CHAPTER 4
Prevention through Governments
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ational, state, and local governments with the power to tax are responsible for many major prevention measures; but regardless of the political system, they respond to the wishes of the people—at least some of them. People also act collectively through other entities, formal or ad hoc, many rooted in traditions: villages gathering to clean out the irrigation ditches for example. These organizations play an important though unheralded role in many economies: without them, governments are less effective. The chapter begins by discussing how much governments spend on prevention. This requires a detailed grasp of budget accounting because prevention is not a specific budget item, and prevention is embedded in infrastructure investments, maintenance, and other spending. In four chosen countries, identified prevention spending was lower than post-disaster spending. But this does not necessarily imply it is “too little,” only that disasters increase spending on relief and that such expenditures remain high for several subsequent years, perhaps for good reasons. The effectiveness of prevention spending is more important than its magnitude, and some indicators can suggest the benefits of reversing the past neglect of maintenance and other types of preparedness spending. The chapter next examines who determines government spending. It is easy to assert that politicians are shortsighted. But competition in the markets for votes, like other competitions, provides the public with the services they want—with a twist that arises when voters can observe inputs (building a levee), not outputs (protection from floods, also requiring other unobservable actions). So, even if voters want prevention, they could vote against such spending if they doubt that it would result in effective protection. The chapter then discusses how to improve collective decisions. Institutions and political competition improve collective decision making, and against this backdrop, cost-benefit analysis is a useful guide to spend effectively. For disaster prevention in particular, ignoring the value of life tilts 105