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a I BUILDING BACK BETTER INTRODUCTION AND SUMMARY Stephane Hallegatte, n ntschler, ian Walsh RRb I BUILDING BACK BETTER INTRODUCTION AND SUMMARY 2018 International Bank for Reconstruction and Development / The W orld Bank 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: worldbank This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrightsworldbank. Cover design by Brad Amburn.i I BUILDING BACK BETTER INTRODUCTION AND SUMMARY This report has been prepared by a team composed of Stephane Hallegatte, Jun Rentschler, and Brian Walsh. It benefited from invaluable comments and advice from Elif Ayhan, Francis Ghesquiere, Joe Leitman, Thomas Lennartz, and Alice Mortlock throughout the drafting process. For their time and feedback the authors also thank the peer reviewers of this report: Artessa Saldivar-Sali, Marc Forni, and Niels Holm-Nielson. Further helpful comments were received from participants of an internal policy research seminar organized by the Global Facility for Disaster Reduction and Recovery (GFDRR). Editorial services were provided by Nick Paul. Brad Amburn designed the report. Visibility and launch of the report were supported by Elisabeth Mealey and Mehreen Sheikh. The report was sponsored by GFDRR and the Climate Change Group of the World Bank, under the leadership of John Roome. ACKNOWLEDGEMENTS i I BUILDING BACK BETTERii I BUILDING BACK BETTER T he 2017 Unbreakable report made the case that disaster losses disproportionately affect poor people. The report showed that they have limited ability to cope with disasters, and estimated that the impact on well-being is equivalent to consumption losses of about $520 billion a year around the worldoutstripping previous estimates of pure asset losses by as much as 60 percent. The Caribbean Hurricane season of 2017 was a tragic illustration of this. Two Category 5 hurricanes wreaked destruction on numerous small islands, causing severe damage in places like Barbuda, Dominica, and Saint Martin. The human cost of these disasters was immense, and the impact of this devastation was felt most strongly by poorer communities in the path of the storms. And yet, amidst the destruction it is essential to look forward and to build back better. In this report we follow up on the Unbreakable report and explore how countries can strengthen their resilience to natural shocks through stronger, faster, and more inclusive post-disaster reconstruction. It shows that reconstruction needs to be strong, so that assets and livelihoods become less vulnerable to future shocks; fast, so that people can get back to their normal life earlier; and inclusive, so that nobody is left behind in the recovery process. This report shows how the benefits of building back better could be greatest among the communities and countries that are hit by disasters most intensely and frequently. For a selection of small island states, this report shows that stronger, faster, and more inclusive recovery would lead to an average reduction in disaster-related well-being losses of 59 percent. For Antigua with roads, bridges, and electric grids that are able to endure the next storm; and with human settlements that provide a better quality of life and enable higher productivity. Such a stronger recovery can reduce the impact and the cost to well-being associated with future disasters. INTRODUCTION AND SUMMARY 1 I BUILDING BACK BETTER2 I BUILDING BACK BETTER INTRODUCTION AND SUMMARY Beyond this traditional understanding of building back better, there are many opportunities to improve the recovery and reconstruction phase that follows a disaster, so that well- being impacts can be minimized. A faster recovery can ensure that people restore their income and assets as early as possible, making it possible to use their savings to maintain consumption levels. And a more inclusive recovery can ensure that the poorest and the most vulnerable can access the support they need to reconstruct. In the absence of such support, they are the most likely to experience the long-term consequences caused by health issues and disability, loss of schooling and education, or simply the inability to save or borrow to rebuild or replace lost assets. A rapid and more inclusive reconstruction is key to preventing poor people from falling into poverty traps that can magnify the impacts of disasters. In this study, therefore, building back better means that the repaired or replaced assets are more resilient, but also that the recovery process is shorter and more efficient, and that the entire recovery process does not leave anyone behindi.e. that even the poorest and most vulnerable receive the support they need to fully recover. The study investigates the potential benefits of building back better, building on the framework and model described in the Unbreakable report, and considering the three dimensions, independently and together: Building back stronger reduces well-being losses by ensuring that reconstructed infrastructure can resist more intense events in the future. If all countries were to “build back stronger” in the next 20 yearsensuring that rebuilt assets can resist hazards with a 50-year return-periodthen global well-being losses due to natural disasters would be reduced by 12 percent, a gain equivalent to US$65 billion annually. Stronger reconstruction would reduce overall well-being losses due to natural disasters by more than 40 percent in ten countries in particular: Antigua and Barbuda, Dominica, Vanuatu, Myanmar, Laos, Tonga, Guatemala, Trinidad and Tobago, Peru, and Fiji. Building back faster reduces disaster impacts by accelerating reconstruction through measures such as contingent reconstruction plans, pre-approved contracts, and financial arrangements. Estimates in this report show that if the average reconstruction speed is reduced by two thirds (without compromising the quality of reconstruction), global well-being losses could be reduced by 14 percentequivalent to increasing global consumption by over US$75 billion per year. These gains are especially pronounced in countries with frequent events, such as small island countries or Sub-Saharan countries. Building back more inclusively ensures that post-disaster support reaches all affected population groups. This emphasizes the importance of providing reconstruction support 3 I BUILDING BACK BETTER INTRODUCTION AND SUMMARY to low-income households, which are typically more exposed, more vulnerable, and less comprehensively supported. If all countries had the ability to provide the poorest people with the post-disaster support found in developed countries, global well-being losses due to natural disasters could be reduced by 9 percent, equivalent to a US$52 billion increase in annual global consumption. The effect is particularly pronounced in countries with high inequality, and where poor people have little access to social protection and financial instruments. In Angola, Benin, Comoros, the Republic of the Congo, the Central African Republic, the Democratic Republic of the Congo, Russia, Gabon, Haiti, and Lesotho, building back more inclusively could reduce disaster losses by 27 percent or more. If implemented together, these three strategiesrebuilding stronger, faster, and more inclusivelycould generate major benefits, totaling US$173 billion per year, or 31 percent of current well-being losses due to natural disasters. Building back better is particularly important in small island countries, due to their high current levels of vulnerability, and their small scale. In the small island states included in this analysis, building back better could lead to an average reduction in disaster-related well- being losses of 59 percent. Using the reconstruction process to upgrade assets and increase their productivityfor example, by using the most recent technologies or adapting old infrastructure systems to current and future needswould generate further economic benefits, making it even more attractive to invest in a better recovery and reconstruction process. Such resilient and effective recovery and reconstruction is possible only if the appropriate policies and tools are made available to affected households, firms, and local and national authorities before the disaster hits. These are usually incorporated into a disaster recovery framework that include contingency plans and institutional arrangements with a clear allocation of responsibility in the recovery period, access to practical knowledge and information, and strong and inclusive financial protection provided by a combination of disaster-response social safety nets, insurance mechanisms, and access to borrowing to finance the reconstruction. While a better recovery and reconstruction process cannot replace investments in disaster risk reduction and prevention, this study provides many examples of policies and interventions that have made countries better able to face the next disaster and that could be replicated in the rest of the world to contribute to a more resilient future.4 I BUILDING BACK BETTER BEYOND ASSET LOSSES BEYOND ASSET LOSSES: Assessing socio-economic resilience and losses in well-being M ost assessments of losses due to natural disasters focus on damages to assetsincluding buildings, infrastructure, equipment, and production. According to such estimates, in 2017, global economic losses due to weather-related natural disastersfrom hurricanes and wildfires to droughts and floodstotaled more than $330 billion (Munich Re, 2018). However, as highlighted in the Unbreakable report (Hallegatte et al., 2017), the focus on asset losses fails to inform us on how disasters affect peoples well-being. The report highlighted the fact that the overall well-being impact of a disaster depends critically on two factors. First, it depends on how asset losses affect income and consumption during the recovery and reconstruction phase. For example, the same asset losses have different impacts depending on whether reconstruction takes place over a few months or several years, and on whether savings make it possible to smooth the impact on consumption. Second, the impact on well-being depends on who is affected. Clearly, a one dollar loss is experienced differently by a rich person than by a poor person. The same loss affects poor and marginalized people far more because their livelihoods depend on fewer assets, their consumption is closer to subsistence levels, they cannot rely on savings to smooth the impacts, their health and education are at greater risk, and they may need more time to recover and rebuild. To account for this important difference between asset and well-being losses, the Unbreakable report developed a new resilience metric to measure how natural disasters affect peoples well-being. It accounts for the exposure and vulnerability of people: how often they are affected, and how much they lose when they are affected. But the framework also includes their socio- economic resilience, defined as an ability to cope with a disaster, receive support, and recover and reconstruct (Figure 1). 4 I BUILDING BACK BETTER
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