The Economic Impact of Natural Disasters in the Philippines

There has been relatively little research on the economic impacts of natural disasters to date. This paper reports findings of a sUidy of the Philippines which is intended as a contribution in filling that gap. Findings include the following: • The Philippines experiences all major types of naUiral hazard and is widely acknowledged as one of the most hazard-prone countries in the world. Moreover, environmental degradation is playing a significant role in increasing the incidence of hazards. • Natural disasters result in significant economic losses every year. However, there is little apparent appreciation of the economic significance of disasters, largely due to methodological difficulties in isolating the impacts of events which occur annually. • The agricultural sector is particularly vulnerable to natural hazards. Nevertheless, although the sector is an important source of both output and employment, relatively few measures appear to have been adopted to mitigate their impact. • Natural disasters have played some role in determinuig patterns of investment, particularly in discouragurg new investment in particular areas in the immediate wake of major disasters. • Natural disasters have placed a continual, i f fluctuating, burden on government finance to meet investment and maintenance costs of public prevention, mitigation and preparedness measures and to fund relief and rehabilitation programmes. The unplanned redirection of resources in response to disasters has hampered efforts to improve the country's transportation network and to meet social infrastructural requirements. • Poverty, disaster vulnerability and envhonmental degradation are mtegrally linked and natural hazards have played an important role in remforcing poverty. However, poverty alleviation programmes have paid little attention to hazard vulnerability. • Considerable attention has been paid to disaster management but these efforts have largely concentrated on preparedness and post-disaster response, with fewer prevention and mitigation projects. • Similarly, donor disaster-related activities have primarily focused on preparedness and response, rather than prevention and mitigation, measures.