PART II Natural Hazards, Shocks and Fragility in Small Island Developing States Amelia U. Santos-Paulino UNU-WIDER ODI, London
Overview of the presentation 1. Fragile States definition 2. Vulnerability in Small Island Developing States Profiles and Constrains Impacts 3. Results 4. Policy Implications 5. Way forward Amelia U. Santos-Paulino, UNU-WIDER 2
1. FRAGILE STATES States or territories under threat (environmental, economic, physical, social, etc). SIDS, Landlocked, countries emerging from conflict. Government incapable of providing basic services such as education, health, safety and security (DFID). Low-income country with CPIA (Country Policy and Institutional Assessment) score of 3 or less, or LICUS (Low Income Countries Under Stress) (World Bank, OECD). Threats to the authority, legitimacy and capacity of the State (Canadian International Development Agency, CIDA). Amelia U. Santos-Paulino, UNU-WIDER 3
2. VULNERABILITY IN SIDS Amelia U. Santos-Paulino, UNU-WIDER 4
Figure 1: Disasters by UN Regions Windstorms Volcanoes Droughts Earthquakes Floods Avalanches Others Source: EM-DAT International Disaster Database, 2010.
2.1 Small Island Developing States: Profiles Geographically constrained Small geographic size Small population size Under diversified economic structure Dependent on resource-based and primary commodities Highly specialised (agriculture and tourism) Narrow range of resources Small domestic and regional market Highly dependent on international trade (vulnerable to global trade). High trade openness: trade flows (i.e. commodity exports and imports relative to GDP) are higher in SIDS than in DCs and LDCs. High volatility in trade related to vulnerability to external shocks. Amelia U. Santos-Paulino, UNU-WIDER 6
2.1 Small Island Developing States: Constrains Vulnerable to natural disasters: Almost 4 millions Caribbean citizens affected by natural disaster during period 1990-2006. Ability to bounce back from negative impact of natural hazards is hampered by geography, population size, economic structure. Volatile macroeconomic performance: high output growth volatility has adverse impacts on long-term growth and on the poor. Amelia U. Santos-Paulino, UNU-WIDER 7
Real income Bahamas Barbados Trinidad & Tobago St. Kitts & Nevis Antigua & Barbuda Dominican Rep. Grenada Suriname Caribbean Belize St. Lucia St. Vincent & Grenadines Dominica Guyana Jamaica Haiti Caribbean 8,217 7,843 7,722 7,722 7,109 6,707 6,568 6,393 4,508 4,291 1,663 Figure 2: Real GDP Per capita in SIDS, US$ 18,380 17,297 14,603 13,307 12,500 Tonga Samoa Fiji Vanuatu Pacific PNG Solomon Islands Marshall Islands Kiribati Pacific 1,970 1,475 2,031 2,894 2,563 3,225 6,170 6,049 8,177 0 2,000 4,000 6,000 8,000 10,000 0 5,000 10,000 15,000 20,000 Source: Chapter 10. Amelia U. Santos-Paulino, UNU-WIDER 8
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 % Real Income growth Figure 3: Real GDP growth in Developing Countries (%) 10.8 Real GDP Growth in Developing Countries (2000, US$) 8.0 LDC DC SIDS 5.2 2.3-0.5 Source: Santos-Paulino, Naudé and McGillivray (2010). Amelia U. Santos-Paulino, UNU-WIDER 9
Poverty Figure 4: Poverty headcount ratio at $2 a day (PPP), (% of population) South Asia Sub-Saharan Africa Haiti East Asia & Pacific Latin America & Caribbean Middle East & North Africa Europe and Central Asia 0 10 20 30 40 50 60 70 80 Source: World Bank WDI (2010). Poverty headcount (%) Amelia U. Santos-Paulino, UNU-WIDER 10
Poverty Figure 5: Poverty Rate in Selected Caribbean and Pacific Island Economies (%) 70 60 50 40 30 20 10 0 Source: Chapter 10 Amelia U. Santos-Paulino, UNU-WIDER 11
Percentage of GDP (period average) Capital Flows Figure 6: Aid, Remittances and FDI, 1980 to 2006 25 20 15 10 5 - SIDS LDC Other DC African SIDS Aid Remittances FDI Source: constructed using data in World Bank (2009a) Pacific SIDS Caribbean SIDS Source: Santos-Paulino, Naudé and McGillivray (2010). Amelia U. Santos-Paulino, UNU-WIDER 12
Haiti Dominican Rep Jamaica Puerto Rico St Vincent and The Grenadines Belize Trinidad and Tobago Bahamas Dominica St Lucia Barbados Guyana Antigua and Barbuda St Kitts and Nevis Grenada Suriname Natural Disasters Figure 7: Occurrence of natural disasters in the Caribbean, 1970-2006 50 Occurrence of Natural disasters, 1970-2006 Occurrence per 10 thousand inhabitants 1.6 1.4 40 1.2 30 1 0.8 20 0.6 10 0.4 0.2 0 0 Source: Chapter 8. Amelia U. Santos-Paulino, UNU-WIDER 13
Natural Disasters Destructive impact of natural disaster in the Caribbean (% of GDP) Country Time Event Damages (% GDP) St Lucia 1988 Hurricane Gilbert 365 Grenada 2004 Hurricane Ivan 203 Dominica 1979 Hurricanes David & Fredrick 101 St Kitts and Nevis 1995 Hurricane Luis 85 St Lucia 1980 Hurricane Allen 66 Antigua & Barbuda 1995 Hurricane Luis 61 Guyana 2005 Floods 59 Haiti 2010 Earthquake 15 Source: Chapter 8, and World Bank (2010) Amelia U. Santos-Paulino, UNU-WIDER 14
2.2 Impacts Damage to the natural environment. Economic: Active hurricane season in 2004 caused damage amounting to circa US$ 3.1 billion (e.g. 10 % of GDP in Jamaica and more than 200 % in Grenada). Social: loss of human life, disruption on public services, migration and break-up of families, increased risks of disease, lack of access to health and education facilities, worsened public infrastructure. Amelia U. Santos-Paulino, UNU-WIDER 15
Repeated setbacks resulting from the destruction of economic and social capital perpetuate the poverty cycle and can act as a catalyst for turning natural hazards into natural disasters. Amelia U. Santos-Paulino, UNU-WIDER 16
Women suffer the most: they represent 70% of the world s estimated 1.3 billion poor. Amelia U. Santos-Paulino, UNU-WIDER 17
3. RESULTS Vulnerability operates through trade: more diversified economies are more able to offset greater import expenditure in the aftermath of a disaster through higher export receipts. SIDS with relatively more specialized export structure are more vulnerable to disasters. The case of Singapore (the highest income SIDS) shows that an island economy can successfully stabilize both employment and price levels by adopting innovative macroeconomic policy mixes. Poverty exacerbated by hazards and natural disasters. Amelia U. Santos-Paulino, UNU-WIDER 18
Gender inequalities repercussions for the welfare of society: women most vulnerable. Women disadvantaged in access to resources and a good standard of living. Remittances constituted the largest share of the poor s supplemental income (87 % in Jamaica). Women receive the greater portion of the remittances. Amelia U. Santos-Paulino, UNU-WIDER 19
4. POLICY IMPLICATIONS Reducing vulnerability to hazards through mitigation and adaptation is critical, and should be a key component of economic policy in SIDS. Macroeconomic policies can play stabilization and growthpromoting roles in highly-open small economies. But this requires appropriate institutional frameworks to regulate the labour market, mobilization of savings, movements of short-term capital and the government s fiscal behavior. Given high aid-dependency, aid delivery and management should be improved. Amelia U. Santos-Paulino, UNU-WIDER 20
Implications for governance, poverty, etc., of catastrophic events (e.g. Haiti s recent earthquake) show the poor institutional framework of SIDS to respond to environmental, economic and social vulnerability. Amelia U. Santos-Paulino, UNU-WIDER 21
5. WAY FORWARD SIDS could be better off by pooling regional capacity and resources: furthering intra-regional flows of goods, services, capital and labour. Strengthen institutions absorptive capacity. Diversification of production and trade. Implementation of risk reduction policies that consider gender disparities and other vulnerable groups. Amelia U. Santos-Paulino, UNU-WIDER 22