Chapter 2. Key lessons from the five case study cities
Chapter 2 provides an overview of key lessons provided by this study on the five case study cities: Bandung (Indonesia), Bangkok (Thailand), Cebu (Philippines), Hai Phong (Viet Nam) and Iskandar (Malaysia). The chapter describes the type, frequency and cost of natural disasters in Southeast Asia. Highlighting findings from the case study cities as well as from different international contexts, the chapter provides an in-depth analysis of the policies and mechanisms required for effective disaster risk management. The chapter concludes with a recapitulation of main findings, and proposes key recommendations to implement in order to enhance urban resilience in Southeast Asian cities.
The geography of natural disaster in Southeast Asian cities
Southeast Asian cities and especially coastal cities are located in a risk ‘hotspot’ (UNU, 2015), one of the most ‘disaster prone’ locations on the planet (UNISDR, 2010). With a long history of natural disasters afflicting the region, large and often densely populated cities are increasingly exposed and vulnerable to environmental hazards.
Types of natural disasters
While there is a multiplicity of environmental hazards afflicting Southeast Asian cities, flooding and other water-related disasters pose significant risks in all the five case study cities (Table 2.1). Globally, flooding has affected 2.3 billion people during the last 20 years (UNISDR, 2015). According to the 2012 OECD Environmental Outlook, the economic value of assets at risk of flood is projected to reach USD 45 trillion by 2050, a growth of over 340% from 2010 (OECD, 2012a). This increase will be much higher for emerging countries as compared to OECD countries (respectively 640% and 130%). Between 1980 and 2017, Asia accounted for 70% of fatalities due to global weather-related loss events (Munich RE, 2018). Some cities such as Bangkok (Thailand), which is less than 2 metres above sea level, are particularly prone to floods.
Water-related risks are exacerbated by greenhouse gas (GHG) emissions because the latter intensify tropical typhoons which have the potential to catastrophically affect both cities and ports. Violent tropical storms and the storm surges, flooding and wind damage associated with them, are some of the most obvious and widely known of all climate change driven impacts globally. Slow-onset climate change impacts include sea-level rise, saltwater intrusion, drought and heat waves. At the same time, seismic hazards represent a very different risk profile, based on their potential destructive power and relative unpredictability in comparison to a flood or typhoon, and necessitate different types of DRM policies, plans and programmes.
Four of the five case study cities, Bangkok, Cebu (Philippines), Hai Phong (Viet Nam) and Iskandar (Malaysia), are vulnerable in the longer-term to both sea level rise and ocean storm surges caused by rising GHG emissions, as well as localised flooding emanating from more intense rainstorms (precipitation). These risks are due in large part to their coastal locations. Bandung (Indonesia), located at 768 metres above sea level, has mountainous geography and a mild climate which distinguish it from the other case study cities. However, its valley floor location close to the Citarum River and surrounding volcanic peaks that reach heights of 2000 metres make it vulnerable to flooding as well. More specific details from the five case study cities are described below:
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Bandung’s high and extreme variation in rainfall between the wet and dry seasons generates a basin effect where water drains towards the river, presenting manifold and ongoing water-induced challenges. Recent events, such as 2014 Christmas floods that inundated several city districts for two weeks, heavily affected the city and caused considerable damage. West Java Province recorded 290 natural disasters in 2014, more than anywhere else in Indonesia. Moreover, Bandung recorded the second highest number of disaster events nationally with 31 or over 10% for all of Indonesia (Jakarta Post, 2014). Bandung is threatened by catastrophic damage or destruction from earthquakes or volcanic eruptions due to its location in a geophysically active area of central West Java. Bandung, for instance, experienced major earthquakes in 2006 and 2009.
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Bangkok is also highly exposed and vulnerable to floods caused by seasonal storms between the months of July and October. The city is located on low-lying plains at the mouth of the Chao Phraya Basin and is exposed to water discharge from northern and eastern provinces. There is a high risk of flooding because the city’s ground elevation is less than 2 metres above sea level. It is also vulnerable to tidal movements, saltwater intrusions into nearby agricultural areas and sea-level rise because of its proximity to the sea. Bangkok experienced major floods in 1942, 1978, 1980, 1983, 1995, 1996, 2002, 2006 and 2011 (Ahsan, 2013). Floods have profound short-term impacts on the economy, environment and public health. They also have long-term national economic and social consequences, such as reinforcing urban poverty and social inequity and negatively affecting the attractiveness of expanding existing manufacturing plants or building new ones. The Bangkok Metropolitan Region is doing much to enhance its urban resilience, although it needs to find ways to better manage flood risks before the next disaster. This would allow the Bangkok Metropolitan Region to better absorb and bounce back from disaster events and ensure green growth in the long-term while adapting to the impacts of climate change.
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Cebu regularly experiences severe flooding, especially after heavy precipitation during the wet season from June to November and annual tropical storms and typhoons. Cebu’s topography is undulating and mountainous with heights reaching 900 metres above sea level. Heavy downpours flood low lying areas and lead to landslides in steeply sloping areas as well (Marvette, 2014). Low lying areas extend a few kilometres inland from the coast and represent about 8% of Cebu City’s total land area. Despite the small area, this land hosts approximately two-thirds of the population (Cebu City, 2010). Cebu lies in close proximity to three fault lines, including the North Bohol Fault, and soft soil composition in certain quarters exacerbate the city’s vulnerability to disaster (Silva, 2015). In 2013, Cebu experienced a magnitude 7.2 earthquake and although the metropolitan area was not at its epicentre, 870 000 people were affected (NDRRMC, 2013).
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Hai Phong has the highest density of rivers in the northern plains of Viet Nam where six major rivers wind their way to the sea. The low-lying delta area accounts for approximately 85% of Hai Phong’s urban land which varies between 0.7 and 1.7m above sea level. The city is vulnerable to flooding on a periodic basis, and tsunamis and ocean storm surges at any time, as well as localised flooding due to intense rainstorms (precipitation). Hai Phong has a long history of flooding going back centuries, and was almost completely destroyed by a typhoon in 1881 that killed 300 000 residents. Between 1990 and 2014, the city of Hai Phong experienced, an average of 20 storm events per year, out of the total of 312 natural disasters (City of Hai Phong, 2015).
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Iskandar is vulnerable to periods of heavy precipitation and flooding, as well as episodes of trans-boundary air pollution. Over the new-year period in 2006-2007, Iskandar experienced major flooding from heavy rains caused by Typhoon Utor, which also struck the Philippines and Viet Nam shortly beforehand, although, its proximity to the equator reduces the risk of typhoons. Furthermore, Peninsular Malaysia and the broader Southeast Asian region experienced significant transnational air pollution in 1999, 2005, 2006, 2009, 2013 and 2015 (Tajudin, et al., 2015). Trans-boundary haze in Iskandar has been linked to large forest and peatland fires in neighbouring Borneo and Sumatra which exacerbate already poor air quality levels (Gaveau, et al., 2014).
The frequency and cost of natural disasters are increasing
The annual number of natural disasters in Southeast Asia increased from 13 in 1970 to 41 in 2014, with a peak of 66 disasters in 2011 (Guha-Sapir, et al., 2016). Globally, the number of weather-related loss events have increased significantly, from 222 in 1980 to 683 in 2017 (Munich RE, 2018). The frequency of natural disasters has increased due to several factors including population growth, economic development, and a changing climate, which can lead to variations in the frequency, intensity, spatial range, duration, and timing of weather and climate extremes (IPCC, 2012).
In parallel with the frequency of natural disasters, the economic costs of natural disasters to urban areas are growing larger as urbanisation and industrialisation advance. The number of people killed or affected by natural disasters, influenced or induced by climate change has increased rapidly and continues to accelerate (UNISDR, 2011). Assuming that sea-levels would rise by half a metre by 2050, a study has estimated the value of exposed assets in 136 port cities at as high as USD 28 trillion (Lenton, Footitt and Dlugolecki, 2009). In recent years, the number of deaths from earthquakes (and subsequent fires) has remained high due to poor housing construction, unsafe settlements, and the lack of early warning systems.
Asia has suffered disproportionately from losses caused by natural disasters. Between 1980 and 2017, losses in human life accounted for over 1.2 million people, or 71% of the total global loss of life, and financial losses up to USD 1.69 trillion, or nearly 40% of the total global losses of assets (Munich RE, 2018). Since 1970, the human impact and economic losses from natural disasters have progressively increased to reach alarming levels (Figure 2.1). Southeast Asian cities must cope with the increasing exposure of urban populations, in particular to floods. Settlement patterns are a critical factor. In Bangkok, Bandung and Metro Cebu, for instance, many informal settlers live along the shore of rivers and canals, in zones which are therefore more likely to be flooded. Sprawling urban development has also often resulted in the destruction of natural habitats that used to play a critical role in absorbing runoff water and protecting cities from flood disasters.
Note: Total damage and total persons affected are smoothed calculations. Total persons affected include persons requiring immediate assistance during a period of emergency, i.e. requiring basic survival needs such as food, water, shelter, sanitation and immediate medical assistance. It also includes homeless and injured people as a consequence of the disaster. It does not include people who died from the disaster. Total deaths over the period 1970-2015 have not followed the same rising patterns as total damage and total persons affected. In 2004 (tsunami) and 2008 (Cyclone Nargis), however, high human losses were recorded.
Source: Guha-Sapir, D., R. Below and P. Hoyois (2016), EM-DAT: The CRED/OFDA International Disaster Database, www.emdat.be.
Estimates on the economic impacts of natural disasters at the city level obtained from the five case study cities are as follows:
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It is estimated that 12 million Indonesians are located in earthquake prone areas, representing a total economic exposure of USD 79 billion (Oxford Business Group, 2014).
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The 2011 mega-floods that hit Bangkok and other parts of Thailand is reported to have been among the costliest natural disasters since the 1980s, along with the Great East Japanese tsunami and earthquake (2011-Japan), the Sichuan earthquake (2008-China), the Kobe earthquake (1995-Japan) and Hurricanes Katrina (2005-United States) and Super Storm Sandy (2012 - United States). The 2011 flood resulted in losses in the global supply chain of USD 44.2 billion and significantly slowed Thailand’s economic growth in the months that followed the flood (OECD, 2013a). A high proportion of these losses were not insured. The flood revealed that most manufacturing industries were not prepared for floods. The manufacturing sector suffered a loss of USD 32 billion (i.e. 70% of total losses) at the country level. In the City of Bangkok, total damages reached THB 296 billion (USD 9.3 billion at 2014 prices), of which 58% occurred in the industrial sector (OECD, 2015b).
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In Cebu, the 2013 Bohol earthquake caused USD 2 billion in damages (NDRRMC, 2013). It damaged nearly 1 000 houses, in addition to local infrastructure and community facilities.
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Hai Phong was directly affected by 43 storms and typhoons (tropical depressions) between 1990 and 2015. Statistical data in recent years showed that there was a rise in the number of storms which affected the city’s economic performance and affected coastal defences. Typhoon No.8 (named Sơn Tinh) in 2012 was particularly destructive, affecting 10 cities in Northern Viet Nam including Hai Phong. This typhoon is considered to have had the most devastating impact on Hai Phong in the last 10 years. The total of citywide losses caused by typhoon No. 8 is estimated to be VND 1 trillion (USD 47.3 million in 2014 prices) (City of Hai Phong, 2015). Between 2003 and 2013, the estimated costs associated with damage and loss caused by natural disasters in Hai Phong were equivalent to VND 1.4 trillion (USD 66.2 million in 2014 prices), and peaked in 2013 at VND 600 billion (USD 28.4 million in 2014 prices) (City of Hai Phong, 2015)1.
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In Malaysia, the Johor floods of 2006-07 that inundated Iskandar led to USD 489 million in damages (Chan, 2012).
Policies to prepare for, prevent and respond to natural disasters
Promoting vulnerability and risk assessment (VRA) and local resilience action plan (LRAP)
The study has found that Southeast Asian cities are by and large “underprepared”. Even though the five case study cities have been pioneering many DRM actions in their respective countries, they have not yet undertaken sufficient disaster prevention and response planning, in spite of the increasing frequency of disasters and the high costs they inflict. Preparation is critical to anticipate the intensity, frequency and extent of environmental hazards, as well as to identify vulnerable urban population groups, private assets and critical public infrastructure. A lack of preparation exacerbates the environmental risks to which populations are exposed, as well as the economic and social impacts.
The lack of preparedness is most clearly observed in vulnerability and risk assessments (VRAs) and asset inventory practices. VRAs and asset inventories form the basis of a Local Resilience Action Plan (LRAP), which should work as an interface with other DRM measures as well as other urban policy instruments as part of a strategic, concrete and long-term DRM framework (Box 2.1).
A Vulnerability and Risk Assessment (VRA) first requires support of local political leaders as well as broad stakeholder participation encompassing representatives from the private sector, civil society and local communities to take stock of their interests and concerns. In addition to broad public engagement, a level of technical analysis is needed to identify the most important natural hazards and their likely impacts. The people, places and assets that are expected to be most exposed to those risks must be inventoried and geographically located. Next, the vulnerability of those populations, assets, and places should be estimated, taking into account their ability to avoid or mitigate the anticipated impacts (their ‘adaptive capacity’). The resulting policies, plans and investment actions – that can either i) reduce the severity of the risk or the exposure of those potentially affected by it; or ii) increase their capacities to prepare for, avoid or recover from the threat – are then weighed against each other and prioritised. Financing for these policies, plans, investments, and actions must be simultaneously determined so that they can actually be implemented once the stakeholders are in agreement, and political and fiscal decisions are made.
A Local Resilience Action Plan (LRAP) is a collaborative process led by government agencies in association with stakeholder groups such as the private sector, civil society organisations, residential communities and the media. A LRAP should function as an interface with other DRM measures as well as other urban policy instruments. It is iterative, rather than “linear or circular”, because certain activities must be periodically revisited throughout the process to ensure that new considerations have not changed earlier decisions. A LRAP should be more of a living document that guides a city’s resilience efforts and is updated periodically. Its five core phases are:
1) Initiation and sensitisation: The success of any LRAP process will depend on a credible, fact-finding and participatory decision-making process and structure in place representing all major stakeholders. Such a goal will be achieved through the establishment of a capable LRAP steering committee and effective ‘core technical team’;
2) Technical and financial analyses: This involves the development of large-scale city-wide GIS maps identifying the city’s physical characteristics, such as topography and drainage, land use, transportation networks, water supply and sewage system, electrical grid and emergency response facilities. Concurrent to the above step is a parallel analysis of the financial implications flowing from the examination of risks and vulnerabilities. Gradually, the core technical and financial teams should narrow their focus to the most exposed and vulnerable populations by area and type based on the initial vulnerability mapping and financial analyses.
3) Institutional, stakeholder, and financial gap and needs assessment: Once a set of DRM options are identified, a capability assessment of the institution responsible for implementation should be conducted. Vulnerabilities should be subjected to a “gaps assessment” to determine the deficiencies and obstacles blocking effective action from being taken.
4) Evaluating and prioritising resilience options: Technical analyses can serve as useful inputs to discussions between key stakeholders and the steering committee about which resilience interventions are likely to be most effective. Thus, the process may become more political and subjective in nature at this point. The job of the technical team, steering committee, and stakeholders is to identify, evaluate, and prioritise the most viable resilience options and strategies. Once complete, a detailed plan of action should be developed.
5) Implementation with effective monitoring and evaluation feedback mechanisms in place: A results framework highlighting the intermediate and expected objectives and outcomes, output targets, planned activities and budgets with deadlines should be prepared. This framework should also identify the government entities responsible for their achievement with key collaborating agencies and/or non-government partners identified. Equally important, this framework should be monitored continuously. Detailed financial planning, in addition to a communications strategy to reach stakeholders and the general public should also be incorporated into the LRAP.
Source: Ranghieri, F. and Shah, F. (2012), Workbook on Planning for Urban Resilience in the Face of Disasters, World Bank, Washington DC, https://doi.org/10.1596/978-0-8213-8878-5.
In the case study cities, comprehensive hazard assessment and mapping is not widely used, which is particularly harmful for identifying and protecting low-income communities at risk (Table 2.2). For example, in Bangkok, the Disaster and Prevention Management Plan (2010-2014) defines the actions of the lead agencies in charge of disaster relief, and follows the guidelines of the equivalent national DRM plan. These plans particularly target pre-disaster, incident and post-disaster management. In Hai Phong, it is estimated that 98% of its land surface is prone to moderate (86%) to high (12%) risk of flooding during periods of high precipitation (Secoa, 2011; HDX, 2015). Iskandar has identified drainage and stormwater management as major hazards with the potential to affect the metropolitan area (IRDA, 2011a). Bandung appears to lack any kind of hazard or asset identification and VRA process (Bandung City, 2015). This may stem from insufficient local capacity to develop and use the necessary technology, or a lack of awareness in local government about the benefits of such tools.
Cebu appears most advanced among the studied cities. In the Philippines, Disaster Management Plans are mandated by the government’s Disaster Risk Reduction Management Act (No. 10121), and enabling laws also ensure that sufficient financial resources are allocated to local government units to implement disaster risk reduction (DRR) programmes. This underscores the role of national government in setting a policy framework for VRAs. However, the implementation at the city level is a challenge. Among 13 local government units in Metro Cebu, only one has completed disaster risk reduction management (DRRM) plans so far. A promising approach is VRA at the metropolitan scale. The Metro Cebu Roadmap for Sustainable Urban Development, developed by MCDCB and JICA, has undertaken detailed studies to identify physical and environmental features which make it vulnerable to natural hazards and pose a risk to the metropolitan population. This has resulted in thematic maps including all the 13 local government areas of the Metro Cebu. The GIDRM has also been supporting the Province of Cebu and MCDCB in developing a Suitability Map for Cebu Island (Table 2.2).
An important caveat observed from these practices in the case study cities is that their VRAs do not link hazards with identification of vulnerable populations at risk. More work needs to be done to link the identification of hazardous areas with the location of at-risk populations, critical infrastructure and community and private assets to build more comprehensive VRA and LRAP practises.
A common obstacle shared by many developing cities is the difficulty to penetrate and produce data (e.g. the number and size of households) in the poorest areas of the city. In addition, these tend to be located in the most vulnerable sites such as river shores. The city of Kumamoto (Japan) set up a smart tool initiative that consists in collecting data directly from local residents to inform hazard maps. Citizens can directly access a digital base map provided by the municipality and add information about the vulnerability of their own house. Adopting a strategy like the city of Kumamoto will require investments to engage even the poorest communities in this process, through ICT training for instance. Projects in the developing world have proven that this is achievable: in Dar es Salaam, Tanzania, locally trained students equipped with tablets have mapped the slums for the first time (OECD, 2016a). Similar processes could be used to create vulnerability maps in the case study cities.
Encouraging participation and input from businesses and industries could also be helpful in building a database on economic vulnerability. Local authorities can involve private stakeholders by providing a platform where the public and private sectors can exchange information on their vulnerabilities and needs. In the United States, the US Economic Development Administration (EDA) of the Department of Commerce, organised conferences via its six regional offices working closely with local partners where community actors, including business owners, were invited to share their experience regarding disaster resilience. The US EDA then funded the Vermont Economic Resilience Initiative, which culminated in local action plans being sent out as templates to all communities in Vermont (Vermont Agency of Commerce and Community Development, n.d.). The US EDA has also set up a website that disseminates best practices for economic resilience where economic stakeholders can exchange information on how to overcome challenges (Restore Your Economy, n.d.).
In Bangkok Metropolitan Region, such joint discussions could be organised with the help of major private organisations, such as the Thai Federation of Industries, or TIPMSE, or within the framework of metropolitan taskforces/committees specifically dedicated to resilience to floods, as noted previously. Not only could it help obtain information from the private sector, but it could raise the awareness of the private sector about flood resilience issues in the city.
Risk-sensitive land use is at the core of DRM strategies
The location and structural integrity of urban development are major factors in determining a city’s vulnerability. In particular, the location of crucial urban systems that provide energy, water and access to transportation and communication networks will greatly affect a city’s adaptive capacity to cope with natural disaster threats. Globally, it is estimated that urban land at risk of flooding will increase from 44 000 km2 in 2010 to 72 000 km2 by 2050, a development that is expected to treble the associated financial costs to USD 80 trillion during this time (compared to 27 trillion in 2010) (World Bank, 2016). If properly designed and managed, the built environment and the functional systems that sustain it can play a critical role in decreasing a city’s vulnerability, while also contributing to urban sustainability.
The case studies have demonstrated that land use policies in the five case study cities do not always take into account DRM, which has resulted in continued urban development in flood-prone areas. Where plans and regulations do exist, they are often not implemented effectively. For instance, in Bandung, residents continue to settle and build in flood-prone areas, increasing the city’s exposure to further flooding risks (Section 0). Another major challenge in land use is the conversion of agricultural or natural areas into commercial and residential uses. This reduces the land that would otherwise temporarily store and/or absorb excess rainwater and thus mitigate flood damage in cities. This is the case in the Bangkok Metropolitan Region (BMR), where more than 30 km2 of residential areas were created in the province of Pathum Thani between 2001 and 2010, while around 184 km2 of agricultural land was lost (Section 0). Similarly, in Hai Phong, the conversion of rice fields upstream in the northern branch of the Red River watershed for commercial and residential uses has significantly reduced rainwater retention and placed additional demands on Hai Phong’s stormwater drainage system. Over the past 15 years, the city’s built-up areas have increased by nearly 47% since 2000 (City of Hai Phong, 2015). In Iskandar, natural and agricultural land is disappearing quickly, while urban land, characterised by low-density development patterns, is expanding rapidly. The continued loss of natural environments and coastal mangroves in particular is a critical issue because it erodes the city’s natural defences against flooding. This remains a persistent challenge, as in many other fast-growing cities in Southeast Asia.
It is important for national and local governments to incorporate DRM considerations into land use regulations (OECD, 2014). Given the continued pressure for urban development, clear land use visions and effective implementation mechanisms are needed to guide private investment, minimise risks and not to lock cities into vulnerable development patterns that will be costly to reverse in the long run. In Cebu, the Roadmap for Sustainable Urban Development, developed by Metro Cebu Development and Coordinating Board (MCDCB) and Japan International Cooperation Agency, have proposed ‘urban limits’ that will restrict land use in zones at risk of flooding or landslide in order to avoid exposing infrastructure, firms and people unnecessarily to risks. The next step is to translate the ‘urban limits’ into legally binding comprehensive land use plans and zoning ordinances at each local government unit in Metro Cebu.
Investment in critical urban infrastructure needs a risk-sensitive approach
Linking climate-resilient infrastructure, crucial urban services, and land-use planning to more holistic and integrated policy making is at the core of DRM strategies. The built environment and the crucial urban systems that provide energy, water, waste removal or transportation services to densely populated urban areas, are major factors in determining a city’s exposure to the threats it faces. They also affect a city’s capacity to adapt or cope with those threats, and as well as its vulnerability to them. The built environment and these systems can be critical elements in increasing the adaptive capacity and resilience of cities to prepare for and recover from disasters when properly designed and managed. They also contribute to the development of urban green growth pathways that lead to healthier and economically prosperous cities.
This study has confirmed that investment in critical urban infrastructure (roads, electricity grid, water supply and sanitation, stormwater drainage system, etc.)2 in Southeast Asian cities needs to further account for DRM. Natural hazards have the power to severely damage infrastructure, thereby devastating the provision of basic urban services and conditions necessary to ensure economic production, public health and the environmental quality of a city. For example, in port cities like Hai Phong, a lack of DRM planning for new port facilities could result in severe regional economic consequences, as well as negative environmental externalities. Opportunities for urban economic growth can be lost very quickly if critical urban infrastructure is not resilient in the long-term. Regular maintenance of existing infrastructure, such as drainage systems, would also limit threats and should be a top priority of local leaders and planners.
A lack of focus in financing preparedness and prevention measures has been a persistent challenge observed in the case study cities. For example, Indonesia’s current DRM paradigm is dominated by a reactive post-disaster response approach which accounts for 20% of total humanitarian disaster relief expenditure, while disaster preparedness spending accounts for less than 1% (Give2Asia, 2016). However, this focus is gradually shifting as preparedness and prevention measures are seen as a more cost-effective way to address climate and other natural disaster impacts.
There are numerous ongoing infrastructure projects in rapidly urbanising Asian cities, which presents a timely opportunity to enhance urban resilience (Table 2.4). Two-thirds of Asia’s infrastructure that will exist in 2050 still needs to be built and financed (Global Commission on the Economy and Climate, 2014). The large need for infrastructure investment will require large-scale private sector engagement. To this end, public finance plays a critical role to facilitate, leverage and guide private investment. However, at the city level this can be a challenge when tax revenues collected by local governments are often small, as is the case in Hai Phong, which has limited prerogative to collect its own revenues, and retains only 15-20% of local taxes collected from residents and businesses, and none of the customs revenues collected from port duties.
Well-designed, long-term investment in electricity grids, transportation and water infrastructure can markedly improve the capacity to recover from disasters and support climate adaptation. Therefore it is essential to systematically consider the vulnerability of critical infrastructure and the possible impacts on socio-economic systems while planning public investments. However, a challenge observed during this study is that “resilient infrastructure” is often claimed as being more expensive which makes policymakers and investors hesitant to invest. Estimates indicate these costs are 10 to 50% higher, and even higher if transport or water networks are factored in (GFDRR, 2010). An equally important consideration is the competition for investment with other (shorter-term) policy priorities which limits the pool of available funding. Serious budget constraints do not make it easy to allocate resources for expensive investment in resilient infrastructure.
Visualising long-term benefits of “resilient critical infrastructure” and facilitating risk-sensitive public investment would enable Southeast Asian cities to cope with this challenge. While there are extra costs associated with “climate proofing” new infrastructure projects, local leaders and planners must recognise that such additional upfront costs can avoid huge losses that could be debilitating or very difficult to recover from in the future. For example, the 2011 flood in Thailand is reported to have been among the costliest natural disasters since the 1980s, and it demonstrated that disasters disrupt regional and global trade which carries with it important ramifications for financial investments. More research is needed to quantify the long-term benefits so that such information can be considered in decision-making processes.
Developing national technical standards for resilient infrastructure would also be an important action to support local decision-making processes. It is crucial to integrate disaster risk information in the assessment of risks of infrastructure investment to facilitate risk-sensitive public investment, further highlighting the need for making disaster risk information available and accessible. However, financial considerations should not be left until the end of resilience planning. It is of little value to undertake a participatory process entailing significant financial, human and political resources if there are no resources to pay for the implementation of the plans and actions on which the stakeholders have agreed. Thus, financial planning needs to occur in concert with technical and political initiatives to contribute to the decision-making process.
The OECD recommends that risk management decisions and standards should be incorporated in national and local regulations for building codes and the design, development and operations of critical infrastructure. Moreover, businesses should be encouraged to take steps to ensure business continuity, with a specific focus on critical infrastructure operators by (OECD, 2014):
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Developing standards and toolkits designed to manage risks to operations or the delivery of core services;
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Ensuring that critical infrastructure, information systems and networks still function in the aftermath of a shock;
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Requiring first responders stationed in critical infrastructure facilities to maintain plans to ensure that they can continue to exercise their functions in the event of an emergency so far as is reasonably practicable; and
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Encouraging small community-based businesses to take proportionate business resilience measures.
Integrating DRM policies and urban green growth policies to generate ‘co-benefits’
The case studies demonstrate that policy complementarities and synergies are often observed between DRM and other policy objectives related to the natural environment, in particular with urban green growth policies. For example, ecosystem-based adaptation measures present a considerable, yet unrealised investment opportunity to enhance urban resilience. Such measures can also generate benefits for urban green growth. They are often more cost-effective than conventional large-scale urban infrastructure investment. Also, strategic investment in smaller, locally tailored and decentralised projects is more likely to create co-benefits with other policy objectives. Adopting place-based and cross-sectoral policy frameworks, such as urban green growth, appears to be a potentially efficient strategy for the sustainable long-term development of fast-growing Southeast Asian cities, such as the case study cities, none of which have currently adopted such a comprehensive vision for development (Daudey and Matsumoto, 2017).
Land use, water resources management and flood risk are typical, interconnected urban resilience and resource efficiency challenges that bear a metropolitan dimension. However, the lack of co-ordinating mechanisms at the metropolitan scale often presents obstacles to urban resilience. For instance, the development of the Bus Rapid Transit which is only being designed and implemented in Cebu City, despite metropolitan commuting flows, may create expensive infrastructure lock-in (and rising GHG emissions) that will be difficult to circumvent in the future (Daudey and Matsumoto, 2017).
Among different eco-system based adaptation measures, rainwater harvesting presents an interesting opportunity in Southeast Asian cities. It has been incorporated into Bandung’s Integrated Rainwater and Wastewater Management System and is expected to reduce pressure on the city’s drainage infrastructure and diminish the risk of flooding (Lee, 2013). It also exploits policy synergies with Indonesia’s National Long-Term Development Plan (2005-2025), which prioritises rainwater harvesting and should ameliorate formal water network access in Bandung City which remains a challenge. This UNESCAP led pilot project should be expanded by the Bandung City government and complimented by other green adaptation measures, such as swales and green curbs which can increase natural vegetation in cities, create pedestrian space and de-incentivise private car use while also serving their function of retaining rainwater run-off to minimize flash flooding (in comparison to more conventional polder or drainage infrastructure). In addition to offering increased absorptive capacity during heavy rainfall, swales and green curbs are also likely to win public support more easily and be implemented more quickly than other large and disruptive solutions.
Initiatives enhancing floodwater management are especially important in coastal cities. In Bangkok, there is considerable unused land in downtown, such as old parking lots or railroads currently used as ‘graveyards’ for old trains, that might serve as retention ponds, while connecting them to the city’s water supply and sewerage system. Installing semi-permeable surfaces on secondary roads (soi) and small sidewalk rain-absorbing planter boxes could also yield high retention rates. Cebu City’s Integrated Storm Water Management (ISWM) project not only delivered an eco-efficient model for rainwater and stormwater recycling, but it also strengthened the capacity of local government officials through training, raised public awareness and introduced new information technology (UNESCAP, 2011). However, such projects are not yet widespread in Cebu. Likewise, Iskandar’s Segget River restoration project is a symbolic initiative that forms part of wider flood mitigation measures. The project seeks to ensure that core urban areas are not affected by 100-year flood levels, while cleaning-up the once heavily polluted river, to enhance attractiveness and quality of life, as well as improving floodwater management (ADB, 2016). These ‘multi-objective’ projects are applicable to other cities in Southeast Asia and their continuation will help to build citizens’ support for investment in critical urban infrastructure.
In the case of Hai Phong, physical improvements to the drainage system within the city need to be complemented by more targeted efforts to conserve vegetated areas upstream of the city. The city’s drainage system capacity (culverts, canals, conditioning lakes) is not up to standard whenever the city receives more than 100mm of rain within 24 hours (City of Hai Phong, 2015). This creates serious environmental and health risks when combined with poor wastewater and solid waste management. One option would be to transform the current Flood Control Master Plan into a comprehensive, ‘green’ floodwater management plan which would deliver co-benefits with other policy objectives. Such a plan, if implemented properly, may lower the long-term costs of controlling floods, treating wastewater and providing other urban amenities as part of a more co-ordinated and effective solution.
Land resources and natural habitats are being consumed at a fast rate in Southeast Asia. Between 2000 and 2010, the surface area of urban areas in Iskandar and Metro Cebu increased by 53.5% and 31.3%, respectively (an annual growth rate of 6.7% and 2.7%) (Daudey and Matsumoto, 2017). Natural and agricultural land in northern Bandung, which once captured significant amounts of rainfall and benefitted residents by reducing flooding risks and protected local ecosystems and biodiversity, is being converted to built-up areas, exposing the city to increased flooding risks. There is no commensurate water management plan to guide investment. This land-use change is also increasing the pressure on local aquifers, which are in decline because there is less space for rainwater run-off to seep into the ground and to feed the water supply (OECD, 2015a).
Developing disaster risk financing mechanisms
Disaster risk financing (DRF) is clearly one of the key policy areas for Southeast Asian countries to develop. The present study’s assessment of DRF mechanisms in the case study countries reveals a lack of diversity of mechanisms which can drastically reduce risk exposure. DRF mechanisms can be implemented in an ex ante or an ad hoc manner. Typically, ex ante disaster risk financing tools involve significant opportunity costs, especially in terms of investment potential. In part, this explains why governments that are well placed to access international capital markets and have the ability to create fiscal resources quickly when needed often opt in favour of ad hoc DRF mechanisms (OECD, 2015c).
On the other hand, as outlined in the G20/OECD Methodological Framework for Disaster Risk Assessment and Risk Financing (OECD, 2012b: Section II.2), compensation arrangements that are explicit and well-defined ex ante have important advantages relative to financial assistance that is provided on an ad hoc basis after a disaster event. Well-defined rules and processes provide clarity on access to financial assistance, helping to ensure prompt assistance, reduce moral hazard and decrease the potential for unplanned post-disaster assistance. In this paper, the application of three types of ex ante DRF mechanisms in the case study cities was examined. Table 2.5 provides an overview of the advantages and limitations of the three mechanisms:
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1. Contingency funds such as dedicated contingency reserves for disasters (with allocated funds lapsing at year end), or multi-year disaster reserve funds (with allocated funds building up over time);
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2. Catastrophe bonds or other types of catastrophe-linked securities or derivatives which provide an alternative means for risk transfer; and
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3. Insurance, which enables the transfer of risks and indemnifies against damage (e.g. to cover damage to government assets such as buildings and infrastructure) (OECD, 2012b).
Contingency funds
Contingency funds are especially important to consider in the context of Southeast Asia as they may be the only available ex ante financial tool for markets lacking insurance and disaster risk financing, or where access to such markets is limited. The OECD Recommendation on the Governance of Critical Risks proposes that governments plan for contingent liabilities within clear public finance frameworks by enhancing efforts to minimise the impact that critical risks may have on public finances and the fiscal position of a country in order to support greater resilience (OECD, 2014).
Different types of contingency funds have been developed in the countries of the case study cities, although most of them are still in an experimental stage (Table 2.6. Examples of contingency funds in the selected case study cities).
For example, in Bandung, the central government’s Rehabilitation and Reconstruction Fund finances public post-disaster expenditure as part of state government budgets. The amount of the reserve fund reflects the potential disasters that might occur and the financial capacity of the state government concerned (OECD, 2013a).
The Philippines demonstrates a promising policy option to support local governments. While most contingency funds are nationally budgeted, the Philippines’ Disaster Risk Reduction and Management Act requires all the local government units (LGUs) in the Philippines to establish a DRM contingency fund of at least 5% based on recurring sources of local revenue. The legislation also allows for 70% of contingency funds to be spent on preparation and prevention planning, as well as insurance premiums and disaster response measures (ADB, 2015). The Government of the Philippines also established a USD 500 million contingency fund with the World Bank in 2015 and is trying to establish a sub-national variant for local governments (World Bank, 2015a). Such contingency funds tailored to the local contexts will strengthen pre-disaster planning to mitigate risks while also providing post-disaster financial assistance at the local level.
In order to complement their actions to mitigate disaster risks, national and local governments may also seek out mechanisms with the assistance of the international community. For instance, the World Bank Group and the Global Facility for Disaster Reduction and Recovery offer two joint programmes seeking to mitigate the financial losses caused by natural disasters. The Disaster Risk Financing and Insurance Program (DRFIP) assists national and subnational governments to implement comprehensive financial protection strategies through sovereign disaster risk financing, agricultural insurance, property catastrophe risk insurance, scalable social protection programs and public-private partnerships (GFDRR/World Bank, 2018a). Although DRFIP works with national and subnational levels of government, the City Resilience Program (CRP) specifically works to enhance urban resilience around the world, including in three of the case study countries, Indonesia, Thailand and Viet Nam. CRP facilitates strategic investments addressing vulnerabilities and risks at the urban level and aims to encourage cities around the world to put climate resilience at the forefront of investment programs (GFDRR/World Bank, 2018b).
Catastrophe bonds
The case study cities are either not authorised or equipped with very limited capacity to issue municipal bonds, and their respective countries have not been issued catastrophe bonds to date. The Philippines recently launched a catastrophe risk insurance programme (World Bank, 2017), which has a contingent credit line with the World Bank, the Second Disaster Risk Management Development Policy Loan with a Catastrophe Deferred Drawdown Option (CAT-DDO) (World Bank, 2015b), and has engaged in catastrophe bond discussions but has yet to be issued a catastrophe bond.
The OECD Recommendation on Disaster Risk Financing Strategies proposes that risk transfer markets for disaster risks be encouraged through a variety of methods, including by supporting the scope of financial protection provided by financial institutions and public entities, where the definition of “financial protection”3 includes catastrophe bonds as a DRF mechanism. It is also recommended that a financial sector regulatory and supervisory framework be implemented that ensures a sound, open and efficient financial sector with sufficient financial capacity to absorb disaster risks, including by enabling the use of risk transfer to national and international (re)insurance and capital markets (OECD, 2017).
Insurance
This assessment has found that disaster insurance is narrowly used in the case study cities. Indeed, lack of insurance to cover natural disaster losses is an increasing global concern. It is estimated that global losses exceeded USD 4.2 trillion (in 2014 dollars) between 1980 and 2014, nearly 80% of which was related to climate-related disasters (Munich RE, 2018). Only USD 1.1 trillion of losses was insured, implying that three-quarters of the global losses were “uninsured” and borne predominantly by the private sector (Global Reinsurance Forum, 2014). This “insurance gap” is even more pronounced in developing countries. However, recent innovation in the insurance sector has been designed to address these more complex and interconnected risks and impacts. The following insurance options could be considered for the case study cities:
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Micro-insurance: Micro-insurance can be defined as the protection of low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved (ILO, 2006). The development of micro-insurance has been one avenue through which governments have sought to enhance financial protection among the financially vulnerable, such as small-scale farmers. Parametric structures require reliable data and technology to monitor hazard levels, which may be costly to acquire, manage and maintain, presenting relevant implementation challenges. On the other hand, existing technological and financial networks can be exploited to improve accessibility and lower transaction costs for financial tools: for instance, mobile phone technology can enhance access to micro-insurance while the purchase of portfolio protection against disasters by credit co-operative or rural banks and micro-finance institutions can enhance access to finance. In some APEC economies with more developed insurance markets and infrastructures, but where insurance coverage for disaster risks may not be sustainable given the scale of the risks and/or level of capital in the insurance industry, different forms of disaster insurance schemes have been established to encourage widespread coverage of catastrophic risks, with the government acting as primary insurer, as reinsurer and/or as guarantor (OECD, 2013a).
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Parametric insurance: Parametric insurance schemes base pay-outs on pre-agreed thresholds for certain defined parameters being surpassed, such as the seismic strength of earthquakes, level of storm surge, rainfall rates, inundation of urban areas, and wind speeds. This has quickened and simplified the process of settling claims and providing timely payments to policy-holders that can at least partially cover the costs of DRM efforts during the immediate response, recovery, and reconstruction phases.
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Re-insurance: The re-insurance sector is an effective risk-spreading mechanism that aims to avoid “peak losses and risk concentration” and take advantage of the reduced probability of a natural disaster occurring across several different regions, economic sectors, or disaster types during a defined period of time. Re-insurance enables a financial entity to take on the risks covered under other policies and bundle them together into larger “packages” in return for a premium paid by the originating insurance companies. It is becoming an increasingly important component of comprehensive DRM strategies worldwide because of its capacity to absorb the increasing costs of disasters and climate change impacts.
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Locally-tailored insurance: Insurance schemes at diverse geographic scales could also effectively support localised response planning. While most insurance schemes globally available at present are at the national scale and remain mostly a prerogative of national governments, insurance schemes tailored at the city level could also be considered. A major challenge to this approach is that estimated natural disaster risks in some cities might be so significant that no insurance company would assume the risk. However, public support including comprehensive disaster risk assessments at the city level may help the private sector develop such a local insurance. In Copenhagen, following dramatic rises in insurance prices for both private and public sector explained by the increase in weather related damage, the local government undertook the “Cloudburst Management Plan”4, partnering with the insurance sector by sharing the data on disasters and DRM in exchange for a reduction of insurance prices. The community and individual levels may also be of interest, with contingency trusts raised by community development funds (CDFs), or through the development of a pro-poor micro-insurance framework, that has proven quite effective and is growing in the Philippines (GIZ RFPI, 2015).
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Regional cross-country insurance: A regional cross-country insurance could be an option in Southeast Asia. In the Caribbean region, Caribbean Catastrophe Risk Insurance Facility (CCRIF) has shown that by putting contingency funding in place before catastrophes occur and streamlining the settlement process, countries can dramatically reduce the indirect economic and financial impacts by quickening the recovery and reconstruction process. Inspired by the Caribbean model and launched in 2007, the Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) aims to provide Pacific nations with disaster risk assessment and financing tools for enhanced DRM and climate change adaptation. One component of PCRAFI is the Pacific Disaster Risk Financing and Insurance programme, designed to increase the financial resilience of Pacific Island countries to natural disasters by improving their capacity to meet post-disaster funding needs. Through this programme, advisory services are available for public financial management of natural disasters, including: (i) the development of a national disaster risk financing strategy, recognising the need for ex ante and ex post financial tools; (ii) post-disaster budget execution to ensure that funds can be accessed and disbursed easily from the onset of a disaster; and (iii) the insurance of key public assets to contribute to post-disaster reconstruction financing. Under the program, Pacific Island countries – such as Vanuatu, the Cook Island, Marshall Islands, Samoa and Tonga – were able to gain access to aggregate risk insurance coverage of USD 43 million for the third (2014-2015) season of the pilot.
National governments play a key role in facilitating the development of a well-functioning private insurance market by reviewing the framework conditions, inviting reinsurance companies and by mobilising local financial resources in Southeast Asian countries. In parallel, governments must actively pursue disaster risk reduction measures in order to develop such a robust and feasible private insurance market. When risk is too high, so too are insurance premiums, and the market will not develop as anticipated. Establishing an insurance market without sufficiently diminishing risk may lead to adverse selection and moral hazard (Box 2.2).
In order for a well-functioning private insurance market to develop without government intervention, the distribution of risks across insured individuals should ideally be similar to that of the underlying population (no adverse selection), and coverage should not overly influence individuals’ actions (no moral hazard). Moral hazard, which refers to a situation where having insurance changes the behaviour of the insured in the sense of making the insured event more likely or costly, must be avoided. Although present in the context of catastrophe risk, adverse selection and moral hazard usually do not pose severe problems to private insurance provision, given the absence of informational problems and the exogenous nature of many of the events (Ahrend, et al., 2011).
While pricing catastrophe risk may be challenging, technical difficulties have historically not prevented the existence of well-developed catastrophe insurance markets as shown for example by marine insurance. Finally, even when the potential loss may be large, most types of catastrophe events are usually local and uncorrelated with a global market index, meaning that they should in principle be diversifiable in financial markets (Ahrend, et al., 2011). Although the use of parametric triggers can reduce moral hazard (since claim payments are based on an index, not on actual loss experience), it may introduce “basis risk” if the index is not well correlated with the occurrence of actual losses (Wolfrom, et al., 2016).
Source : Ahrend, et al., 2011; Wolfrom, et al., 2016.
Promoting a multi-layered approach
In addition to exploring these DRF mechanisms individually, a multi-layered approach to DRF can combine catastrophe bonds with complementary DRF mechanisms such as contingency funds and insurance, thereby providing a stronger safety net and other benefits such as limiting financial exposure of the central government to disaster risk. Mexico’s FONDEN is a relevant example of an effective multi-layered approach to DRF that might serve as an inspiration (Box 2.3).
In light of the lack of an issued catastrophe bond in the case study cities, Mexico’s Fondo de Desastres Naturales (FONDEN) will be discussed. FONDEN was established in 1996 as a tool to finance the costs of recovery and reconstruction of damaged public assets and infrastructures and co-ordinate the actions of intergovernmental and inter-institutional entities. Although FONDEN was initially established as an ex ante disaster risk fund, it also benefits from a related reinsurance and catastrophe bond programme which serve to augment the financial capacity of FONDEN, thereby limiting the financial exposure of Mexico’s federal government to disaster risk (Government of Mexico/World Bank, 2012).
In 2006, FONDEN issued a USD 160 million parametric catastrophe bond against earthquake risks in three zones for a three year duration; in addition, it secured USD 290 million of parametric reinsurance coverage for the same three zones for three years, bringing its total protection to USD 450 million. In October 2009, it issued a USD 290 million multi-peril parametric catastrophe bond covering both earthquake and hurricane risks with a three-year maturity. After the 2009 bond matured, a third issuance was made in October 2012. MultiCat 2012 is a three-tranche catastrophe bond, with an overall value of USD 315 million, covering earthquake and hurricane risks in multiple regions with a parametric trigger. Starting from 2011, moreover, FONDEN secured a USD 400 million indemnity-based excess of loss reinsurance treaty that will cover the losses sustained by the federal government for government assets and low-income housing, limited to replacement costs (OECD, 2015c).
Source: Government of Mexico/World Bank, 2012; OECD, 2015c.
Similar to FONDEN, the Thai government’s National Catastrophe Insurance Fund (NCIF) has adopted a multi-layered approach to DRF. After the devastating 2011 floods in Bangkok, many businesses and individuals struggled to find affordable insurance policies to cover flood damages and losses. Of the total losses in 2011, only about USD 10 billion were insured (as compared to losses of about USD 45 billion). As a response, and as a measure to restore public confidence, the Thai government set up NCIF in January 2012, with a view to making disaster insurance coverage broadly available to businesses and individuals alike. The NCIF is used as a reinsurance reserve, whereby local insurance companies that issue policies retain part of the risk underwritten and transfer the rest to the NCIF, which in turn retrocedes a portion to international carriers on the global reinsurance market (OECD, 2015c). The government regularly raises awareness about the NCIF and other insurance products at seminars and events (OECD, 2013b).
In order for such a multi-layered approach to function effectively, co-ordinating the efforts of central and local authorities in the various phases of DRM, from risk assessment to risk financing and transfer, is critical. Collaborating with the private sector is another indispensable factor of success, and the national government has a key role to facilitate such collaboration.
Promoting the use of information and communication technologies
Information and communications technology (ICT) infrastructure can improve cities’ early warning systems (EWS), emergency services, and disaster response efforts, in addition to transport, energy, water and solid waste services. Digital technologies can help to make urban planning more resilient through flood EWS, to co-ordinate the evacuation and rescue response teams, to reach-out to and receive real-time feedback from local communities and the private sector on the status of current conditions, and to assess the performance of recovery efforts more efficiently. The use of geographic information system (GIS) technology, and other digital tools is a considerable asset in the endeavour to co-locate vulnerable populations, assets and geographic areas on “risk or vulnerability maps” and would contribute to more comprehensive VRAs. This critical information is largely absent from the case study cities with the exception of Cebu, and would provide Southeast Asian policy and decision-makers with data to formulate and implement more effective, targeted, and responsive DRM measures.
Among the case study cities, Bandung is currently developing strategies to become a regional leader in the smart city field, and is exploring the extent to which this can support DRM efforts. As part of a specific research focus on urban green growth in Bandung, this study observed that the city is embracing ICT in the roll out and provision of many cost effective solutions to enhance DRM. This distinct approach is in contrast to the four other case study cities and could be useful in human settlements across Southeast Asia. A smart city uses digital technologies and ICT to make critical urban infrastructure components and services more intelligent, interconnected, and efficient. It is expected that the global market for smart urban services will reach USD 400 billion per year by 2020 (BIS, 2013).
Efficient early warning systems can be developed by ICT to quickly mobilise emergency services. Coupled with meteorological weather forecasting systems, advance warning times can be increased from a matter of minutes or hours to one or more days, allowing potentially affected people to move themselves, their families and their assets out of harm’s way, and to protect their property and other possessions which cannot be relocated in time. Early warning systems reaching out to citizens can therefore be installed throughout a city and remotely controlled. Screens in shopping malls and other public areas (e.g. public green space), SMS, and social networks such as Facebook and Twitter can diffuse information on what citizens should do when a flood or earthquake happens. Austin’s Flood Early Warning System (FEWS), in Texas (United States), combines flood maps, real-time data and predictive modelling to improve the efficiency of evacuation decisions and plans. The system predicts which streets will become flooded up to six hours beforehand and maps flooded areas and road closure. Before this system, evacuation mostly took place after the disaster had occurred (City of Austin, n.d.).
Smart city tools can help to mobilise the resources of local communities and the private sector in responding to a disaster. Organising domestic and international support effectively was notably one of the issues faced by the Philippines in the aftermath of cyclone Haiyan in 2013. During the 2011 Bangkok megafloods, the help of volunteers was critical in mitigating the impacts of the flood (OECD, 2015b). Smart city tools could be developed so that the local government can directly contact volunteer communities (including companies that can provide basic daily needs such as water and food) and co-ordinate support. These volunteer communities should be identified, with leaders so that they can easily be contacted during a disaster to organise the response of the civil society.
Smart city tools can assist local government or any relevant agency coping with the disaster to get street-level information from citizens to identify priority needs. A common existing method is the emergency switchboard (e.g. 911 in the United States). However, this is often inefficient in the event of a major disaster due to a high volume of calls. During Hurricane Sandy, New York City’s switchboard was receiving around 20 000 calls an hour, many of which were not emergencies. This created slow response times and lack of prioritisation, which is particularly problematic to provide support for residents in life-threatening situations. New York City is trying to better education citizens about what qualifies as a 911 call, but is also developing a parallel 311 line able to analyse text and data received through SMS, calls, and social media posts, for less urgent reports.
Governance to ensure concrete implementation actions for DRM
Mainstreaming DRM into urban policy decisions through a Local Resilience Action Plan
This study finds that DRM is often understood as a technical or environmental issue, rather than as a cross-cutting principle of a sustainable urban development agenda in local governments in the case study cities. For example, Bandung’s efforts largely focus on enhancing co-ordination between the fire and police departments, and less on broader ‘whole-of-government’ initiatives. In Bangkok, the Fire and Rescue Department leads disaster relief measures and is implementing the city’s Disaster Prevention and Mitigation Plan 2010-2014. This plan mostly targets preparation, incident and post-disaster management. Ultimately, however, it is unclear who exactly is co-ordinating and responsible for the implementation of these and other resilience measures in Bangkok (OECD, 2015b).
What is needed for Southeast Asian cities is a policy framework to mainstream DRM into different urban policy decisions. As previously mentioned, a Local Resilience Action Plan (LRAP) can function as an interface with other urban policy instruments (Box 2.1). Hai Phong’s 2008 Action Plan on implementing the National Strategy for Prevention and Mitigation of Natural Disaster Vision 2020 would certainly be a good starting point, although it should extend its scope to resilience-oriented policies and programmes for Hai Phong Port, a lynchpin in the regional economy.
This study also underscores a need for a ‘whole-of-government’ approach which can co-ordinate the complex pre- and post-disaster policy measures with myriad stakeholders. An institutional arrangement, such as a dedicated local government agency under the mandate of the mayor would assist during the implementation of DRM policies by facilitating horizontal and vertical co-ordination between public agencies and departments. The case study cities have developed different institutional co-ordinating mechanism across departments for DRM (Table 2.7):
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In Bandung, an ad-hoc Task Force on Disaster Management (Satkorlak Penanggulangan Bencana dan Pengungsi), which incorporates several public agencies, focuses solely on post-disaster response, and while the fire department is responsible for disaster preparation, uncertainty clouds other agencies’ respective responsibilities (Bandung City, 2015). The lack of clearly defined roles has led to inadequate co-ordination and communication between departments, especially as regards preparation and prevention efforts.
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The Cebu City Disaster Risk Reduction Management Council (CDRRMC) co-ordinates initiatives and actions introduced by the local government. Cebu City also hosts the Provincial Office for Disaster Risk Reduction and Emergency Management.
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Hai Phong’s Steering Committee for Natural Disaster Prevention and City Rescue is a cross-departmental organisation which has taken responsibility for advisory, planning management, general DRM, search and rescue, and oil spill clean-up operations. When a disaster occurs, based on the functions and tasks of the branches and units, the Committee is responsible for creating favourable conditions for collaboration of all agencies in the response activities. The Committee is made-up of heads of Hai Phong Departments, Agencies and Government Units. Every year, they are requested to prepare local plans of natural disaster prevention and submit them to the Committee, at which point a general resilience master plan for the whole city is prepared.
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In Iskandar, there is no dedicated local government agency co-ordinating DRM, except for the National Disaster Management and Relief Committee (present at regional and local level).
Southeast Asian cities could consider several prospective international examples, such as the appointment of a Chief Resilience Officer, as is also implemented in Bangkok. The primary aim of the Chief Resilience Officer is the co-ordination of measures and communication between different levels of government, their agencies and other private stakeholders. An alternate model under the mandate of the Mayor of NYC is the Mayor’s Office of Recovery and Resiliency which secured USD 300 million in new funding during 2015 to implement a raft of coastal defence and infrastructure maintenance projects (NYC Mayor’s Office of Recovery and Resilience, 2016). It leads NYC’s efforts to enhance urban resilience through the implementation of the plan for ‘A Stronger, More Resilient New York’.
Aligning national and local resilience plans and strategies
This study has found that in many cases, the co-ordination mechanisms between national and local governments are unclear. Where national and local resilience plans and strategies do exist, they are often not aligned. Sound vertical governance can be an effective approach to enhance urban resilience in Southeast Asian cities. To date, few national policy frameworks are accompanied by processes to assist local governments in translating and implementing national development strategies, and sometimes, they are missing altogether. An unclear delegation of responsibilities usually leads to inefficiencies, as seen in the multi-dimensional water sector in Bangkok. Below are details for the case study cities:
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In Bandung, DRM falls under the aegis of Indonesia’s National Agency for Disaster Management (BNBP) and Disaster Management Authority (DMA). As the lead agency, it co-ordinates with other national ministries and provincial level BNBP agencies (known as BPBDs) to determine and implement their roles and responsibilities. Despite extensive technical and financial assistance from international donors, co-ordination appears weak between national and local DRM offices. For example, the DMA reports that only 18 of the 33 provinces in Indonesia have established corresponding regional offices and that many provincial disaster management agencies (BPBDs) have limited human and financial resources, inadequate equipment, and lack local disaster preparedness plans (Give2Asia, 2016).
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In Bangkok, the Thai government has established major disaster prevention and relief guidelines for action at lower levels of government through the National Disaster Prevention and Mitigation Plan (2010-2014). However, for example a local project to build a pumping station has been blocked because it was not well co-ordinated with a different department at the central government (Department of Rural Roads and the Marin Department). There is a lack of collaboration and capacity-building strategies, reflected in the incomplete translation of national spatial plans at the local level and management failures between the national government and BMA during the 2011 floods.
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The Philippines has made a concerted effort to align national and local planning through the Disaster Risk Reduction and Management Council (DRRMC). The recognition of local government’s on-the-ground role as first-responders in the event of disaster has led to the establishment of equivalent DRM offices in nearly 1 500 LGUs including in Metro Cebu. Moreover, the initiative has allocated specific financial budgets and staff resources as well. The central task of these offices is to prepare a local DRM plan as part of a greater effort to mainstream disaster planning, prevention and response efforts (Government of the Philippines, 2011).
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In Malaysia, the National Disaster Management Agency (NADMA) was established in 2015 under the Prime Minister’s Department, taking over the responsibility for disaster management from the National Security Council. While NADMA functions as a focal point for Malaysia’s disaster management, co-ordination mechanisms between national, state and local governments remain unclear with no reference to how Iskandar Malaysia’s five local municipal governments could contribute to DRM efforts.
These complex practices underline that national governments have an important role to play in aligning national and local DRM policies and to create an enabling environment whereby local governments can act more effectively and efficiently.
Horizontal co-operation can deliver more effective disaster risk management
Policy coherence is a crucial component of disaster risk management and should be encouraged through effective cross-sectoral co-ordination. Adopting this holistic approach to policy coherence forms one of the twelve pillars of the OECD Principles on Water Governance, which provide a framework for enhancing urban water resilience (Box 2.4).
By 2050, the OECD estimates that water demand will increase by 55% globally and that 4 billion people will be living in water-stressed areas. The international community has recognised that “water crises” are often “governance crises.” Technical solutions to water-related challenges often exist and are well-known, but the difficulty lies in the political economy environment to put them in practice, which requires effectiveness, efficiency and inclusiveness.
The OECD Principles on Water Governance (the Principles), endorsed by OECD countries in 2015, set standards for governments to reap the economic, social and environmental benefits of good water governance through effective, efficient and inclusive design and implementation of water policies.
The Principles provide a framework for enhancing urban water resilience, including: properly allocating roles and responsibilities for flood, drought and water pollution management to avoid conflicts and overlaps across levels of government; engaging stakeholders to raise awareness towards risk prevention; putting in place the necessary arrangement for sustainable finance over time
Since 2014, the OECD has been working on the implementation strategy of the Principles, through the development of Water Governance Indicators and the collection of Water Governance Stories.
Source: OECD (2015e), Principles on Water Governance, http://www.oecd.org/gov/regional-policy/OECD-Principles-on-Water-Governance-brochure.pdf.
As the cases of Bangkok and Bandung demonstrate, a lack of horizontal co-operation can increase cities’ vulnerability to flooding and further exacerbate the already poor provision of municipal services. National governments should therefore spearhead metropolitan governance initiatives and allocate sufficient financial and political resources for their proper functioning. Like in many OECD metropolitan areas, there is an opportunity for greater collaboration between local governments at the metropolitan level in Southeast Asian cities. The Metro Cebu Development Coordinating Board (MCDCB) is an excellent example of a public-private sector approach to facilitate horizontal co-operation at the metropolitan level. The MCDCB has adopted a development framework (Metro Cebu Roadmap) that promotes a green growth agenda, although integration with the Philippines’ national economic development strategies is lacking. Similarly in Bandung, a presidential decree issued in June 2018 officially approved the establishment of a metropolitan co-ordinating body, the first of its kind in Indonesia. Since 2007, Iskandar has benefited from the establishment of the Iskandar Regional Development Authority (IRDA), the mandate of which is to co-ordinate various public agencies and to work with private stakeholders to plan, promote and facilitate investment in, and the development of the metropolitan area. In contrast, in the Bangkok Metropolitan Region (BMR), no such authority exists and co-ordination mechanisms at the metropolitan scale are lacking. Although a regional development plan has been promulgated, it has not been implemented in all local land-use plans in the BMR.
Enabling subnational finance for urban resilience
This study underscores that investing in urban infrastructure is a critical strategy for enhancing urban resilience and that financing is a critical implementation lever. In the context of subnational financing in Southeast Asian cities, two persistent challenges are observed from the case studies:
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1. Capacity of local governments to access funding markets to meet the investment needs. In particular, there has been intense debate focusing on the question of how difficult it is for developing countries and cities to access dedicated climate funds. The problem is often not the availability of capital, but the lack of well-vetted and viable project proposals. Indeed, local governments are likely to require high levels of financial sophistication to prepare ‘bankable’ project proposals.
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2. The lack of own revenues in subnational governments. The proportion of tax revenues collected by local governments in the region is small, often less than 10% of the total tax revenues as a country (OECD, 2016b). Indonesia’s Disaster Management Authority reports that provincial DRM agencies are reluctant to use their limited budgets and instead rely on Indonesia’s national disaster funds (Give2Asia, 2016).
Given these challenges, three key policy directions should be pursued: i) to develop diverse mechanisms to leverage private funding; ii) to provide more opportunities for local governments to raise their own revenue; and iii) to place more focus in the local budget on financing disaster preparedness and prevention measures. Below are concrete options that can be considered:
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Leveraging private sector funds by public sector involvement. Public resources could be used to offset the higher costs associated with ‘climate-proofing’ critical infrastructure to address some of the long-term risks associated with such investments. Some of these risk mitigation policy instruments include credit-enhancement schemes, revenue supports, public-private partnerships (PPPs), or a combination of several different financial mechanisms as part of more comprehensive financial ‘packages’. National governments play a key role in creating these incentives.
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Promote the use of ‘social impact investment’. Social impact investment is a new, evolving form of financing, providing finance to organisations addressing social needs with the explicit expectation of a measurable social, as well as financial, return. It has become increasingly relevant in today’s economic setting, as social challenges have mounted while public funds in many countries are under pressure (OECD, 2015d). By branding itself as environmentally, socially and fiscally responsible (‘creditworthy’), a city could become an attractive partner for impact investors.
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Introducing a transparent public accounting system and obtaining credit ratings. Currently, only 4% of the 500 largest cities in developing countries have international credit ratings while 20% have domestic credit ratings (World Bank, 2013). The lack of a credit rating at the municipal or provincial level creates a powerful barrier for cities to potentially secure large sources of financing and hampers cities from carrying out efficient DRM policies.
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Developing partnerships with local governments, local lenders and community groups. There is a need to catalyse partnerships with local lenders by increasing the banking and investment communities’ awareness of the role they can play in supporting climate-resilient investments and initiatives. Businesses and the investors who finance them realise that they cannot operate profitably in isolation from their surrounding environments and labour forces, and know that they depend on public services like roads and the electric power grid to function normally.
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Making more use of economic instruments that can both raise and diversify local revenues, such as property taxes, combined waste and sanitation services and electricity tariffs, and land development/land-value capture taxes along public transport corridors. The case of Bangkok demonstrates an opportunity for local governments in Southeast Asian cities to raise their revenues by linking land-use control tools with taxes/charges. For example, levying higher taxes/charges for urban development in areas where flood risks are high could be considered. In the Netherlands, developers who locate property beyond the dykes generate future liabilities and are required to pay higher taxes for the future costs of protecting their assets. A portion of the higher revenues collected by local authorities from such taxes could be earmarked for flood resilience projects, such as those that might cover relocation costs for poor communities living in flood zones. Authority to implement these taxes and development fees typically lies with national governments, implying that close co-ordination between national and local governments is essential.5
Engaging stakeholders can enhance inclusiveness and foster a culture of DRM
Engaging local communities from the early stages of decision-making can help develop more effective and inclusive DRM strategies and frameworks. The poor, and especially poor women and children, are the most acutely exposed to natural disaster risks in Southeast Asian cities. They often lose their homes, assets and livelihoods, making them even more vulnerable to the next disaster, while having weaker adaptive capacities, no insurance, and little influence in decision-making processes. Women and children are 14 times more likely to die than men during a disaster, and more than half of all those affected by disasters are children (UNISDR, 2011). By 2030, it is estimated that three billion people will be living in urban slums (Baker, 2012), which indicates that these trends may worsen.
The assessment has found that local communities are not always offered opportunities for engagement. For example, in Hai Phong, the city implemented an action plan between 2013 and 2015 to raise public awareness about DRM through community participation. The action plan was based on a national project, the National Strategy for Prevention and Mitigation of Natural Disasters with the Vision 2020, which aims to mobilise resources to ameliorate disaster response, prevention and mitigation and to minimise loss to human life, property and damage to natural, cultural and environmental assets (City of Hai Phong, 2015). Presently, however, in most cases, the local government and its citizens are simply informed of decisions already made at much higher levels of government, which may not adequately reflect local preferences and needs.
One of the most effective strategies to contain the social impact of floods on local communities in Southeast Asia is the direct involvement of local communities before, during and after a disaster. In disaster response, promoting organisational capabilities and response skills within urban communities is key, as in most disasters, the ‘first responders’ are either family members or neighbours in the time-window immediately following a disaster and before local authorities arrive. The creation of a ‘self-help first’ culture should be promoted by incorporating local community structures into resilience efforts, starting with the most vulnerable community groups first. Local communities in Bangkok were aware of the fact that local government efforts to build DRM were not exhaustive and they prepared to act as first-responders in the event of disaster, as occurred in 2011. During the 2011 mega-floods, many residents volunteered to fight the floods by helping the most vulnerable populations (Global Disaster Preparedness Centre, 2013). This encouraged the BMA to change its strategy and to co-ordinate more with local residents, by going out into the field to the volunteers’ camps and discussing the flooding issues with local leaders in these camps. Such a strategy could make the residents’ future response to disasters better organised and render their co-ordination and collaboration with governments even more effective. The state of Victoria (Australia) has set up a dedicated agency to create safer and more resilient communities (Box 2.5). Collaborating with the local community and NGOs for public awareness-raising campaigns is another key strategy.
Engagement with the local business communities and the private sector is equally important. Flooding is likely to have serious economic consequences through the loss of employment, livelihoods and trading opportunities with local and international markets. For instance, natural hazards not only have the power to damage city infrastructure, but also affect international trade because they impact major ports such as those located in Iskandar and Hai Phong. Multi-stakeholder forums could be set up on a number of issues of concern beyond flood resilience in the case study cities, at the regional scale as well as at the individual provincial and district levels. Such interactions could be facilitated by officials and local leaders, especially in slum areas, which typically are less accessible and under-represented in public policy discussions and decisions.
To ensure long-term economic resilience, national and local authorities can also encourage the private sector to design their own business continuity and post-disaster recovery plans, to reduce disruption to their economic activities. For example, the Greater London Authority has developed a Business Preparedness Checklist available online, and a five-step strategy to assist the private sector in business continuity planning: 1) analyse the business; 2) assess the risks; 3) plan and prepare; 4) communicate the plan; and 5) test the plan. Each of the five strategies are adapted according to the size of the business at risk (small, medium or large) and the Greater London Authority’s website also features key actions to be taken in case of a shock, and pools knowledge on best practices for DRM worldwide (Greater London Authority, n.d.). Local authorities in the case study cities can learn from such examples.
The ability of broader networks to generate resources was demonstrated during the so-called “Black Saturday” bushfires, which took place in 2009 in the state of Victoria. Over $378 million and a myriad of other resources were drawn through Victorian networks to support those affected. In addition to these material resources, communities mounted a volunteer fire fighting response, cared for those affected, and have been working after the disaster with a range of decision-makers to ensure their towns, and the industries that support them, recover and rebuild. The floods across Victoria in January 2011 also showed the importance of mobilising communities to help each other prepare, respond, clean up and recover.
To improve both preparedness and post-disaster response, and to create safer and more resilient communities, the state of Victoria created a dedicated agency, the EMV (Emergency Management Victoria), which has the following objectives:
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Creating and supporting institutional mechanisms for collaborative community planning;
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Building governance capacity to ensure equal participation in governance including: grants to support organisations build their capacity for community engagement or planning (for example, Local Government Capacity Grants, Volunteer Support Grants); Office of the Community Sector work to improve the community sector by reducing red tape and building sector capacity; leadership and governance training;
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Providing grants to support community planning processes (such as the Community Support Fund, a trust fund aiming to direct a portion of gaming revenues back into the community.); and
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Creating an evidence base to support community planning in the three areas of technical/empirical data, local knowledge and strategic analysis including: participation of communities in data collection; release of data to communities; support to help communities use data; community forums, strategic roundtables and conferences about best-practices for resilience.
Source: Victoria State Government, Department of Land Planning and Community Development (2011), “Indicators of community strength in Victoria: framework and evidence”.
Summary of assessments and recommendations
This section summarises the study’s assessment of DRM policies in Bandung (Indonesia), Bangkok (Thailand), Cebu (Philippines), Hai Phong (Viet Nam) and Iskandar (Malaysia), and presents the following main findings and recommendations.
Main findings
Preparedness: Southeast Asian cities are largely underprepared for natural disaster risks, especially as regards vulnerability and risk assessment practices. Comprehensive hazard assessment and mapping is not uniformly employed, which is particularly harmful for identifying and protecting low-income communities at risk.
Land-use: Land-use policies do not often consider DRM, which has resulted in continued urban development in risk-prone areas.
Urban infrastructure: Two-thirds of Asia’s infrastructure needs by 2050 still have to be built and financed, thus providing an opportunity to factor in resilience to natural disasters. The large need for infrastructure investment will require large-scale private sector engagement. To this end, public finance plays a critical role to facilitate, leverage and guide private investment. At the city level, this is a challenge when tax revenues collected by local governments are often small.
Insurance: Adequate private and public insurance mechanisms to share disasters risks are not well developed in the case study cities. Almost three-quarters of all financial damages globally are not insured, and this insurance gap is even more pronounced in Asia.
Governance: The co-ordination mechanisms between national and local governments are often lacking or not clearly defined, obstructing the implementation of national policy frameworks (when they exist) at the local level.
Stakeholder engagement: While engaging local communities from the early stages of decision-making can help develop more effective and inclusive DRM strategies and frameworks, such opportunities are not always offered in the case study cities.
Recommendations
Conduct a comprehensive vulnerability and risk assessment to develop a local resilience action plan.
Vulnerability and risk assessments and local resilience action plans are tailored to local conditions and rely on multi-level, multi-stakeholder engagement to identify and prioritise DRM policies, plans, and investment actions. They are the first step to enhancing urban resilience and are vital to the success of a long-term DRM framework. Developing data and indicators for DRM at the metropolitan level is another key step.
Adopt risk-sensitive land-use policies combining regulatory and fiscal instruments to guide urban development away from risk-prone areas.
Given the continued pressure for urban development, effective design and implementation of land use strategies and policies is needed to guide private investment, minimise risks and avoid locking cities into vulnerable development patterns that will be costly to reverse in the long run.
Integrate disaster risk management policies and urban green growth policies, especially in the infrastructure sector, to generate “co-benefits”.
Complementarities and synergies are often found between disaster risk management and urban green growth policies, which can produce cost-effective “co-benefits”. Financing resilient urban infrastructure can be achieved through economic instruments (property taxes, fees, tariffs, and land-value capture mechanisms) that promote DRM and diversify local tax revenues.
Develop disaster risk financing mechanisms to serve as a backbone of effective disaster response planning.
Contingency funds, catastrophe bonds, and insurance schemes can drastically reduce risk exposure. Promoting a multi-layered approach that combines disaster risk financing mechanisms can provide a stronger safety net, limit financial exposure of the central government to disaster risk, and encourage multi-level governmental co-ordination.
Promote the use of information and communication technologies.
Investing in social and human capital and enhancing the availability and quality of innovative emerging information and communications technology is also a potentially useful approach. Key tools include early warning systems, emergency services, and other disaster response efforts in sectors such as transport, energy, water and solid waste.
Foster vertical and horizontal co-ordination to foster a “whole-of-government” approach.
National governments have an important role in aligning national and subnational DRM policies and creating an enabling environment that allows local governments to act more effectively and efficiently. Establishing a dedicated DRM agency will help to facilitate horizontal co-ordination among sectoral departments as well as vertical coherence across levels of government. Conducting in-depth country reviews of urban DRM policies can also be useful to provide a neutral assessment of the current state of play, consider options to fit for the future, and guide public action and decisions.
Engage with stakeholders to promote inclusiveness and encourage a culture of DRM.
Co-ordinated response mechanisms between civil society and local governments as well as public awareness campaigns targeting citizens, especially those at greatest risk, and financially vulnerable is critical to enhance urban resilience. Local authorities can encourage the private sector, notably SMEs, to design business continuity and post-disaster recovery plans to reduce economic disruption to their activities.
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Notes
← 1. In 2014 USD 1 = VND 21,148.00 World Bank (2016), Official exchange rate (LCU per US$, period average), available at: http://data.worldbank.org/indicator/PA.NUS.FCRF (26 April 2016).
← 2. The definition of critical infrastructure varies from country to country. This paper is based on the following definition by the European Commission: “an asset, system or part thereof located in Member States which is essential for the maintenance of vital societal functions, health, safety, security, economic or social well-being of people, and the disruption or destruction of which would have a significant impact in a Member State as a result of the failure to maintain those functions” (COUNCIL DIRECTIVE 2008/114/EC of 8 December 2008 on the identification and designation of European critical infrastructures and the assessment of the need to improve their protection).
← 3. “Financial Protection”: in the context of disaster risks, the level of payment to be expected based on the occurrence of a disaster event and/or the specific costs incurred as a result of a disaster event (e.g. property insurance contract, parametric insurance contract, catastrophe bond, government compensation or financial assistance for disaster losses)” (OECD, 2017).
← 4. A “cloudburst” is an extreme precipitation event.
← 5. Close co-ordination between national and local governments neatly encapsulates the need for effective assessment practices (policy) and a whole-of-government approach to derive co-benefits between different policy objectives, so as to deliver long-term financial and material dividends.