Adaptation to Reduce Indirect Losses

Adaptation options able to reduce direct losses were discussed in Section 4.2. But different adaptation options may be able to reduce indirect losses, independently of direct losses. As explained in Section 5.1, indirect losses arise mainly from propagation between sectors and from production losses during the reconstruction. Measures can be implemented to limit these two sources of indirect losses.

First, a resilient economic, i.e. an economy able to cope with a disaster in an efficient manner, is an economy where all producers are not too dependent on their suppliers. This can be the case (1) if the production of the most important production factors (especially the non-stockable goods like electricity) can be rapidly restored; (2) if each company has several redundant suppliers, implying that if one of its suppliers becomes unable to produce because of the hurricane, the company will not be forced to stop its own production; (3) if companies have inventories and can keep producing even when a supplier cannot produce. In that respect, the most recent and efficient industrial organization, with a limited number of suppliers, on-demand production, and small stocks, increases the vulnerability of the economy to disasters.

The resilience is also increased if imports from outside the affected region can replace local production. To do so, essential infrastructures have to be repaired as fast as possible, to reconnect the affected region to the rest of the economy: roads, railways, ports, airports, phone, internet, etc. Much can be done to improve this aspect of resilience: (i) making sure that utility companies and the organizations in charge of transport and communication infrastructures can mobilize enough workers to restore rapidly their services; (ii) facilitating imports in case of disasters (e.g., by simplifying administrative requirements).

Emergency services can also be improved, emergency management plans can be established and maintained, and new institutional structures can be created (see for instance, Hecker et al., 2000), to facilitate a more rapid recovery after the event.

Second, reconstruction must be done as fast as possible to restore production and housing. First, utility companies and the institutions in charge of transport infrastructure must be equipped to face large-scale disasters and reduce as much as possible the period during which their production is interrupted or unreliable. Second, the construction sector has a specific role in a disaster aftermath. There are numerous examples of cases where the reconstruction was slowed down by the lack of qualified workers in the construction sector. For instance, after the explosion of the AZF chemical plant in Toulouse in 2001, tens of thousand of windows had been damaged, and the number of glaziers was far insufficient to satisfy the demand, even though glaziers from all over France came to Toulouse. In the same way, after the particularly destructive hurricane season in 2004 in Florida, roofers were unable to satisfy the demand and reconstruction costs increased by up to 40 percent in some regions (Hallegatte et al., 2008). In most cases, reconstruction involves a few specialties (among which glaziers and roofers), and increasing the number of such specialists can reduce in a significant manner the reconstruction duration. As a consequence, preparing for disasters by organizing a special status for foreign workers in this needed specialties can speed up the reconstruction, and therefore reduces the total cost of a disaster. Also, administrations can facilitate reconstruction, for instance by making it easier and faster to obtain building permits.

Finally, disasters can also be opportunities. For instance, when a factory has been destroyed, the reconstruction can be done using the most efficient new technology, therefore improving productivity. Examples of such improvement are: (a) for households, the reconstruction of houses with better insulation technologies and better heating systems, allowing for energy conservation and savings; (b) for companies, the replacement of old production technologies by new ones, like the replacement of paper-based management files by computer-based systems; (c) for government and public agencies, the adaptation of public infrastructure to new needs, like the reconstruction of larger or smaller schools when demographic evolutions justify it. Capital losses could, therefore, be limited by a higher productivity of the economy in the event aftermath (see also Albala-Bertrand, 1993; Stewart and Fitzgerald, 2001; Okuyama, 2003; and Benson and Clay, 2004). Several factors, however, make it doubtful that this effect is totally effective in disaster aftermaths (Hallegatte, 2008b). First, production has to be restored as fast as possible to avoid unbearable losses, especially for small businesses. Second, the productive capital is most of the time only partially destroyed, and the remaining capital creates "inheritance" constraints on the replacement capital, preventing the embodiment of new technologies or the adequacy of the capital to new needs.

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