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Natural Hazards, UnNatural Disasters: The Economics of Effective Prevention
The poor bear the brunt of the cumulative effects of such policies (tax structure, city financing arrangements, and so on) which produce only a limited and unresponsive supply of affordable, legal land sites for safer housing. Governments could greatly expand the choices of the poor—who often locate in dangerous areas and slums exposed to hazards—but this is more subtle than dictating what they should choose. Poor households prefer to have easier access to jobs, even though this may imply living in slums on riverbanks prone to flooding or on hilltops subject to mudslides. In some cases, security of property (clear titles often help) allows people to invest in prevention measures. When the social consequences of settling in hazardous zones are so adverse, the correct response is for governments to make targeted interventions. This could include making land available in safer locations—along with adequate and reliable public transport and other services so that people remain connected to their jobs. Third, governments must provide adequate infrastructure and other public services, and multipurpose infrastructure holds promise. Much prevention is embedded in infrastructure, but effectiveness depends on quality. Infrastructure needs maintenance: fixing potholes in the road before the winter or the rains; painting steel bridges before they weaken through corrosion; inspecting and fixing cracks in concrete bridges. All engineers know this, but they do not always obtain budget appropriations—even in the United States, where the 2007 bridge collapse in Minneapolis drew attention to such neglect. Spending should go down a list arranged in descending order of (economic) rates of return. But when subject to arbitrary budget spending limits and lumpiness, low-return spending often gets put ahead of postponable high-return spending. Since maintenance can be postponed, it gets deferred—repeatedly—until the asset crumbles. Drainage ditches, once built, are not adequately maintained and become clogged; so rains result in floods that drown the poor. Other less obvious public services include reliable city transport, and these require better—not always more—public spending. For example, about 30 percent of infrastructure assets of a typical African country need rehabilitation, and just $0.6 billion on road maintenance would yield $2.6 billion in annual benefits (figure 3). Governments must ensure that new infrastructure does not introduce new risk. This is particularly important since, in many developing countries, infrastructure investment—long-lived capital stock—is likely to peak in the coming few decades. Locating infrastructure out of harm’s way is one way of doing so. Where that may not be possible, another way is to execute multipurpose infrastructure projects, such as Kuala Lumpur’s Stormwater Management and Road Tunnel (SMART). Floods from heavy rains are a hazard, and the 9.7 kilometers long $514 million tunnel has three levels (figure 4), the lowest for drainage and the upper two for road traffic. The drain allows large volumes of flood water to be diverted from the city’s financial district to a storage reservoir, holding pond, and bypass tunnel. Combining the drain with the road has two advantages: it ensures maintenance of a