Natural Disasters and Adaptive Capacity. OECD Development Centre Working Paper No. 237

Natural disasters (droughts, earthquakes, epidemics, floods, wind storms) damage wellbeing, both in their immediate and long-term aftermath, and because the insecurity of exposure to disasters is in itself harmful to risk-averse people. As such, mitigating and coping with the risk of natural disasters is a pressing issue for economic development. This paper provides a conceptual framework for understanding natural disasters. Disasters, which imply tragic human costs, are distinguished from hazards, which are events like earthquakes or flooding: hazards only translate into disasters when societies are vulnerable to them. Consequently international development policy can play a role in reducing the costs of disasters by addressing vulnerability. A review of two recent disasters -- the Turkish earthquakes of 1999, and Hurricane Mitch in 1998 -- illustrates the importance of precarious urbanisation and environmental degradation for increased vulnerability to natural hazards. These cases furthermore demonstrate the heterogeneity in adaptive capacity to disasters, as similar hazards have vastly different social consequences in different countries. Adaptive capacity is a function of countries' "ex ante" vulnerability to natural-disaster risk and their "ex post" resilience once such disasters have struck. Three key dimensions of public action are highlighted: domestic versus international policies; ex ante versus ex post measures; and private versus public efforts. The paper closes with an overview of innovative proposals to mitigate disaster risk and broaden the range of insurance instruments available to households and firms. (A bibliography is included. Contains 17 footnotes and 3 tables.)