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- Haiti reconstruction cost may near $14 billion, IDB study shows
Haiti reconstruction cost may near $14 billion, IDB study shows
- By S Coward
- Published 16-Feb-10
- Haiti Earthquake
- Unrated
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Preliminary estimates
Feb. 16, 2010 -- The cost of rebuilding Haiti’s
homes, schools, roads and other infrastructure could soar to nearly $14
billion, according to a new study by economists at the Inter-American
Development Bank.
The
study offers a preliminary estimate of the potential damages resulting
from the January 12 earthquake, using simple regression techniques
employing data from past natural disasters
and their damage estimates. It takes into account several variables
including the magnitude of the disaster, the number of fatalities, and
the affected country’s population and per capita GDP.
A
detailed accounting of the cost of reconstruction will emerge in coming
months as a full Post Disaster Needs Assessment is completed. But the
new IDB study
indicates the cost is likely to be larger than anticipated. The study
calculates damages assuming either 200,000 or 250,000 people dead or
missing (as of Feb. 11, the Haitian government had reported 230,000
dead).
IDB
economists Andrew Powell, Eduardo Cavallo and Oscar Becerra calculated
a base estimate of $8.1 billion for a 250,000 dead-or-missing toll, but
they estimate this figure is likely to be at the low end and conclude
that an estimate of US$13.9bn is within the statistical margin of error.
While
the results are subject to many caveats, the study confirms that the
Haitian earthquake is likely to be the most destructive natural
disaster in modern times, when viewed in relation to the size of the
Haiti’s population and its economy. Indeed, in this respect the Haiti
earthquake was vastly more destructive than the Indonesian Tsunami of
2004 and the cyclone that hit Myanmar in 2008. It caused five times
more deaths per million inhabitants than the second-ranking natural
killer, the 1972 earthquake in Nicaragua.
Powell,
Cavallo and Becerra conclude that the scale of the damages in Haiti
will require unprecedented coordination among the multiple bilateral,
multilateral and private donors. To ensure the efficient use of
billions of dollars in reconstruction funds, for example, individual
donors may need to surrender the kind of control and conditionality
they typically demand of projects they finance. This will in turn
require extraordinary mechanisms to ensure transparency and
accountability.
Moreover,
a separate forthcoming study by Cavallo and others indicates that
countries hit by disasters on this scale suffer an economic setback
that can take decades to reverse. In several such countries,
investigators found that even with big inflows of outside aid, GDP per
capita was up to 30 percent lower 10 years after the disaster than it
would have been if the country had been spared.
“Of
course this does not necessarily mean that aid does not work, perhaps
the negative growth effect would have been even worse if aid had not
increased,” the study notes. “However, this does underline the
challenge ahead for Haiti and for the international community
attempting to support the country.”
