Byron Buckley, News EditorIT WAS brought to public attention last week that the Government has been penny wise and pound foolish regarding its contribution to the National Disaster Fund.
According to Dr. Barbara Carby, director general of the Office of Disaster Preparedness and Emergency Management (ODPEM), only once has the Government deposited money in the fund that was seeded with $4 million at its inception in 1988 after Hurricane Gilbert. As at March 2004, the fund stood at $22 million.
As the disaster management official notes, the obvious thing for the Government to do is to make annual allocations from the national budget to the disaster fund in preparation for the proverbial 'rainy day'. She argues, correctly, the fund would be able to grow during years when little or no natural disasters occur.
But in reaction to Dr. Carby's disclosure, Land and Environment Minister Dean Peart says Government cannot afford to contribute to the fund at this time, reflecting short-sightedness in long-term planning. It seems incredulous for the administration to make such a claim in the face of numerous instances of waste of public resources and cost overruns on physical infrastructural projects that are unearthed annually by the Auditor General.
SCRAMBLE FOR RESOURCES
In the absence of regularly putting aside funds for emergency spending, Government has been forced to scramble for resources from the housekeeping budget when disaster strikes robbing Peter to pay Paul. Short of juggling the budget in times of disaster, for which Finance Minister Omar Davies is proud, the administration goes cap in hand to friendly countries and multilateral agencies. The Finance Minister and his team must place as much emphasis on building a disaster fund as ensuring a healthy net international reserve, if the economy is not to take one step forward and two steps backward at regular intervals.
Just last week, Dr. Wesley Hughes, the country's chief economic planner, reported that the economy shrank marginally during April to June of the current financial year. He attributed the 0.2 per cent decline in the country's gross domestic product (GDP) mainly to a 19 per cent drop in agricultural output during the period. "The residual impact of Hurricane Ivan in September last year is the major cause of the decline," suggested Dr. Hughes, who is the director general of the Planning Institute of Jamaica (PIOJ).
'Ivan', a category four hurricane that struck the island in September last year, caused $36 billion in damage and loss, prompting the PIOJ to lower the projected growth rate for 2004-2005 from 2.6 to two per cent. This was equivalent to eight per cent of the previous year's GDP a measurement of economic performance.
'IVAN'S' ECONOMIC IMPACT
A report prepared jointly by the PIOJ, the United Nations Development Programme (UNDP) and the Economic Commission for Latin America and the Caribbean (ECLAC) detailed the economic impact of Hurricane Ivan as follows:
Social sectors $12.7b
Productive sectors $13.3b
Infrastructure $6.9b
Environment $2.5b
Emergency expense $277m
According to the post-Ivan assessment report, approximately 14 per cent of the population or 369,685 persons were directly affected by the hurricane. In the absence of a properly-funded catastrophe or disaster fund, the Patterson administration has tried valiantly to offer some level of relief to affected persons.
The Labour and Welfare Ministry offered assistance cheques in four denominations, based on the property damage sustained: $20,000 for total destruction; $10,000 for severe damage to block and steel structure; $5,000 for other types of structure; and $5,000 for minor damage.
"We had to do something even though it was an extremely daunting task," Horace Dalley, the Labour and Welfare Minister told journalists in February this year. "There was a very high price tag that was placed on the assistance package we wanted to give to those who were affected by Hurricane Ivan, but we tried our best to assist and rehabilitate those families who were affected."
The total hurricane relief price tag was $248 million an amount that, conceivably, could have been financed from the 17-year-old National Disaster Fund if it was being funded on a regular basis. In July this year, 10 months after Hurricane Ivan struck, Minister Dalley reported that close to 65,000 persons had not yet received assistance.
This level of social and economic dislocation more than makes the case for putting in place some kind of permanent funding which can assist in the relief and reconstruction effort.
'CATASTROPHE BONDS'
Dr. Carby proposes the issuing of "catastrophe bonds" to the private sector to finance the National Disaster Fund, which, she notes, is done by several South American countries. This should be pursued by the Government.
The administration may also consider making it mandatory for the National Insurance Fund (NIF) to make annual contributions, for example one per cent of its assets, to the disaster fund. The NIF commends itself as a suitable source of capitalising the disaster fund because a wide cross section of the population are National Insurance Scheme contributors. Such a move would certainly remove the budgetary pressure off the welfare ministry to rise to the demands brought on by a natural disaster.
With this approach, the National Disaster Fund could introduce a peril insurance component from which disaster victims, on the basis of being NIS contributors, could make claims. The level of coverage could have a ceiling, similar to the approach adopted by the Jamaica Deposit Insurance Corporation which protects depositors in financial institutions.
The existence of a properly constituted and managed disaster fund, involving the private sector, could provide the confidence necessary to attract overseas and local contributions to disaster relief and reconstruction. There were signs during the aftermath of Ivan last year that donors were reluctant to make contributions towards state-controlled relief programmes. This is what influenced the Government's establishment of the Office of National Reconstruction (ONR), headed by Danville Walker, the highly-respected director of elections.
At the regional level, Jamaica and its partners in the Caribbean Disaster Emergency Response Agency (CDERA) need to pool their resources and establish a regional disaster insurance fund. If properly run, this fund could invest on the international capital market. As a regional insurance fund, it would attract more attractive reinsurance rates.
DISASTER MITIGATION
Disaster fund aside, efforts at disaster mitigation are also necessary. As Dr. Carby pointed out last week, critical support entities in disaster management such as police facilities need to be strengthened so they can effectively play their role. The same could be said about school and church buildings that are designated as shelters. Efforts must be made before hand to make sure that these facilities can themselves withstand a national disaster. In this regard, the Government should invest some resources in building and equipping emergency shelters at strategic locations. These could serve other purposes in between disasters.
Comments made by the Finance Minister, while touring in the aftermath of Hurricane Emily, indicate that Government plans to focus on preventative measures in implementing civil works and infrastructural development to minimise dislocation during natural disasters. It may cost a few million more dollars to carry out civil works, but the treasury could end up saving much more if rivers and drains do not overflow and cause flooding.
Recognising the need to lessen the impact of natural disasters, Prime Minister P.J. Patterson announced recently that his administration would embark on an extensive drain construction project in western Jamaica, the scene of severe floodings by several hurricanes.
So clearly, the Government is coming to the realisation that the country's disaster preparedness and management apparatus must move to the next level, especially in light of the increased frequency of hurricanes. But let us start by putting away resources for the rainy days on a regular basis.
