Op-ed: Preparing for the Worst, Best Response for Disaster-Prone Central America

* Originally published in Spanish on May 31, 2011 in 'La Hora' 

By Sri Mulyani Indrawati, World Bank Managing Director

A few weeks from now, contractors in the Salvadoran municipality of Tepetitan will place bids to build a new school to replace the one destroyed there by Tropical Storm Ida in 2009. The new facility will be more than a place where children learn - it will be a shelter to protect them if a similar natural disaster comes their way.

The quarter-million dollar project, financed by Brazil and administered by the World Bank and the Global Facility for Disaster Reduction and Recovery, is a small but telling example of the level of cooperation, knowledge sharing and innovation needed to address the growing human toll of natural disasters. 

After hydrological and geological studies helped identify a safe site, project designers applied the latest building specifications, such as the Safe School Index tool developed by the World Bank and the Pan-American Health Organization during risk prevention work done with Guatemala.  

Chances that another natural disaster will affect the same area are not slim. El Salvador and most of Central America are prone to natural disasters of all kinds – earthquakes, hurricanes, flooding, mudslides, volcano eruptions, and more. According to the World Bank’s Natural Disaster Hotspot, Costa Rica, Guatemala, El Salvador, Panama and Nicaragua rank among the top 15 countries in the world with the highest economic risk exposure to three or more natural hazards.  

Add to that the fact that rapid urbanization and a changing climate are making these disasters more frequent or more costly (or both), and some may feel tempted to throw up their hands in resignation. But make no mistake, much can and must be done to mitigate the effects of coming disasters. 

Evidence of that was abundantly clear last year when, in a period of 47 days, Haiti and Chile were hit by devastating earthquakes. The quakes were dissimilar in important factors beyond human control, such as the proximity of the epicenters to large populations, but man’s influence, particularly poor construction and weak institutional capacity, proved decisive in terms of casualties. Haiti’s quake claimed nearly 230,000 lives; Chile’s less than 600, despite Chile’s being much stronger..

Fortunately, Central American governments have begun preparing for the worst. Ever since Hurricane Mitch, the second deadliest hurricane in the Atlantic, made landfall in 1998, regional leaders have increased efforts to improve risk mitigation and climate adaptation.

We at the World Bank have participated in these efforts at different levels.  In Honduras and Nicaragua, the World Bank has provided funding and expertise through Natural Disaster Mitigation Projects, which have helped develop local institutional capacity to better respond to disasters. We have also helped to create risk maps, flood forecasting and early warning systems as well as to adopt long-term flood mitigation measures and watershed management. 

In Guatemala we have also supported the formulation of a new building code, made official less than two months ago. And in El Salvador and Costa Rica, largely with local funds, we are assisting in the application of the Central American Probabilistic Risk Assessment, a free and open information platform, to better identify risk and exposure to disasters. 

When natural disasters easily cause billions of dollars in damage, it is clear that any investment made now for mitigation is an investment that protects development. Not surprisingly one of the key priorities for us at the Bank is to integrate modern disaster risk management practices into the development strategies and investments policies of the countries we work with.

Still, when disaster hits, the cost of recovery is normally extremely high – and the amount of help insufficient. According to the OECD Development Aid Committee, foreign money typically covers less than 10 percent of a country’s disaster losses. 

That is why the World Bank is offering new risk financing instruments such as the “Catastrophic Risk - Deferred Draw Down Option” or “CAT DDO” to have access to immediate liquidity following a natural disaster. Currently Costa Rica, Guatemala, El Salvador and Panama are either using or preparing to use this facility, for a total of $245 million.

As Finance Minister for Indonesia during the devastating tsunami in Aceh in 2004, I experienced firsthand the social and economic burden of disasters. But I also have come to understand that just as in my country, many countries including those in Central America, are learning from their experiences and preparing for the hazards ahead. 

That’s the least we can do particularly for children living in increasingly vulnerable areas, such as Tepetitan.

Sri Mulyani Indrawati is World Bank Managing Director