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Economic evaluation nepal earthquake 2015

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Dr. Gursharanjit Singh
Dr. Gursharanjit Singh

This document discusses the economic impact of the 2015 Nepal earthquake. It provides background on Nepal's economy, details on the earthquake and its aftermath. Over 8,000 people were killed, hundreds of thousands of homes were destroyed, and critical infrastructure and historical sites were damaged. This disrupted economic activity, agriculture, access to healthcare and education. Estimates placed the total cost of reconstruction at $6.6 billion. Financial instruments for disaster risk are discussed, as well as suggestions around improving building codes and construction practices to reduce future earthquake impacts.

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Economic evaluation of Nepal Earthquake (2015) Gursharanjit Singh Rupa Ramachandran Samridhi Nigam Soundarya Venkatachalam 1
Contents Introduction Effects of natural disaster Types of damage Factors affecting the impact of natural disaster Nepal and its economy Nepal earthquake and its aftermath Financial instrument Economic impact of earthquake Suggestions References 2
What is disaster? According to EM-DAT, an event is said to be a disaster if it has the following characteristics. More than 10 people killed More than 100 people affected Emergency declared Call for international assistance 3
Effects of natural disasters Short run 0-3 years Physical destruction Disruption of utilities Emotional damage Social consequences Long run More than 5 years Difficult to determine Damage to local economy due to destruction 4
Types of damage Direct damage Assets Buildings Agricultural lands Historical sites Indirect damage Productivity Economic activity Food security Access to healthcare Access to essentials 5
Factors affecting the impact of natural disaster Population size Geographic location Political factors Economic factors Resource allocation Infrastructure 6
Nepal South Asia Borders with India and China In Himalaya range Has Hills, Mountains, terrain No plains Developing country, Ranked 145th on Human development index 2014 7
Economy of Nepal Least developing country Long term political turmoil Delay in economic development 40% unemployment rate GDP ($19 Billion in 2012) - Smaller than any state in USA. 33.7% agriculture (use 75% of workforce) 52.2% services such as tourism , hotel , restaurants 14% Industries such as manufacturing 8
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Nepal earthquake 25th April and 12th May 2015 7.8 and 7.3 Richter scale Epi-centre Less than 50 miles north-west of Kathmandu Depth 11km/6.8 miles 10
Aftermath 8,790 killed 22,300 injured 498,852 houses destroyed 256,697 houses partially damaged Thousands of schools and other public buildings destroyed Millions displaced 11
Aftermath Less than 5 percent: Percentage of homes rebuilt so far $6.6 billion: total estimated cost for reconstruction $4.1 billion: amount pledged so far in donations $308,880: total funding Nepal has offered for reconstructing homes 661: number of Nepalese families who have received reconstruction funding 12
Economic impact Tourism affected Clean water and sanitation disrupted. Scarcity of food and agriculture fields were damaged. Health care facilities, medical care were damaged. Health and Education infrastructure system was severely damaged. Infrastructure services like electricity and telecommunications were severely damaged. 13
Major figures 8,856: Number of deaths 22,309: Number of injuries 602,257: Number of houses destroyed 185,099: Number of houses damaged 6,430: Number of government buildings damaged 35,000: Number of classrooms destroyed Nearly 1 million: Number of children left with no school 9.1 million: Total number of school-age children in Nepal 956: Number of hospitals and clinics damaged 14
Figures Number of people pushed into poverty by the earthquake700,000 Number of people receiving humanitarian aid 3.7 million Number of families who lived in high- altitude temporary shelters through winter200,000 15
Financial instruments Quantify the risk Risk assessment Natural disasters are low frequency and high risk Use computer aided technology to track natural events Develop a model based on the observation World bank supports many catastrophic risk insurance Ex : Turkey , Catastrophic insurance pool Insurance to middle income households Funded by WB Catastrophe insurance Provided for people who are a part of catastrophic insurance pool Property catastrophe insurance programs for homeowners 16
Most of the national insurance catastrophic program Focus on the disaster Regional aspect Provide coverage for dwellings and contents Premium rates reflect the characteristics of the risk No direct government subsidy Encourage safer construction practices Reply on distribution and servicing capabilities of the private insurance In low and middle income countries There is an inadequate development of domestic insurance market 17
Suggestions Develop hazard map showing earthquake risk zones Using construction techniques that are shock resistant Instituting incentives to remove unsafe buildings and buildings on unsafe sites or, more probably, to upgrade their level of safety. Ensuring that future development is on safer sites and apply safer methods of construction through abiding by: Land use controls (zoning). Building Codes and standards and means of enforcing them. Favourable taxation, loans, or subsidies to qualify buildings, methods and sites. Land development incentives. 18
Reducing possible damage from secondary effects by: Identifying potential landslide sites and restricting construction in those areas. Installing devices that will keep breakages in electrical lines and gas mains from producing fires. Verifying the capability of dams to resist earthquake forces, and upgrading as necessary. A high percentage of losses in earthquakes is due to failure of non- structural elements such as ceilings, windows, doors, partitions, cupboard and shelves, external cladding, electrical and mechanical systems, and other components of buildings. Non-structural components comprise 60-80% of the cost of the building. 19
Referenes Cummins JD, Mahul O. (2009). Catastrophe risk financing in developing countries: principles for public intervention. The World Bank: Washington DC. Cavallo E, Noy I. (2010). The economics of natural disasters: a survey. IDB working paper series No. IDB-WP-124. CDEMA Earthquake Readiness - Earthquake Damage Reduction. Weready.org. Retrieved 9 March 2017, from http://www.weready.org/earthquake/index.php?option=com_conte nt&view=article&id=16&Itemid=53 A list of some effects from Nepal's earthquake 1 year ago. Mail Online. Retrieved 9 March 2017, from http://www.dailymail.co.uk/wires/ap/article-3551129/A-list-effects- Nepals-earthquake-1-year-ago.html 20
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Economic evaluation nepal earthquake 2015

  • 1. Economic evaluation of Nepal Earthquake (2015) Gursharanjit Singh Rupa Ramachandran Samridhi Nigam Soundarya Venkatachalam 1
  • 2. Contents Introduction Effects of natural disaster Types of damage Factors affecting the impact of natural disaster Nepal and its economy Nepal earthquake and its aftermath Financial instrument Economic impact of earthquake Suggestions References 2
  • 3. What is disaster? According to EM-DAT, an event is said to be a disaster if it has the following characteristics. More than 10 people killed More than 100 people affected Emergency declared Call for international assistance 3
  • 4. Effects of natural disasters Short run 0-3 years Physical destruction Disruption of utilities Emotional damage Social consequences Long run More than 5 years Difficult to determine Damage to local economy due to destruction 4
  • 5. Types of damage Direct damage Assets Buildings Agricultural lands Historical sites Indirect damage Productivity Economic activity Food security Access to healthcare Access to essentials 5
  • 6. Factors affecting the impact of natural disaster Population size Geographic location Political factors Economic factors Resource allocation Infrastructure 6
  • 7. Nepal South Asia Borders with India and China In Himalaya range Has Hills, Mountains, terrain No plains Developing country, Ranked 145th on Human development index 2014 7
  • 8. Economy of Nepal Least developing country Long term political turmoil Delay in economic development 40% unemployment rate GDP ($19 Billion in 2012) - Smaller than any state in USA. 33.7% agriculture (use 75% of workforce) 52.2% services such as tourism , hotel , restaurants 14% Industries such as manufacturing 8
  • 9. 9
  • 10. Nepal earthquake 25th April and 12th May 2015 7.8 and 7.3 Richter scale Epi-centre Less than 50 miles north-west of Kathmandu Depth 11km/6.8 miles 10
  • 11. Aftermath 8,790 killed 22,300 injured 498,852 houses destroyed 256,697 houses partially damaged Thousands of schools and other public buildings destroyed Millions displaced 11
  • 12. Aftermath Less than 5 percent: Percentage of homes rebuilt so far $6.6 billion: total estimated cost for reconstruction $4.1 billion: amount pledged so far in donations $308,880: total funding Nepal has offered for reconstructing homes 661: number of Nepalese families who have received reconstruction funding 12
  • 13. Economic impact Tourism affected Clean water and sanitation disrupted. Scarcity of food and agriculture fields were damaged. Health care facilities, medical care were damaged. Health and Education infrastructure system was severely damaged. Infrastructure services like electricity and telecommunications were severely damaged. 13
  • 14. Major figures 8,856: Number of deaths 22,309: Number of injuries 602,257: Number of houses destroyed 185,099: Number of houses damaged 6,430: Number of government buildings damaged 35,000: Number of classrooms destroyed Nearly 1 million: Number of children left with no school 9.1 million: Total number of school-age children in Nepal 956: Number of hospitals and clinics damaged 14
  • 15. Figures Number of people pushed into poverty by the earthquake700,000 Number of people receiving humanitarian aid 3.7 million Number of families who lived in high- altitude temporary shelters through winter200,000 15
  • 16. Financial instruments Quantify the risk Risk assessment Natural disasters are low frequency and high risk Use computer aided technology to track natural events Develop a model based on the observation World bank supports many catastrophic risk insurance Ex : Turkey , Catastrophic insurance pool Insurance to middle income households Funded by WB Catastrophe insurance Provided for people who are a part of catastrophic insurance pool Property catastrophe insurance programs for homeowners 16
  • 17. Most of the national insurance catastrophic program Focus on the disaster Regional aspect Provide coverage for dwellings and contents Premium rates reflect the characteristics of the risk No direct government subsidy Encourage safer construction practices Reply on distribution and servicing capabilities of the private insurance In low and middle income countries There is an inadequate development of domestic insurance market 17
  • 18. Suggestions Develop hazard map showing earthquake risk zones Using construction techniques that are shock resistant Instituting incentives to remove unsafe buildings and buildings on unsafe sites or, more probably, to upgrade their level of safety. Ensuring that future development is on safer sites and apply safer methods of construction through abiding by: Land use controls (zoning). Building Codes and standards and means of enforcing them. Favourable taxation, loans, or subsidies to qualify buildings, methods and sites. Land development incentives. 18
  • 19. Reducing possible damage from secondary effects by: Identifying potential landslide sites and restricting construction in those areas. Installing devices that will keep breakages in electrical lines and gas mains from producing fires. Verifying the capability of dams to resist earthquake forces, and upgrading as necessary. A high percentage of losses in earthquakes is due to failure of non- structural elements such as ceilings, windows, doors, partitions, cupboard and shelves, external cladding, electrical and mechanical systems, and other components of buildings. Non-structural components comprise 60-80% of the cost of the building. 19
  • 20. Referenes Cummins JD, Mahul O. (2009). Catastrophe risk financing in developing countries: principles for public intervention. The World Bank: Washington DC. Cavallo E, Noy I. (2010). The economics of natural disasters: a survey. IDB working paper series No. IDB-WP-124. CDEMA Earthquake Readiness - Earthquake Damage Reduction. Weready.org. Retrieved 9 March 2017, from http://www.weready.org/earthquake/index.php?option=com_conte nt&view=article&id=16&Itemid=53 A list of some effects from Nepal's earthquake 1 year ago. Mail Online. Retrieved 9 March 2017, from http://www.dailymail.co.uk/wires/ap/article-3551129/A-list-effects- Nepals-earthquake-1-year-ago.html 20