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The Economic Impact of Disasters: Damage to Human Society Ca

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Marella Gonzalez

on 26 November 2014

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Transcript of The Economic Impact of Disasters: Damage to Human Society Ca

The Economic Impact of Disasters: Damage to Human Society
Caused by Natural Hazards

38% of the economic damages were proportionally smaller of the world total
The Asian and Pacific share of global production or GDP exceeds the world average of about 29% in constant 2005 US dollars
Countries in the Asian and Pacific continents continue to suffer from natural disasters
Highest rate of death 1.1 million: earthquake in Haiti
Highest number of affected : 2.7 billion
Greatest amount of damage properties : 1.3 billion dollars
(UNISDR, 2012)
Increase in billions of dollars loss every year shows how natural disasters can affect lives and properties of people who are affected by a natural calamity (The Contribution of Surveying Profession to Disaster Risk Management, 2006).
Disasters may cause small or large impacts on the world’s stock market depending on how great the damage (The Market Tremors, 2011).

everyone is affected
prevalent in the Philippines
we usually do not do anything to protect ourselves against these natural occurrences, therefore we should learn how and carry out the work to be done
The reforms and recommendations would be for everyone’s sake. eg. CSR, NDCC

• Government; the executive and legislative branches
o Local government units
o Specific departments
➢ Department of Health
➢ Department of Social Welfare and Development
➢ Department of Resource and Management
➢ Department of Trade and Commerce
• Organizations
o National Disaster Coordinating Council
• Military and police,
• Private sectors, churches,
• NGOs (e.g. Red Cross),
• Volunteer groups
• Concerned citizens

National Disaster Coordinating Council or NDCC

• Policies and coordination for disaster management at
national level.
• Preparedness, mitigation, response and rehabilitation
• Present advises to the President about natural calamities
and disasters; recommends when to declare a state of
calamity and evacuation.
• Activities for strengthening the ability of the national
government and local government units with partner
o To construct disaster flexibility of communities
o To institutionalize arrangements and measures for
reducing disaster risks
o Enhancing disaster preparedness and response and
response capabilities at all levels.
Significance of the Topic
Theory: Economic Externality
A consequence of an economic activity that is experienced by unrelated third parties
Example: a condominium building was built with a strong and resilient foundation to withstand natural calamities like typhoons, earthquakes etc. The residents of that building would pay a premium in exchange for their safety. There are some other structures and people surrounding the building. They are kept safe because of how strong and sturdy the condominium building is that it would not collapse or fall. This is economic externality because their safety is not compensated through market price (Obayashi, 2014).

many stakeholders
couldn’t care less
, because the Philippines is used to rain and storms. However, after a series of huge and strong typhoons in the recent years, stakeholders have been
more conscious
and concerned
for their safety
and the safety of the country. Now, people may be willing to “pay a premium” just for their welfare. Disaster preparedness is being put to the test.
Corporate Social responsibility has heightened
Theory: Public Goods
Theoretical Economic Background

• “Non-rivalrous” and “non- excludable”
• Wherein an individual can enjoy the availability of a commodity without lessening its availability for another person
Examples of public goods are parks, malls, sewage systems, radio, and television (Public Good, 2014).

Stakeholders will
behave for the common good.
Since public goods are for the benefit of all, everyone is affected and it may affect people individually as well. It is
to the interest of everybody to protect these public goods
. An example would be the government should fix roads, bridges, and other infrastructure and keep them well maintained for the ease in transportation, creating less traffic, and so as not to add to the destruction natural hazards may bring. It creates a chain effect. Being aware of the consequences of not taking care of public goods may also
help increase Corporate Social Responsibility or CSR.
Quantitative Data
Millions of people were affected and killed due to storms, floods, and droughts, which are included in the top 10 natural disasters that happened in the country, where storms are considered to be on top in years 1990 to 2009 (Philippines - The Disaster Statistics, 2011).
Qualitative Information
Causes and Effects
Damages due to natural calamities happen in great numbers. Due to natural calamities, a great number of
sources for goods are damaged or lost.
When a farm, lets say, gets destroyed due to a severe earthquake the goods that farm could have produced could have contributed to the finances of the farm owner and indirectly, the government. Another example is that damaged roads would lead to slower travel time to deliver goods from manufacturer to seller. As a result,
economic activities will slow down and the economy weakens.
Input from other fields
In the
psychological aspect
, disasters can leave an
effect on one who has experienced the event first hand. A person’s behavior tends to change as they worry too much because of the
trauma they have faced
. They would most likely
lack emotional stability
, the ability to think straight, disturbed patterns of eating and sleeping, overwrought personal relationships and
physical consequences
such as headaches, chest pain, and even nausea.
Another is the
sociological approach
, which deals with how one interacts with others and the society after a disaster. People may become
distant and tenser
around others because of the experience they have faced.
Based on a qualitative study called “the Social Impact of Tropical Storm Ondoy and Typhoon Pepeng”, one of the main findings was that many victims are still burdened to recover from the aftermath of the disasters. The
livelihood assets were ruined
and not focused on at that time because they
had to work on their basic needs
(Philippines:Typhoon Affected Communities Cope, Seek Involvement in Disaster Preparedness, 2014).
The Philippine law on Disaster Management, the Presidential Decree (PD) 1566

• Most basic law in dealing with natural calamities
• Allows every level of government to provide multi-sectoral disaster coordinating councils
• Allows the council to cooperate, disseminate information, and share resources
• Provide for committed technological abilities for specialized disaster management services
(Israel, & Briones, 2012).
National Disaster Coordinating Council or the NDCC

• Coordinating body for the national level
• Head for every coordinating body all over the
• Advises the President regarding issues or plans
on disaster management
• Programs are mainly based on four major areas
o Emergency management
o Vulnerability reduction and risk management
o Human resource development
o Advocacy for civil protection
• National Disaster Management deals with issues
after the natural hazard strikes the country and
disaster preparedness
(Israel, & Briones, 2012).

National Disaster Reduction techniques

• Philippine weather bureau (PAGASA)
o Special Tropical Cyclone Reconnaissance Information Dissemination and Damage Evaluation (STRIFE)
➢ Quick response team that conducts spot investigations in affected areas by natural calamities
• Philippine Institute of Volcanology and Seismology (PHIVOLCS)
o Volcanic Hazards Identification and Mapping
➢ Identify, categorize, and describe potential active volcanoes
(Capistrano, n.d)
NDCC partnership with non-government organizations and local disaster coordinating committees

• Examples of programs created
o Brigada Kontra Baha
➢ Unclog canals, waterways, etc.
o Linis Bayan Program
➢ Under the Administrative Order No. 32
➢ Nationwide cleanup drive to promote cleanliness in all communities, homes, offices, and the like to prevent dengue or other diseases
(Capistrano, n.d)
Policy Recommendations

Corporate Social Responsibility as Vision-Mission

• 82% of companies in the Philippines make the corporate social responsibility a part of their vision and mission.
*As surveyed by the League of Corporate Foundation
(Rimando, 2012)

• The researchers highly suggest that most companies in the Philippines would include the Corporate Social Responsibility to their vision and mission
• Benefit the society and benefit the company
• People should benefit from companies and vice versa → patriotistic and nationalistic efforts

• CSR is heightening
o Major destruction to the country would
greatly affect everyone
o Protect the needs of the citizens but
their necessities as well to stay in
control as a fully functioning unit
o With its many techniques and
partnerships, it can achieve so much
• Presidential Decree (PD) 1566
o Provides opportunities for assemblies
to create ideas and technological tools
for better disaster service

• Unity amongst all private sectors, non-government
organizations, and the different levels of government
o For every voice to be heard, hopefully contributing to resourceful and organized plans when a calamity occurs
• More seminars and training would be highly recommended
for readiness and preparedness for disaster
• Such seminars and training should be taught not only to
schools, offices, hospitals, but also in local communities
especially in the rural areas
• The government should build more protection in areas all
over the country
• A proportion percentage of profit for environmental and
ecological protection

Research Materials:

Capistrano, M. (n.d.) National Disaster Reduction: National Response and International Cooperation. Retrieved from http://www.adrc.asia/countryreport/PHL/PHLeng98/

Ciurean, R., Schroter, D. & Glade, T. (2012). Conceptual Frameworks of Vulnerability Assessments for Natural Disaster Reduction. Social Sciences: "Approaches to Disaster Management - Examining the Implications of Hazards, Emergencies and Disasters". doi: 10.5772/55538

Israel, D. & Briones, R. (2012). Impacts of Natural Calamity on Agriculture, Food, Security, and Natural Resources and Environment in the Philippines. Philippine Research for Development Studies. Retrieved from http://dirp4.pids.gov.ph/ris/dps/pidsdps1236.pdf

Corporate social responsibility (CSR). (2013). Retrieved September 21, 2014, from IISD's Business and Sustainable Development: A Global Guide: https://www.iisd.org/business/issues/sr.aspx

Obayashi. (September 2014). Disaster preparedness as corporate social responsibility. Council on Business & Society Council Community. Retrieved: http://councilcommunity.com/2014/09/10/disaster-preparedness-as-corporate-social-responsibility/

Public Good. (2014). Retrieved October 1, 2014, from Investopedia: http://www.investopedia.com/terms/p/public-good.asp

Kliesen, K. L. (1994, April). The Economics of Natural Disasters. Retrieved October 13, 2014, from Federal Reserve Bank of St. Louis: https://www.stlouisfed.org/publications/re/articles/?id=1880

disaster. (2014). Retrieved October 12, 2014, from Merriam- Webster.com: http://www.merriam-webster.com/dictionary/disaster

flood. (2014). Retrieved October 12, 2014, from Merriam- Webster.com: http://www.merriam-webster.com/dictionary/flood

typhoon. (2014). Retrieved October 12, 2014, from Merriam- Webster: http://www.merriam-webster.com/dictionary/typhoon

earthquake. (2014). Retrieved October 12, 2014, from Merriam-Webster: http://www.merriam-webster.com/dictionary/earthquake

disaster preparedness. (2014). Retrieved October 12, 2014, from Business Dictionary.com: http://www.businessdictionary.com/definition/disaster-preparedness.html

natural hazard. (2014). Retrieved October 12, 2014, from Business Dictionary.com: http://www.businessdictionary.com/definition/natural-hazard.html

human health risk. (2014). Retrieved October 12, 2014, from Business Dictionary.com: http://www.businessdictionary.com/definition/human-health-risk.html

PHYSICAL DAMAGE. (n.d.). Retrieved October 12, 2014, from The Law Dictionary: http://thelawdictionary.org/physical-damage/

scarcity. (2014). Retrieved October 12, 2014, from Investorwords: http://www.investorwords.com/4402/scarcity.html

volcanic eruptions. (2012). Retrieved October 12, 2014, from International Federation of Red Cross and Red Crescent Societies: http://www.ifrc.org/en/what-we-do/disaster-management/about-disasters/definition-of-hazard/volcanic-eruptions/

displaced populations. (2012). Retrieved October 12, 2014, from International Federation of Red Cross and Red Crescent Societies: http://www.ifrc.org/en/what-we-do/disaster-management/about-disasters/definition-of-hazard/displaced-populations/
volcanic eruption. (2014). Retrieved October 12, 2014, from The Free Dictionary: http://www.thefreedictionary.com/volcanic+eruption

calamity. (2014). Retrieved October 12, 2014, from The Free Dictionary: http://www.thefreedictionary.com/calamity

The Devastating Impact of Natural Disasters. (2014). Retrieved October 12, 2014, from Child Fund International: https://www.childfund.org/the-devastating-impact-of-natural-disasters/

UNISDR. (2012, January 10). Disaster losses top one trillion dollars as donors underfund risk reduction. Retrieved October 13, 2014, from Prevention Web: http://www.preventionweb.net/files/25833_20120318disaster20002011v2.pdf

The Economic of Natural Disaster. (1994). Retrieved October 13, 2014, from Federal Reserve Bank of St. Lois: https://www.stlouisfed.org/publications/re/articles/?id=1880

The Contribution of Surveying Profession to Disaster Risk Management. (2006). Retrieved October 13, 2014, from International Federation of Surveyors: http://www.fig.net/pub/figpub/pub38/figpub38.htm

The Market Tremors. (2011). Retrieved October 13, 2014, from The Economist: http://www.economist.com/blogs/dailychart/2011/03/stockmarkets_after_disasters

Philippines - The Disaster Statistics. (2011). Retrieved October 15, 2014, from Prevention Web: http://www.preventionweb.net/english/countries/statistics/?cid=135

Natural Disasters. (2014). Retrieved October 15, 2014, from American Psychological Association: http://apa.org/topics/disasters/

Rimando, L. (April 2012). How CSR is evolving in the Philippines. Newsbreak.
Retrieved from http://www.rappler.com/newsbreak/3421-how-csr-is-evolving-in-the-philippines

Philippines:Typhoon Affected Communities Cope, Seek Involvement in Disaster Preparedness. (2014). Retrieved October 16, 2014, from The World Bank: http://www.worldbank.org/en/news/press-release/2012/03/30/philippines-typhoon-affected-communities-cope-seek-involvement-in-disaster-preparedness

McElroy, A. (2013, December 30). Philippines unveils dedicated disaster risk budget for 2014. Retrieved October 13, 2014, from UNISDR: http://www.unisdr.org/archive/35997

ndrrmc.gov.ph. (2011). National Disaster Risk Reduction and Management Plan (NDRRMP) 2011‐2028. Retrieved October 13, 2014, from ndrrmc.gov.ph: http://www.ndrrmc.gov.ph/attachments/article/41/NDRRM_Plan_2011-2028.pdf
Marella Gonzalez
Mariel Labrador
Paulo Manuel
Aliki Siao
Bianca Tenorio

Relevant Policies and Their Effects on Stakeholders
Republic Act No. 10121 of 2010

• Philippine Disaster Risk Reduction and Management Act of 2010
• Provides a legal source for policies, strategies and agendas for disasters
• a disaster risk reduction and management approach that is holistic, comprehensive, integrated, and proactive in lessening the socio-economic and environmental impacts of
• Promotes involvement and participation of all sectors and all stakeholders concerned, especially the local community
• National Disaster Risk Reduction and Management Plan” or NDRRMP document that sets out goals and specific objectives for reducing disaster risks
o Priority projects of NDRRMP
➢ Local flood early warning systems
➢ Evacuation
➢ Infrastructure
➢ Modifications
➢ Manual of operations of disaster operation centers
(Israel, & Briones, 2012)

• Poor coordination between agencies
• Government departments report contradictory information on the same category of loss

• The NDCC should gather assessments and reports prepared by regional government departments and submit to the President recommending;
o Whether or not a disaster should be declared
o The total of national funds that should be released in support of the relief efforts
• At the national and local levels, sources can be tapped to fund the General Appropriations Act (GAA), such as the…
o National Disaster Risk Reduction and Management Fund (NDRRMF)
o Local Disaster Risk Reduction and Management Fund (LDRRMF)
o Priority Development Assistance Fund (PDAF)
o Donor Funds
(ndrrmc.gov.ph, 2011)

• The devastation of Typhoon Yolanda, signified the reformation in the country’s funding priorities
o Proactive disaster risk management
o Response and reformation
• The National Disaster Risk Reduction and Management fund
o US$158 million to US$293 million → Rehabilitation and Reconstruction Program
o US$1.8 billion → restoration work for the Unprogrammed Fund
• Philippines budget for disaster risk reduction and climate change adaptation programs assured the national budget for 2014 is sufficient for the next calamities that the country may encounter (McElroy, 2013)
More than 500,000 US dollars was lost during these events which then lead to a domino effect where every Filipino citizen struggled surviving due to the fact that their jobs were at stake (Philippines - The Disaster Statistics, 2011).
The leading natural disaster that caused a great impact on the economy is the typhoon or storm where more or less 5 million US dollars was lost. Other natural disasters such as earthquakes, flood, and volcano eruption had great damages too (Philippines - The Disaster Statistics, 2011).
The National Calamity fund is used to rehabilitate, help people, mitigate, and prepare for future natural disasters. During the 1996 to 2002 period, 1996 stands out as the particular year with high rehabilitation cost (Ciurean,Schroter,& Glade, 2012).
Other Recommendations
CSR and the Government Policies, hopefully an effective solution

Contribution from Corporations

• Corporate Social Responsibility → business
contribution for societal needs of the country (Corporate social responsibility (CSR), 2013).
• Corporations give donations, sponsorships, and fund certain organizations
• Implement their own projects or activities for the families affected as well as their own workers and their families
• Main motivation of Corporate Social
Responsibility → goodwill of the companies towards the society (Rimando, 2012).
Government Policies

Situation and Behavior of stakeholders
Situation and Behavior of stakeholders

Budget : Action only when destruction strikes
Budget: Problems in funding and the operation system
floods, tornadoes, fires and more; happen suddenly and have extremely bad effects as they may cause great loss and suffering to people (disaster, 2014).
Disaster Preparedness
readiness to contain the effects of a forecasted disastrous event to minimize loss of life, injury, and damage to property may ease the hardships of many and in the aftermath of a disaster, people can be provided with rescue, relief, rehabilitation, and other services as well (disaster preparedness, 2014).
Natural Hazards
damage caused by biological, geological, hydrological, meteorological or seismic conditions (natural hazard, 2014).
Natural Calamities
a disaster or misfortune, especially one causing extreme havoc, distress, or misery;
caused by natural hazards
(calamity, 2014).
extremely large, powerful, and destructive storms that occurs especially in the region of the Philippines or the China Sea (typhoon, 2014).
a shaking of a part of the earth’s surface that often causes great damage (earthquake, 2014).
a large amount of water covering an area of land that is usually dry (flood, 2014).
happens when lava and gas are discharged from a volcanic vent (volcanic eruptions, 2012) or a sudden occurrence of a violent discharge of steam and volcanic material (volcanic eruption, 2014).

Volcanic Eruption
Food Scarcity
or the lack of supply of food, after natural disasters food can become scarce because of destroyed crops and loss of agricultural supplies (scarcity, 2014).
degree of likelihood that one or more exposures to a hazardous substance may have damaged or will damage the health of exposed persons (human health risk, 2014).
Health Risks
result of the sudden impact of disasters when people flee from their homes to find safer ground. This can disturb everything from accessibility of health care and education to food supplies and basic hygiene because of the large influx of evacuees (displaced populations, 2012).
Displaced Populations
seen in the destruction of property, infrastructure, stores, livestock, and the like; damage that is apparent to something/someone that can be seen and/ or felt (PHYSICAL DAMAGE, n.d).
Physical Damage
Psychological effects
come about as emotional aftershock is observed in many young children. many children develop post-traumatic stress disorder (PTSD) when faced with scenes of destruction and the deaths of friends and loved ones, which can be prone to lasting psychological damage and emotional distress (The Devastating Impact of Natural Disasters, 2014).
highest valued of foregone alternative use of a resource
change in wealth caused by damage to structures or other physical assets
deal with the destruction of buildings, support, and other infrastructure while;
Direct losses
in respect with other physical damages
Indirect losses
mirrored in national income accounts data while;
Market effects
not seen in income accounts data
Non-market effects
(Kliesen, 1994)
(Kliesen, 1994)
• The Philippine law on Disaster Management, the
Presidential Decree (PD) 1566
• National Disaster Coordinating Council or the
o Techniques
➢ Philippine weather bureau (PAGASA)
➢ Special Tropical Cyclone Reconnaissance
Information Dissemination and Damage
Evaluation (STRIFE)
➢ Philippine Institute of Volcanology and
Seismology (PHIVOLCS)
o Partnerships
➢ Brigada Kontra Baha
➢ Linis Bayan Program
(Capistrano, n.d)
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