Investment in natural capital for risk reduction – an opportunity not a cost
Coastal wetland conservation
Integrated delta management
At the session on ‘Economic aspects of Disaster Risk Reduction’ at the World Conference on Disaster Risk Reduction (WCDRR) in Sendai on 16 March, the JICA Vice President, Mr. Kiyushi Kodera indicated that over 85% of ODI related to Disaster Risk Reduction (DRR) was still ex-post, for relief and reconstruction. This is taking place despite the proven effectiveness of investment in DRR and community resilience.
Often, investments into ‘grey infrastructure’ as sea walls is shown to have higher cost-benefit ratios than natural solutions. It raises the question, are the existing evidences not sufficient to influence Overseas Development Investments (ODI) into DRR, or it is to do with financial metrics that form the basis of investment decisions. The answer, unfortunately is not simple. Economics of DRR to date has focused on risk avoided. However, this is at best a partial approach. Besides risk reduction, DRR investment creates opportunities for development with lower-risk, and that is seldom captured. Investment in natural capital for DRR can create several positive spinoffs through their wide ranging ecosystem services. And this is simply not just ‘risk avoided’ then, it is about creating ‘development’ with lower disaster risk. Same goes for risk assessment tools, which to a large extent, do not discount for positive gains which ecosystems can provide.
Time frame provides another complexity. Ecosystems approaches work on their natural cycles, for example, a mangrove patch needs to attain a certain structure and density to function as buffer. Conventional project assessment economic tools may just not discount the benefits and costs within an appropriate ecological time-frame.
To bolster investments into ecosystem based DRR approaches, we will need to appropriately recognize and demonstrate the value of natural capital. Values help societies reflect on the consequences of their decision-making, but in order to do so, values need to be credible and reflect ecological as well as economic and social realities.
Discussions during various sessions at WCDRR indicate that natural capital values are not being considered enough, and even brushed aside in favor of short term solutions. This is a clarion call for financial, DRR and environment sector to work together for a holistic appreciation of economics of natural capital for DRR and provide realistic economic tools and benchmarks that can provide a realistic comparison of various risk reduction interventions.
The tools need to provide for ‘long term’ vision. And the time to act is ‘now’ – as the costs disasters impose on society is increasing exponentially, and conventional economics is apparently failing to indicate right options for disaster risk reduction. On the other hand, natural capital as wetlands are getting ‘more scarce’ as they continue to be degraded and converted for alternate uses. Time to create economics for ‘win-win’ and ‘opportunities’.