with the with the size of that tsunami where in Ache it was 200,000 so we know just intuitively disaster preparedness works what we got to get better at is is doing cost benefit analysis on what what that works and particularly in developing countries I think we can use a lot of this financially modeling as examples and I know FEMA sometimes uses a ratio of one to four every dollar spent saves four dollars in preparedness you see these different ratios rolling around which are important because I think I think we need to use those particularly to show donors and government and and and businesses that investing in disaster preparedness works but where I think we need to do that is translate that more at the at the national and sub-district and local level really what what is working and and what with limited resources where where is that best return in investment going to be because we have scarce resources and we have limited choice so from the American Red Cross perspective we we work at the community level and so I think a lot of what we heard today was we heard some community stuff but the the report that came out from the World Bank is a really good indicator that again preparedness and infrastructure is at risk reduction works but it's at a very macro level where we're working is down at the community level we see community as the first responders we often think we're the first responders or even the Red Cross and countries first responders it's the community and your neighbor that's the first responder so we have to give them the skills to be able to do that and in a lot of developed countries you just do you do not have a fire department you do not have a police department you do not have the infrastructure to allow that so it's the communities that really need to be prepared to do that and so we have a model that's called community based disaster risk reduction which is a participatory approach that walks the community through what we call a VCA vulnerability capacity assessment and most communities have capacity to be able to have action that reduces their risks and we we take them through a process that helps them identify what their risks are what their capacities are and what their vulnerabilities that then lead to action planning and then you can have and then we do first response training we do first aid training we do early warning early evacuation and these are all things that the community can communities can do themselves but what we're trying to do more of is put a cost benefit analysis model on that to help the communities to really look at what interventions are going to get the best return for their dollar so what we're seeing is this this model is being being used to inform and evaluate a range of interventions it's a decision support tool decide on the range of possible interventions to reduce risk and maximize maximize benefit for every dollar give you an example in Nepal we were working with the community and they came up with a list of interventions they'd like to do they wanted to build a bridge that gave them market access plus would be evacuation route they they had trains that were clogged up and so they wanted to clean those out and build better drains for for flooding and they wanted to look at Riverbank Riverbank enforcement or improvement and the community really wanted to do the bridge they felt the most important thing was was market access and they wanted a place to evacuate but when we ran them through a cost-benefit model that actually looked at some of the social factors it ended up being Riverbank enforcement was the what was going to be the most important because that protected their crops from being destroyed and annual and annual flooding or flooding was increasing to an annual event and so when we put them through that that modeling they were able to actually put a it helped them make that decision where they would have made it another decision just just based on intuitive discussion taking them through a CBA also then helps them go back to the government or go back to other NGOs and say look we've done this analysis we've done this modeling for this amount of investment we know we're going to get this returned so it's a great it's a great model to to use use for the government and it takes the communities away from just getting outputs to really look in at outcomes and this is a this is a good another advantage of the cost-benefit analysis cost-benefit analysis encourages is an open discussion as well a lot of it's just taking people through the process it's not necessarily then result but it's looking at options and putting some numbers numbers on that and so we're seeing through this participatory approach it's helping communities have a conversation however there there's challenges with this community-based approach one it is a risk assessment and so it's it's a lot of opinion it's not based on empirical data it's based on local knowledge and so that in itself is inherit throughout the process data collection is challenging again I would say in the United States it's much easier to do cost-benefit analysis because there's a lot of secondary data that's already available and it's already been done to build on in a developed country you don't have any data and therefore you're gonna have bias you're gonna have conflicting and insistent information across the board and so this can this can definitely skew your outcomes the sea and it's not it's not implemented systematically so it's very hard to make comparisons across the board so this this may work in this community but if you go to try it in this community it might not necessarily work so comparisons are very difficult and then social factors are hard to measure I was in a recent presentation where an NGO was walking through their cost-benefit analysis and they got hung up on on valuating life and it really just just just stopped it just because the discussion just just stopped because they just couldn't get past that and it was it was really hard and then social factors are just very very difficult to measure and quantify some interesting things that have come out of this though is that what we have seen is when you put a cost-benefit out analysis on some of these interventions if they're tied to development they team to they seem to have a a better return for their money so for an example boats in that are used for an evacuation if those boats are rented out in non-disaster times they generate income evacuation centers are now often used as community centers so they're up they're up they're maintained better they're ready to go so when evacuations hit there they're used more and then I think another good example is we've done a lot of market access so not only does it does it improve access to markets but it's an evacuation route I did a project in Pakistan where where up in the mountains everything's done by trails and they can be really small just by widening that trail it decreased the time to to get to the market by almost two hours and then it was also easier access to get injured people down to down to hospital so yeah I'm done and my last point is that we're seeing soft trees resilience opposed to our soft scale resilient measures opposed to hard cost-benefit analysis is often attached to infrastructure projects or tangible things but when we start putting it on soft things like early warning training we're seeing that there's a much better return in investment in in a lot of these soft mitigation activities thank you thanks very much rod I think we've heard several messages today it pays for preparation does pay we've also had a discussion about a spectrum of cost benefit analysis we've had sort of heard we've sort of sort of the community turbo tax version of cost-benefit analysis to the much more sophisticated version that the World Bank provides to get to a national and subnational governments but it sounds as if one of the challenges here is how do you build the capacity for communities subnational governments and national governments to have the capacity for for resilience for preparation to make the to make rational choices and how do they balance that against a number of different challenges one was political there's there's some discussion report about the politics of this and there was some discussion in Olivier's comments about that in terms of how do you if you've got a such a long timeline if we're talking 20 or 30 years before you see the benefits of of an investment what what is the what's the rational why would a why would policymakers make that decision if they they get they get rewarded on a shorter term basis than that and so it's a that's a particular challenge even though it's not a pleasant one to to think about and so I think there are any number of different tools that have been discussed but also we've also discussed ways in which communities and societies can't can achieve resiliency that there is actually that the reason the the work was done is that there's a belief that we can actually see change happen in their societies that were discussed whether it's Japan or or Chile where you're talking about a culture of preparedness and how do you achieve a culture of preparedness maybe I am just cognizant of the time I know we're gonna have I want to make sure that we have some time for Q&A but I'm just wondering if if each of the the the pants could give a very brief maybe a minute or less comment on how do you create a culture of preparedness if you could just give your your views on that maybe I could start with Rod to speak speak to that and each of you could just go down the down the it's a it's a long-term process and again this what DR disastrous reduction is often housed in humanitarian sections but it's really a developmental issue and it and it takes a long time to build that culture we see it a lot in schools is a good entry point and where where students are open to new ideas and and we see students as change agents that often can take messages back to their communities in the recross as a good entry point into into the schools shabar yeah I think I completely concur with how what Rod said I think one way at an agency level on an organizational level we do is we we give out grants or we ourselves do a lot of outreach and education on the value of preparedness we have also built a lot of tools that are available for communities to use to to go through the cycle of what it means to prepare at an individual level at a community level at the school level what is the infrastructure that needs to be in place so Charles we have less of focus on on policy and codes and regulations we try to develop better building practice for example training with with Red Cross we've often in the past done multi-level types of training from informal education in the street street theater puppetry comic books you name it we try to do it and strategic communications at a more kind of macro level we've done a lot in the last year with text messaging and Haiti that is trying to get some key key messages across on DRR I mean from the world bank perspective there are two dimensions one is at the institutional level since our clients are governments and I think it's a long-term effort really to to build within the kind of policy making decision process this kind of culture of preparedness and there is a lot of work to be done and in parallel doing some work at the I would say macro community level for some livelihood projects where we can use comic books where we can use short movies and again it's a long-term process and I think you need to build on both kind of institutional aspects because you want that to be well institutionalized and as the same thing you want to make sure that the at the growth at the at the ground level people understand the needs to to some extent just to implement the rules and to apply or to comply with the rules that could come from the from the central level you'll have been very very patient I'm gonna collect three questions and if I'd ask you to tell me your name your affiliation and a very brief question so there's their microphones there's a gentleman here and we'll start with the gentleman here but we're gonna capture three questions very briefly Robert right an international investor I wonder if you couldn't also educate or elicit the help of insurance companies business and investment community on this and my specific question is for example in the case of the Japanese tsunami protection that lasted for 35 years that's 35 years or it should have been of reduced risk premiums on insurance not just for the for the town but for every business every residence in that town I would think accumulatively that could make a strong argument for why there's money savings and doing these projects in the future other other questions and from the audience gentlemen gentlemen here I'm a James Turner from the National-Oceanic and atmospheric administration I guess one of the things I'm a little bit surprised about is that haven't heard anybody talk about public education risk education in that you know very few in the public you know understand what risk is the understand the difference between one and a hundred one and ten thousand and and what it may mean and also to as you do these some of these analyses you know to make sure that people understand that they're you know that when you do this probabilistic calculation it's not a number that you arrive at but there are huge uncertainties around that maybe that will help you to to rank order the relative risk but but again you know if you could address risk education okay third question third question gentlemen there hello my name is Sergio a camera I work for the Inter-American Development Bank I have a question for Olivia how useful is the cost-benefit analysis tool for assessing projects aimed at institutional strengthening or policy reform I'm talking here not about you know the typical investment projects but rather you know soft projects thank you why don't I'm gonna take these a little bit out of order maybe I would ask maybe Rod or perhaps Shabar to take the second question about public risk education and maybe Rod I suspect you you could just speak could you speak speak to that and then I'll shabar after you it's tough public awareness campaigns sometimes work sometimes they don't we are looking at in Almaty for example which is very at risk to earthquakes of doing a very intensive city-wide public awareness campaign again we feel it's it's getting it down to the community level and and we do do risk analysis there and risk education when we do our vulnerability assessment first thing that we work with the community on is taking them through their risk analysis so we do do risk education the community level and a lot of places it's it's difficult to do it nationally Indonesia for example it's 17,000 countries and I mean 17,000 islands that's the size of that size of New York I mean the size of the U.S. from end to end so it's it's got every hazard except locus and I think it has that as well yeah great Shabar on the issue of risk education I'll just share some of the things FEMA does in terms of risk education we approach risk education at the national level primarily in the context of flood disasters I don't know if any of you all have seen those commercials of flood smart where the water rises in a house and some of the good demonstrations out there on national television we approach it that way at the community level and we do a lot more community outreach and education post disaster in the communities that have been impacted and just to give you a specific after a disaster if 10 counties are declared as disaster areas we will open at least one disaster recovery office in each community and homeowners and individuals and business owners they all come in they go through a process of education and what kind of support system and mechanisms are available through all the federal the whole federal family with that small business administration whether it's FEMA whether it's Red Cross all these entities are sitting there so and that's where we do a lot of the education the context of that hazard and the mitigation proposals Charles and then Olivia if you could each speak to the issue about insurance in the investment community sure thank you one experience that we've had with the private sector insurance companies in particular has been in several countries in Southeast Asia of working very closely with them to develop a series of building practice training programs that are tied to it's almost a precursor activity to the establishment of insurance markets in Indonesia for example when I live there years ago I think 2% of the households in the country had some form of insurance so it was very much an emergent market kind of situation so there had to be some some precursor activity of really promoting the higher bars of standards and what have you and standardization of materials building materials construction materials and like we've had some very very positive contributions from hamchamp the American Chamber of Commerce in various countries Indonesia is probably the best example that I know of because the president was a good friend of my treat for some time also in Turkey and Central Asia places that you wouldn't normally think would be a large community there's there's been a lot of support from the private sector not just the international community but also the local community I think this these issues of continuity of service for example in the local banking industries and and offices of and the hotels and industry tourism industry they're looking at particularly with earthquakes for example they want to know how their their services are going to continue so this issue of of critical kind of internal infrastructure as well as public infrastructure something that's very very keen and I think people the private sector have a have a leg up in some regard and understanding the real true benefits and costs of that and we try to incorporate those wherever we can into the disk disk the DRR program that we do in places like Istanbul if you could speak to that yeah I mean it's interesting because in fact the two questions I would say closely related when we talk about disaster risk management at the bank we tend to work on five pillars one being institutional capacity building they're the only being risk assessment itself emergency preparedness risk reduction and financial that would say disaster is financing so I would not try to to to exclude one against the other I think it's really kind of you need to work around the five pillars and I would say it's the the five or nothing it's not one or the other on the insurance just on the insurance component this is something I mean coming from the financial sector myself in the in at the World Bank this issue of public partnerships is quite important particularly when it comes to risk assessment again I think that to some extent the insurance market can provide tools if not products but at least tools to help us to better price the risk and I can take examples related to earthquake or related to agriculture when you can price the risk it's a very good signal economic signal you're gonna send to your to your counterparts they have developed as I said in my presentation they have developed tools to help us to price this kind of risks all these kind of catastrophic modeling techniques come from the insurance sector now how can we use insurance to create the right incentives this is something which is a bit tricky because in many countries and the US also insurance is not fairly priced meaning that and if you take flood insurance you know it's highly subsidized so you do not always send the right signal for political reasons so in many countries it's very difficult for us to convince governments first of all to develop a property insurance markets based on private I would say principles and also to let the market price the risk accordingly the governments may always tend to come up with a kind of universal coverage at a universal price with some cross subsidies between that so this is something again which is quite difficult to tackle we do have some successful examples like in Turkey where the World Bank helped setting up the Turkish Catastrophe Insurance Pool and this is one of the few programs in the world where your premium will depend on your type of building and the location you live but again they're quite quite quite unique on the other hand we've been working with the government of Romania and the government of Romania decided to commit to one single premium rate for all the country so again we need to work around this kind of private incentives versus a kind of political economy dimension quickly on the last point institutional strengthening as I was saying this is of course where you can reach the limits of this kind of economic tools and from our side as I said in my presentation we really focus on some physical investments where we think that cost-benefit analysis can provide some guidance not being the final tool but at least compromise some guidance when it comes to soft investments including institutional capacity building from our side I don't think we can really price it properly the way again we sell it to our clients and to our board at the bank is that it comes within the package and if you have to invest in risk mitigation physical risk mitigation you also have to invest in institutional capacity building one or the other is not really the alternative I think our time has ended I hope you'll join me in thanking the panel