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The Pakistani floods: a note of guarded optimism

17 September 2010

This post contributed by John Mutter, Professor of Earth and Environmental Sciences/Professor of International and Public Affairs and Director of PhD in Sustainable Development, Columbia University, NY.

 How will Pakistan do after the floods?

To answer that question we need first to know how bad the flooding was. It is widely said to be the worst in modern history and there is no reason to doubt that, but it’s not so easy to measure the magnitude of a flood. There is no widely accepted scale like the Richter scale for earthquake magnitude. Disasters are commonly scaled by deaths and economic losses.

The death toll for the Pakistan flooding is said to be around 2000. However, such figures are notoriously difficult to assess accurately because many people who are displaced don’t “report in”, making it hard to know who among the missing are alive or dead. The 2000 figure is probably the number of bodies recovered and is surely less than the true total. Even so, that’s still as high as the death toll from Hurricane Katrina, although it’s less than the number killed in other disasters in the region, such as the 70,000 victims of Cyclone Nargis in Myanmar.

Floods are not like earthquakes that give no warning. You can see a flood coming. It has to rain a lot over a long period of time and floodwaters rise over many days or longer. People can get out of the way and move to safer locations and that is what happened in Pakistan. The number of displaced people is thought to be enormous, far greater than the number displaced by the Indian Ocean tsunami of 2004. These figures too are hard to estimate with any accuracy but it is very safe to say that the death toll was mercifully low and forced displacement by contrast absolutely enormous.

Hard as these figures are to assess it is harder still to assess the economic impact of a disaster. Here there is often confusion added to the difficulty of estimation. What is often reported is so-called financial losses that, at least in the US tends to mean the value of that which is destroyed and the figures that come out quickly are insured property losses. Insurance companies usually know how much they have lost. But the very fact that property is insured says that it will be rebuilt without much financial hardship to the owner. Those losses don’t hurt an economy and can even stimulate a surge in the construction industry. As measures of economic set back due to a disaster they are very misleading.

What damages an economy is loss of productive assets and infrastructure. In poorer countries these assets are often state owned and uninsured. Roads, bridges, ports, airports, schools and hospitals are all integral to economic well-being and development of a country. They have to be replaced with state capital reserves or from donors like the World Bank or in this case the Asian Development Bank. In Pakistan these productive assets have been lost in vast numbers along with crops and domestic properties – peoples homes and small businesses. Pakistan has lost a lot no doubt.

But I think there is some reason to be somewhat optimistic about the future. Pakistan is a poor country still, ranking higher than Bangladesh in GDP/capita and not too far behind India. But the economy is growing and most of the growth is in manufacturing and particularly services. The flooding hit agriculture the hardest but that sector currently makes less than a 20% contribution to GDP and is the sector growing the slowest. The Pakistan economy is in transition from poor to middle income and the transition is being lead by non-agricultural sectors. For disaster recovery that is actually a very good thing. No country can recover from a disaster shock unless its economy is growing and ideally in areas that were not strongly affected by the disaster. Flooding has damaged the crop farming areas along the Indus River but not the economic hubs of Karachi and Islamabad. That’s a little good news among all the bad.

So, odd as it may sound recovery from disaster in the rural sector will depend as much on restoration there as on ensuring continued vigorous growth in sectors that are performing well. If there are three breadwinners in your family and one of them has to be out of a job for a while better that it be the lowest wage earner whose prospects for income growth are smallest. The others can carry the family through for a while. The strong growing sectors of Pakistan’s economy may be able to carry on and help speed recovery.
Although it is natural for us to think of the physical destruction brought by a natural disaster the real issue is the economic destruction they can bring. Disaster recovery and economic recovery is one and the same thing. Disasters can, in fact represent opportunity. Most of the infrastructure destroyed in the flooding was old and inefficient. New better roads and bridges can actually provide the basis for a stronger economy than existed before. Not the way you would chose to do economic development but the revenues available from a stronger economy can help make a country less prone to harm from Nature’s extremes.

Much about natural disasters is counterintuitive. Their “naturalness” has far less to do with the harm they do than the actions we take before and after the event. Helping Pakistan become economically stronger may cause them to have greater financial losses in a future disaster but actually helps them become less disaster prone.

Useful links

OECD work on risk management

Develoment actions and the rising incidence of disasters

Hazards of nature, risks to development:an IEG evaluation of World bank assistance for natural disasters

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