Estimation of Disaster Impact on Personal I ncome IIncome a nd and and Poverty Application of the DaLA Methodology J Roberto J Robe rto J ve v l

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1 Estimation of Disaster Impact on Personal Income and Poverty Application of the DaLA Methodology J. Roberto Jovel PLS308 Damage, Loss and Needs Assessment Impact on Personal Income and Poverty 1

2 Disasters and Personal Wellbeing Disasters may cause a temporary decline on livelihoods and on personal or household income in addition to higher costs of living The loss of livelihoods may in turn result in increased poverty levels in the areas affected by the disaster, introducing increased pressures on the country s quest for development These losses can be overcome through specially defined programs in the recovery and reconstruction stages 2March09 RJovel 3 What is Required There exists a virtually constant relationship between the amount of gross production and the number of workers in each sector of economic activity Therefore, after the value of production losses due to the disaster has been estimated for all sectors, it is possible to estimate the corresponding expected reduction in personal or household income, in each of the sectors that were affected To do this, baseline information is required on the amount of gross output or production, the number of workers employed, and the average value of wages paid to workers in each sector of economic activity This information is usually available in the national accounts and household surveys conducted by the Statistical Institute of the affected country 2March09 RJovel 4 2

3 Estimation of Post-Disaster Personal Income Losses Disaster Impact on Personal Income and Expenditures In view of the production losses in all sectors of activity, there will occur a corresponding decline in personal and household income Persons employed under permanent conditions are not expected to sustain such personal losses Wage earners, on the other hand, are expected to temporarily lose personal income In addition,,p persons and households are expected to face increased expenditures to cover Partial costs of medicines and medical care Increased food costs Higher transport costs, etc This will result in an overall decline in personal wellbeing, although temporary in nature 20June2007 RJ 6 3

4 Procedure for Income Loss or Decline Estimation 1. From Statistical Office or Institute obtain information on Gross production or output for all sectors of economic activity (In National Accounts) Number of workers and average wages in each sector of economic activity (In most recent Household Survey) 2. From DaLA obtain the estimated value of post-disaster production losses, for each sector of economic activity and over the entire duration of recovery and reconstruction 3. Develop a ratio of Post-Disaster Losses vs normal Gross Output or Production for each sector 2March09 RJovel 7 Procedure for Income Loss or Decline Estimation.. 4. Estimate the reduction of employment-years years in each sector of economic activity, by multiplying the number of employed persons times the ratio developed under previous step 5. Estimate the value of income decline in each sector of economic activity and for each affected geographical area, over the entire recovery and reconstruction period, by multiplying l i the value of wage times the number of work-months lost 6. If disaggregate information is available estimate the differential impact on men and women, in each sector of economic activity 2March09 RJovel 8 4

5 Income Loss Decline Estimation for Agriculture in 2008 Yemen Floods Estimation Baseline Value of Value Losses, Information of Ratios of Lost taken of from Wages Production from National Damage in Agriculture Lost Accounts and Loss Sector 2007, Assessment Number 2008 Household to of 2012 work-years Survey 2004 lost 2March09 RJovel 9 Summary of Income Loss Decline for All Sectors, 2008 Yemen Floods * ** 2March09 RJovel 10 5

6 Employment Losses 2008 Floods in Yemen 2March09 RJovel Cyclone Season in Haiti Loss of Employment by Region Number of work days lost 9,000,000 Income loss: 8,000,000 Men 24.6 million US$ Women 10.9 million US$ 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, March09 RJovel 12 Males Females 6

7 2008 Cyclone Season in Haiti Geographical Distribution of Employment 2March09 RJovel 13 Employment Losses per Sector and Gender: 2008 Haiti Cyclone Season 100,000 10,000 t Losses, work-years Employment 1, March09 Agriculture Fisheries RJovel Industry Commerce Tourism 14 Male Female 7

8 Personal Income Decline, after A H1N1 Swine Flu in Mexico, 2009 Sector of Economic Activity Personal Annual Income, M$ Pre-PandemicPandemic Men Women Post-PandemicPandemic Men Women Transport 27,060 39,360 9,011 13,107 Electricity 11,256 10,884 3,748 3,624 Livestock 23,508 30,264 7,828 10,078 Trade and Entertainment 30,852 18,540 10,274 6,174 Restaurants 29,484 23,328 9,818 7,768 Tourism 129,720 35,292 43,197 11,752 24/08/2009 RJovel 15 Temporal Income Decline after Pandemic Flu in El Salvador 20June2007 RJ 16 8

9 Number of persons affected by personal income decline after flu pandemic in El Salvador Personal income decline by Type of required medical attention Number of persons affected 43% In hospital 95,400 90% In Intensive Care Unit 16,850 20June2007 RJ 17 Estimation of Poverty Aggravation after Disasters 9

10 Procedure for Poverty Aggravation Estimation 1. From the most recent poverty or human development survey, determine the number and location of people living below the poverty level in the affected country or area 2. From the previous estimates of income decline, estimate the additional number of persons that will fall under poverty conditions due to the disaster 3. Special post-disaster poverty alleviation schemes may be designed later on as part of the recovery and reconstruction programs 2March09 RJovel 19 Number of people below poverty line, thousands Number of people below poverty level, Yemen Number of poor would go from 310,000 in 2008 to 575,000 in 2009! 0 2March RJovel Pre-Disaster Post-Disaster 10

11 Sector of Economic Activity Household Income Falling Below Poverty Level, after Swine Flu Outbreak in Mexico, 2009 Poverty level income: M$ 20,160/Household Post-Pandemic Pandemic Household Income, M$/year By Household Head Gender Male Female Transport 18,058 26,266 Electricity 7,512 7,263 Livestock 15,688 20,196 Trade and Entertainment 20,589 12,372 Restaurants 19,676 15,568 Tourism 86,567 23,552 24/08/2009 RJovel 21 Sector of Economic Activity Aggravation of Poverty, after Swine Flu Outbreak in Mexico, 2009 # Families falling below poverty level By Household Head Gender Men Women Transport Electricity 9 2 Livestock Trade and entertainment 0 37,686 Restaurants 42,228 52,186 Tourism 0 0 Total 43,009 89, ,544 Persons 24/08/2009 RJovel 22 11

12 Aggravation of Poverty after Flu Pandemic in El Salvador # of Poor Households Losing Family Head due to Flu Poverty Extreme Poverty Level Urban areas 2, Rural areas 2,346 1,999 Total country 5,035 2,098 # of Households Headed By Poverty Level Extreme Poverty Level 35 Estimate number of new orphans 20June2007 RJ 23 Pre-Earthquake Map of Human Development Index in El Salvador 2March09 RJovel 24 12

13 Spatial Distribution of Disaster Magnitude by Province (Damage and Losses versus GDP) Distribución geográfica del daño ocasionado por los terremotos de enero y febrero de 2001 (Daño total/pib, %) SANTA ANA 22% CHALATENANGO 57% W N S E AHUACHAPAN CUSCATLAN CABAÑAS SAN SALVADOR MORAZAN SONSONATE LA LIBERTAD SAN VICENTE LA UNION LA PAZ SAN MIGUEL USULUTAN % del PIB menos de 5 5 a a y más 31% 19% Kilometers Fuente: CEPAL 27 Agosto 2001 Roberto Jovel 25 Distribución geográfica del daño ocasionado por Spatial Distribution los terremotos of Damage de enero y febrero and Losses de 2001 per Person Caused by the (Daño El per Salvador capita, US$ por Earthquakes habitante) in 2001 N W E S CHALATENANGO SANTA ANA AHUACHAPAN CABAÑAS CUSCATLAN MORAZAN SAN SALVADOR SONSONATE LA LIBERTAD SAN VICENTE 1,533 LA UNION LA PAZ SAN MIGUEL USULUTAN Daños per capita total menos de a a y más 27 Agosto Kilometers Roberto Jovel 26 Fuente: CEPAL 13

14 Earthquake Map of Human El nuevo mapa de la pobreza Post-Earthquake of Human Development Index in El Salvador 2March09 RJovel 27 Definition of Affected Population How to Classify People on the Basis of Damage and Losses 14

15 Defining Affected Population After disaster effects (Damage and Losses) have been estimated, different types and degrees of population affected must be defined Primary affected: those persons living in the affected areas whose assets have been destroyed; dead and ill persons Secondary affected: persons living in the affected area that have sustained losses in production and income Tertiary affected: persons living outside of the affected areas that are sustaining higher costs of services (transport, water, sanitation and electricity Each type of persons affected will have different kinds of needs to achieve recovery and reconstruction after the disaster 15Sep07 RJovel 29 Thank You! 15