Some science-related

strategic challenges


A report for the UK
Government Office for
Science

Ariel Research Services
February 2013

Written by Michael Reilly
+44 (0)7986599791
michael@arielresearchservices.com
www.arielresearchservices.com



Prospero and Ariel by Steering for North
2012 All rights reserved


This report has been commissioned by the UK Government Office for Science. The views expressed
in this report are not those of the UK Government and do not represent its policies.





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5. Recovering from disasters
Summary
More research is needed on how populations successfully recover from disasters because
ex-post disaster policy represents an important pathway to improved societal outcomes.
Nassim NicholasTaleb has been arguing that the opposite of fragility or vulnerability is not
resilience but anti-fragility and the concept has some promise. On a macroeconomic level,
countries with higher literacy rates, better institutions, higher per capita income, higher
degree of openness to trade, and higher levels of government spending, seem to be better
able to withstand the initial disaster shock and prevent further spillovers into the
macroeconomy. Once disaster has struck, in-flows for richer countries are predominantly
new lending from multilateral institutions but they are largely offset by reductions in private
money flows. In contrast, for poorer countries foreign aid flows in, but it is bolstered by
private remittances to the extent that in-flows account for around four-fifths of estimated
damages. Catastrophic disasters can induce political volatility by opening up political
systems to deeper scrutiny thereby provoking useful structural change than can contribute to
longer-term recovery. Developing country populations, females, older people, ethnic
minorities, those with prior psychiatric problems or with weak or deteriorating psychosocial
resources have an increased likelihood of impairment from disasters. It is often serious and
ongoing financial problems that produce the most severe, lasting, and pervasive
psychological effects. Self-efficacy, on the other hand, has been found to be important to the
recovery of a wide variety of traumas. An infusion of self-efficacy into groups like friends,
families and communities bound by social capital thereby creating a therapeutic
community - could have a powerful impact on disaster recovery. Societies respond to
technological or man-made disasters in qualitatively different ways from natural disasters
and recovery may be more challenging.
A cynical view
Based on a UN definition of great natural catastrophes, data from Munich Re for the 1950s
onwards suggests that both the number and the overall losses of natural disasters has been
rising on an upward trend (Munich Re, 2013). Against a backdrop of future drivers such
globalisation, environmental change, economic growth and urbanisation, researchers has
been investigating ways to improve ex-ante disaster policy by enhancing the resilience of
populations to natural disasters and reducing their risk (Foresight, 2013).
Past experience, though, invites a more cynical view of future policy. Politicians, as
representatives of the public, are prone to hyperbolic discounting and may be biased against
ex-ante policies especially if they require significant investment with an uncertain return
(Kahneman, 2011). And political scientists suggest that political externalities mean that
sharing the responsibility for reducing disaster risk may be less appealing than monopolising
the political benefits of aiding disaster recovery (Depoorter, 2006). Much less research is
available on how populations actually recover from disasters - understandable given that
rebuilding damaged lives in a dangerous environment has a higher priority than conducting
rigorous empirical analysis - but ex-post disaster policy represents a further pathway to
better outcomes.

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Resilience vs anti-fragility
Resilience, an increasingly cited aspiration for ex-ante disaster policy, has been defined by
the Intergovernmental Panel on Climate Change as:
The ability of a system and its component parts to anticipate, absorb, accommodate, or
recover from the effects of a hazardous event in a timely and efficient manner, including
through ensuring the preservation, restoration, or improvement of its essential basic
structures and functions.
However, Nassim NicholasTaleb has been arguing that the opposite of fragility or
vulnerability is not resilience. Instead he has coined the term anti-fragile to describe
systems that actually thrive in the midst of uncertainty (Taleb, 2012). Like many of Talebs
propositions, it has been publicised much more vigorously than it has been applied to policy,
but the concept has promise.
Natural disasters creative destruction?
That the costs of disasters are increasing is also a positive sign of economic development.
The state of knowledge on the macroeconomic costs of disasters has been at times
contradictory but can be summarised thus:
disasters have larger relative adverse impacts on developing, than developed, countries
the nature and overall magnitude of impact varies between types of hazard climatological
hazards have negative long-term economic impacts, particularly in lower-income
countriesearthquakes may have positive long-term macroeconomic consequences for
middle and upper income countries but negative consequences for lower income states
severe disaster events do not have positive economic impacts under any circumstances.
(Benson, 2012)
That earthquakes can have positive long-term impacts arises partly from the economic
opportunity of reconstruction. Not enough is yet known about the ways in which disaster
impacts work their ways through economic systems and influence outcomes. In addition, the
methodological problem of finding accurate counterfactuals in order to compare results with
or without impacts is difficult. Recent analysis using a carefully constructed counterfactual
suggests, for example, that the long-term costs of hurricanes may be underestimated
(Coffman & Noy, 2009).
The possibility remains, however, that Joseph Schumpeters theory of creative destruction
could hold in special circumstances: a natural disaster may be a catalyst for the creation of
more productive enterprise. In this instance, the response would be an example of Talebs
anti-fragility.
On a general macroeconomic level, then, what are the factors that aid disaster recovery?
Countries with higher literacy rates, better institutions, higher per capita income, higher
degree of openness to trade, and higher levels of government spending, seem to be better
able to withstand the initial disaster shock and prevent further spillovers into the
macroeconomy (Noy, 2009). What underlies these findings is the crucial ability to mobilise
and deploy resources effectively for reconstruction. Ex-ante policy is important here because
- for a variety of reasons - natural disaster insurance markets are immature and incomplete
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(Foresight, 2013). Ex-post economic policy also has to be innovative - counter-cyclical fiscal,
and special monetary and exchange rate policies may be necessary (Cavallo & Noy, 2010).
The ties that bind
Financial flows into the disaster area, then, are critical to recovery. But the nature of these
flows seems to be quite different for richer and poorer countries. Dean Yang at the University
of Michigan when looking at the financial flows that followed hurricanes noticed a striking
distinction (Yang, 2008). Once disaster has struck, in-flows for richer countries are
predominantly new lending from multilateral institutions but they are largely offset by
reductions in private money flows. In contrast, for poorer countries foreign aid flows in, but it
is bolstered by private remittances to the extent that in-flows account for around four-fifths of
estimated damages. It is an illustration of the remarkable microeconomic power of social
capital in poorer countries. Many recommendations seeking to localise risk management and
to address market failure in natural disaster insurance propose to harness this binding force.
These results also infer that richer and more individualistic countries that suffer natural
disasters may struggle to reconstruct if lending from fiscally-pressed multi-lateral institutions
diminishes and private flows remain risk-averse, ex-post.
Never let a serious crisis go to waste
Schumpeters forces of creative destruction may also apply to institutions in the aftermath of
disaster. Political stakeholders in an institution can produce dysfunctional equilibria that are
resistant to all but violence (Fukuyama, 2011). Catastrophic disasters can induce political
volatility by opening up political systems to deeper scrutiny (Pelling & Dill, 2006). For
example, important structural changes were observed in the societies affected by the Indian
Ocean Tsunami of 2004, which arguably contributed to a peace process in Indonesia and a
conflict in Sri Lanka (Birkmann, et al., 2010).
The technological disaster at the Fukishima Dai-ichi nuclear plant in 2011 has had several
important institutional and political impacts. Japan has been deeply affected by the strong
local response to the disaster and the institutional failings it has revealed in central
government and Tokyo Electric Power (TEPCO) (The Economist, 2011). The political
aftermath has been a quest for greater decentralisation of power from Tokyo to under-
appreciated regions like socially-resilient Tohoku, and a re-evaluation of its less than anti-
fragile energy policy. In the past major earthquakes have been precursors for renaissance in
Japan and some believe this disaster will be no different.
Vulnerability to impairment
A macroeconomic perspective aggregates the factors that affect recovery. But, as in Japan,
societies of highly inter-dependent regions, communities, families, friends and individuals
can surprise. Even at a more micro level, we have to rely on stylised characteristics of those
who are most impaired by disasters. In a meta-analysis of disasters from 1981 to 2001,
researchers found that you were likely to be impaired if you live in a developing rather than a
developed country, were a youth rather than an adult and if you experienced mass violence
(Norris, et al., 2002). For adults, being female, older, an ethnic minority, having prior
psychiatric problems or having weak or deteriorating psychosocial resource increased the
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likelihood of impairment. For young people, the likelihood of impairment depends on their
families.
A recurring finding is that loss of material resources has a larger impact on mental health
than pre-existing psychological functioning and disaster exposure (Jenkins, 2012). It is often
serious and ongoing financial problems that produce the most severe, lasting, and pervasive
psychological effects (Norris, et al., 2002).
The primacy of self-efficacy
A recent psychological insight is that for some people a degradation of their environment
also induces a deep-seated longing for the past the neologism, solastalgia, has been
coined for this phenomenon (Albrecht, et al., 2007). This seeking of solace in the past may
provide a further clue to what many experts believe to be the most important psychosocial
determinant for disaster recovery. Self-efficacy, or perceived capability to manage ones
personal functioning and the myriad environmental demands of the aftermath occasioned by
a traumatic event, has been found to be important to the recovery of a wide variety of
traumas (Benight & Bandura, 2004). Self-efficacy is in effect a propensity to adapt
constructively to ones circumstances and is in many ways the opposite of avoidance and
stasis. It may be a firmer empirical hook on which to hang Talebs vaguely explained concept
of anti-fragility.
Early responses to disasters are undoubtedly driven by aid workers who possess self-
efficacy. At a micro-level, then, self-efficacy may be a crucial trait to inculcate in the
therapeutic communities that can help societies successfully emerge from natural and
technological disasters.



Figure 5.1, Analysis of the structural paths of influence of resource loss, active and avoidant
coping, and perceived coping self-efficacy on acute and long-term distress measured
following Hurricane Andrew. Source: (Benight, et al., 1999).
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Dont bowl alone
Remittances and families, then, are important for disaster recovery. The extraordinary
response of Tohoku in Japan to the March 2011 tsunami and the Fukishima Dai-ichi
technological disaster that followed also suggests that social ties more generally are
influential (The Economist, 2011).
Daniel Aldrich, a political scientist at Purdue University, goes much further. He calls social
capital an engine for recovery and argues that disaster response is far too weighted
towards physical rather than social infrastructure. He cites the examples from the 1995 Kobe
earthquake in Japan to the 2004 Indian Ocean tsunami where communities that had higher
levels of social capital seemed to recover from these disasters better than those that did not
(Aldrich, 2010). An infusion of self-efficacy into groups like friends, families and communities
bound by social capital thereby creating a therapeutic community - could have a powerful
impact on disaster recovery. In the absence of bridging social capital across groups,
however, the effect may be diminished.
A crucial caveat: technological disasters are different
Societies respond to technological or man-made disasters in qualitatively different ways from
natural disasters (Kasperson & Pijawak, 1985). There is often have no advance warning of
technological disasters and they are usually novel incidents. The recovery phase is also
distinct - early response may be more challenging and compressed in time with a much
greater dependency on authority for information. Because the risk of the hazard and the
exposure is often over-estimated, evacuation can be voluntary. Technological disasters also
invoke a higher degree of loss of control ex-post, which can lessen the power of self-
efficacy. Whereas natural disasters anthropogenic climate forcing notwithstanding are
considered as acts of God subject to a social force majeure, for technological disasters
blame is sought and political conflict is more likely. This confusion, disharmony, and fear can
impede the emergence of a therapeutic community.

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References
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Benson, C., 2012. Indirect economic impacts from disasters, London: Government Office for
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Noy, I., 2009. The macroeconomic consequences of disasters. Journal of development
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