Financial Planning for National Disaster

Financial Planning for National Disaster Abstract Whether natural or fabricated, disasters strike unexpectedly. When they occur, they can cause serious disruptions in the normal way of life of the affected communities. Aftermaths of a major disaster in a society often shatter routines, disrupt jobs, and/or destroy property and people’s lives.Advertising We will write a custom report sample on Financial Planning for National Disaster specifically for you for only $16.05 $11/page Learn More If it were possible, disasters would be avoided at all cost because the emotional toll, financial impacts, and disruptions that they cause are very traumatic to the affected society. In line with the realisation that it is difficult to stop some hazards that cause disasters from happening, there have been sustained efforts from the international community to focus on disaster risk reduction and disaster planning. This comparative research on Turkey and Mexico presents the financial arrangement for national catastrophes in the two countries. The goal is to shed light the key measures that the two countries have put in place towards reducing and planning for the many risks that are associated with disasters. Introduction Disaster Risk Reduction (DRR) and Disaster Planning are efforts that are undertaken by a given community or a nation towards promoting disaster preparedness and resilience. In the event of a hazard, the losses of property, injuries, loss of lives, and disruptions to the social and economic wellbeing of the society are greatly reduced and/or eliminated altogether (Ragin, 2004). Owing to the enormous financial losses that are associated with disasters, as well as the financial resources that are required to respond and/or to lead recovery plans, financial planning has become a major tenet of the modern disaster risk reduction and disaster planning activities around the world.Advertising Looking for report on business economics? Let's see if we can help you! Get y our first paper with 15% OFF Learn More This comparative study of Turkey and Mexico discusses the financial planning for national disasters in the two countries with an aim of bringing to the fore the key measures that the two countries have undertaken towards ensuring disaster risk reduction and planning and hence reducing the impact of disasters whenever they occur. Country Profiles and Disaster Management Situations Turkey Turkey is the most disaster-prone country in Europe. It has a long history of natural disasters, majorly earthquakes, which have caused serious disruptions to the Turkish communities in the past (MCEER, n.d). The nation of approximately 80 million people is 80% mountainous. As Sengezer and Koa (2005) confirm, â€Å"Primary and secondary risk zones cover 66% of the country† (p. 173). Geologically, the nation lies at the boundary of the African and Arabian plates, which are both moving towards the north. Following the continuous movement of the plates, a large-scale fault line of more than 1000 kilometres referred to as the North Anatolian Fault (NAF) has formed from the eastern to the western side in the northern territory of Turkey. Along this fault line, many earthquakes have occurred in Turkey. Figure 1: Map of Turkey Showing the North Anatolian Fault (NAF) and other tectonic features Source: (Sengezer Koa, 2005)Advertising We will write a custom report sample on Financial Planning for National Disaster specifically for you for only $16.05 $11/page Learn More The history of Turkey cannot be precise without a mention of major disasters that claimed thousands of lives in the 20th century. For instance, in 1939, an earthquake struck Erzincan City that is located in the eastern part of Turkey. According to MCEER (n.d), â€Å"This earthquake devastated most of the city and caused approximately 160,000 deaths† (Para. 5). Ranguelov and Bernaerts (n.d), it killed between 30, 000-40, 000 people in addition to economic losses that almost brought the city to closure. The same city was the victim of another earthquake in 1992 where more than 700 people perished. In this last earthquake, although the figure that represented the lost lives was significantly lower than the previous earthquake of 1992, losses that were incurred through damages of property, including collapse of buildings, destruction of social amenities, and devastation of important infrastructures were enormous. In fact, Ranguelov and Bernaerts (n.d) say, â€Å"The famous Erzincan earthquake (M~8.0) on 26 December 1939 generated many effects†¦ as well as big destruction and many human deaths (more than 30-40 000)† (p. 62). The situation required massive financial resources to bring back the city to its previous state. However, the turning point in the approaches to disaster management came after 1999 following the crucial lessons that were learnt from two earthquakes, namely Izmit Earthquake a nd Duzce Earthquake. The first earthquake, Izmit, occurred in the late 1999 at a magnitude of 7.6. It caused tremendous loss of human lives and property. This earthquake caused the deaths of more than 17,000 people, especially in the hardest-hit Marmara region where over 31, 000 commercial buildings were destroyed (Bibbee et al., 2000).Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More It is estimated that more than 120000 houses were irreparably damaged while between 27000 and 35000 others had to be demolished due to the irretrievable dents. The cost of the earthquake was estimated to be roughly USD3billion. In November 1999, another earthquake, the Duzce, which was approximately 100km from the first earthquake, occurred again along the NAF region. It was recorded to have had a magnitude of 7.2. This earthquake led to death of approximately 1000 people. It brought about numerous injuries and destruction of property. Previously, the disaster management approaches that were used by the Turkish government were focused on disaster recovery. There was no motivation for disaster risk reduction or disaster planning at the time. However, since then, the government and the international community have increased efforts to establish elaborate disaster risk reduction and disaster planning to minimise the impact of the disasters as will be discussed later. The chart below sh ows how the Turkish government has developed an organisational chart that addresses various catastrophe management roles. Mexico Located in the â€Å"fire belt† where more than 80% of the world’s seismic activities occur, Mexico is a nation that has suffered many geological disasters. Further, because of its diverse geographical landscape and climatic conditions, Mexico is exposed to a variety of natural hydro-meteorological hazards such as earthquakes, hurricanes, floods, wildfires, volcanoes, and droughts. For instance, in the period 1970-2010, more than 60 million people in the country that has a population of 113 million people had been affected by natural disasters. These figures have placed Mexico in the top 30 nations in terms of exposure to three or more natural hazards (World Bank, 2005). Annually, it is estimated that more than 90 earthquakes of a magnitude of more than 4.0 in the Richter scale are recorded in Mexico. Almost all territories in Mexico, includ ing the Mexico City, are located in earthquake-prone zones. In addition to the earthquake risk, Alva-Valdivia et al. (2000) confirm that Mexico City lies within the Trans-Mexican Volcanic Belt that is well known for its nine active volcanoes that have been a major risk to natural disasters in the region. The risk of tsunami is very real in Mexico, especially along the nation’s Mexico Pacific Coast. In addition, hydro-metrological disasters frequently affect the nation where the events range from severe tropical cyclones to heavy rainfall events and high-intensity storms along the Pacific and Atlantic Coasts. The agricultural sector is also faced with the risk of droughts, which can be very disruptive to many people whose main economic activity is farming. The nation has experienced an increased risk of disasters, especially following the evident amplified economic growth and urbanisation. For instance, more than 75% of the population in Mexico lives in urban cities. Mexico Ci ty, which is the world’s fifth largest city, has seen a rapid increase in its population. With the augmented economic wellbeing and urbanisation, more assets, infrastructure, and social amenities have become essential. Consequently, they have increased the risk of loss of lives and property in the region (World Bank, 2005). Another significant risk factor in the Mexican nation is the tendency of people who have lower incomes to conglomerate in high-risk zones such as slums or mountainous areas, as well as exposure to poor quality infrastructure that is susceptible to destruction in case of a natural disaster such as earthquakes or hurricanes. In the past, Mexico had various disasters that had major impacts on the society. Such catastrophes have revolutionised how disaster management approaches and efforts are coordinated. For instance, in 1985, one of the largest earthquakes in the Mexican history occurred. The Mexican city earthquakes of September 19 and 20, 1985 with a magn itude of 8.1 and 7.3 respectively, had the highest impact. They affected millions of people. Firstly, the earthquakes led to the loss of lives of more than 6000 people. They also led to direct and indirect losses that were estimated at USD$8.3billion. They are among the costliest disasters in the history of Mexico (Editors of Encyclopaedia Britannica, n.d). Almost 87% of the total losses were recorded from the destruction of building and infrastructure while the remaining 13% went to the loss of productivity, increased cost of service provision, loss of income, emergency response, and temporary rehabilitation. More than 1700 schools were damaged while approximately 30% of hospital capacity in the Mexico City was destroyed. More than 250,000 people became homeless while other 900,000 citizens had their homes damaged. In fact, Editors of Encyclopaedia Britannica (n.d) say, â€Å"More than 400 buildings collapsed, and thousands more were damaged† (Para. 3). Of all the major disa ster occurrences in the history of Mexico, the 1985 Mexico City earthquakes marked an awakening point where the nation of Mexico put more sustainable efforts and emphasis towards disaster risk reduction and disaster planning. Previously, the focus had been on disaster recuperation. However, the impact of these two earthquakes clearly showed that recovery was very costly and that it would cost less to have risk reduction measures to trim down the impact of disasters on the community and nation. Henceforth, Mexico has done a commendable work towards the establishment of disaster risk reduction initiatives that have greatly helped the country in terms of early warning, financial planning, and resilience of the vulnerable communities. Comparison of the Financial Planning for National Disaster in Mexico and Turkey Financial planning for national disaster refers to the efforts that a given nation puts towards disaster risk reduction and disaster preparedness to reduce the financial impact of disasters in case they occur. The financial losses that happen in large-scale disasters are highly disruptive. Sometimes, they require the intervention of the international community for the country or the affected communities to recover wholly. If disasters are not anticipated and financially planned for, the risk of delays in post-disaster response often worsens the adverse human and economic consequences. As such, disaster risk reduction efforts offer the best chance for a country to take a proactive role in preventing or drastically reducing the losses that it may suffer in the event of a disaster (Arnold, 2008). Both Turkey and Mexico face high levels of risk for disaster events. Their history is marred by major disaster events, which have marked an awakening point when the need for disaster risk reduction, including financial planning has become evident as the way to go in addressing future disaster occurrences (Stallings, 1997). With the two countries featuring in the top -ten list of nations that have a high risk for natural disasters, with Mexico at position five and Turkey at position 8, the need for disaster risk reduction and disaster preparedness can only be ignored at the peril of the two nations. In other words, it is no longer tenable for the two nations to sit and wait for a disaster to occur without initiating any recovery plans. From the two 1999 earthquakes in Turkey, where â€Å"At least 17,118 people were killed, nearly 50,000 injured, thousands missing, about 500,000 people homeless and estimated 3 to 6.5 billion U.S. dollars damage in Istanbul, Kocaeli and Sakarya Provinces† (MCEER, n.d, Para. 20), the government was put in a difficult place. Finances that were meant for other development activities and the provision of services to citizens were diverted and directed towards disaster recovery efforts. More than ever, there was a need for the government to revisit its disaster management and response strategies to ensure that s uch events and disruptions would never face the nation again. In recognition of the need to establish an elaborate disaster risk reduction and management approaches to reduce the economic impact of future disasters on the people and the government, Turkey put forward a ten-year roadmap from 1999 to achieve the goals of a well-established disaster risk reduction and management apparatus. The plan included, â€Å"the establishment of a national information centre for processing of all kinds of earthquake data, such as the preparation of earthquake catalogues and earthquake hazard maps of Turkey† (Bibbee, Gonenc, Jacobs, Konvitz, Price, 2000, p. 19). During this time, a wide consolation and involvement of experts from different organisations such as the United Nations Office for Disaster Risk Reduction, the USAID, and JICA among other bodies that had an extensive experience in disaster risk reduction efforts around the world were engaged. These efforts were aimed at ensuring su ccessful formation of elaborate policies and authorities that would be in the forefront to coordinate disaster risk reduction efforts in Turkey (Cummins Mahul, 2009). Besides, the framework below was successfully adopted to address disasters in the country. At the end, the government saw that the future of disaster risk reduction lay in the establishment of a central authority that would lead in the coordination of disaster risk reduction efforts that covered preparedness, financial planning, and resilience. The first step in this process was the collapsing of the existing institutions that were focused on disaster management. They had many inadequacies that hindered their capacities to respond to disaster occurrences. The institutions that collapsed included the Directorate General of Civil Defence, Directorate General of Disaster Affairs, and Directorate General of Turkish Emergency Management. Instead, in 2009, a new umbrella body of all organisations that dealt with disaster m anagement was formed. The body became the Disaster and Emergency Management Presidency (IFAD in Turkey) under the Prime Minister. The IFAD was given enormous resources and authority to be the sole authority in all efforts that were geared towards disaster risk reduction, preparedness, emergency response, and recovery. However, much of the organisation’s efforts have concentrated on preparedness and risk reduction. For instance, the organisation is actively engaged in promoting insurance schemes towards disasters, which have been absent in the nation for a long time. In addition, according to Anan (2011), IFAD recognises the importance of financial planning towards disaster risk reduction. In this case, unlike in the past, the organisation has a strong financial resource base that is allocated by the central government to allow it to carry out disaster risk reduction awareness activities while at the same time responding promptly in the event of a disaster emergency in the cou ntry. The success of the organisation has already been tested and proven, especially during the Elazig Simav and Van earthquakes where the organisation intervened swiftly and responded accordingly to help victims and/or offer disaster recovery plans. Currently, 1% of the national budget of the Turkish government goes to the IFAD, which represents one of the highest percentages of money that is set aside by governments towards DRR in Europe. The situation in Mexico follows almost the same script as that of Turkey. Accordingly, for a very long time, disaster management and coordination efforts were dedicated towards disaster recovery. Very little efforts were focused on disaster risk reduction. Indeed, the 1985 Mexico City earthquake, which in its aftermath left over 6000 people dead and over USD$8billion of financial and economic losses, was the awakening point that effectively changed disaster management and coordination efforts in Mexico forever. In the aftermath of the disaster, t he Federal Government of Mexico (GoM) established a National Commission for Reconstruction in October 1985 to coordinate disaster recovery and reconstruction efforts (Arnold, 2008). After the recovery, efforts were commissioned to start the process of ensuring that future disasters would not have such devastating impacts in Mexico. In 1986, the Sistema Nacional de Protection Civil (SINAPROC) was established as an umbrella body for various government bodies, as well as non-governmental organisations whose mandate was to promote engagement between these bodies to ensure that good approaches to future disasters would be deliberated and adopted where necessary. The SINAPROC, which is now under the control of the Ministry of Interior, is charged with the coordination of disaster risk reduction efforts. Under the leadership of SINAPROC, a Natural Disaster Fund (FONDEN) was established to ensure financial preparedness in the event of a disaster in Mexico. Through this fund, the government of Mexico is now able to dedicate not less that 0.4% of the nation’s budget to disaster risk reduction efforts and recovery. The funds that are available through the kitty can be used to towards emergency response, infrastructure reconstruction, building of low-income housing, and other efforts that are geared towards cushioning the community and government from financial shocks during disasters. While a large share of the budget of FONDEN goes towards disaster recovery, a significant share goes towards disaster risk reduction efforts (Cummins Mahul, 2009). The success of the fund, especially in disaster risk reduction, has been evident through the establishment of an elaborate early warning system for major hazards in the country such as volcanic activities, hurricanes, storms, droughts, and earthquakes, which have helped communities to prepare early or to be evacuated to safety before any disasters strike. A good example is the Hurricane Dean, which did not cause any direc t death in the nation, despite its magnitude. Other success stories of the fund have been evident through the collaboration between SINAPROC, which has ensured consistent adoption of better housing codes such that buildings and infrastructure can withstand earthquakes and hurricanes and hence greatly reduce the impact of the disaster on the society (Cummins Mahul, 2009; Neuman, 2006). In addition, the increasing adoption of insurance covers towards disasters is a clear indication of SINAPROC’s efforts towards the transferring of risk to third parties by property owners to guarantee faster recovery and return to the normal state of affairs in the event of disasters. While Turkey has had better success stories in its financial planning for national disaster efforts, Mexico has also achieved considerable success. Both countries are good examples of how disaster risk reduction efforts can greatly cushion the government and society from extreme impacts of disasters. For better di saster risk reduction efforts, both countries will have to dedicate more resources to financial planning and/or establishing collaborative efforts that will allow more partnerships with other nations and organisations to achieve better results in disaster risk reduction. Discussion The impact of natural and fabricated disasters can cause serious devastations to societies and nations. In many cases, the impacts overwhelm the affected nations’ capacity to cope with the situation. As such, the approach of waiting for disasters to occur to initiate disaster response and recovery efforts is no longer tenable (Twigg, 2004). It is very costly as evidenced in the case of Turkey and Mexico. The aftermath of disasters often leaves nations in economic disasters where they have to appeal to international allies for financial support towards recovery. Therefore, in this case, financial planning and preparedness forms a central tenet of disaster risk reduction, which organisations must ado pt to ensure that they can reduce the impact of disasters while at the same time helping in recovery efforts (McEntire, 2006). The success of financial planning in Turkey and Mexico is a good example of why nations around the world must put more efforts towards disaster management instead of applying the wait-and-see attitude, which often backfires on them while leaving hundreds of people dead, billions of dollars worth of properties’ destroyed, and other devastations that have a lasting impact. Conclusion The relevance of financial planning in disaster management and coordination has been laid bare in this paper. Despite the two countries being geographically separated and distinct, they face unique disaster risks that make them susceptible to disaster events such as earthquakes, floods, hurricanes, and other hazards. The path towards financial planning did not happen overnight. It followed hard lessons and bad experiences that the two countries faced from past disaster even ts. Consequently, disaster risk reduction efforts that encompass many programmes, including financial planning, play an important role in the two nations’ efforts towards disaster management and coordination. Reference List Alva-Valdivia, L., Goguitchaichvili, A., Ferrari, L., Rosas-Elguera, J., Urrutia-Fucugauchi, J. Zamorano-Orozco, J. (2000). Paleomagnetic data from the Trans-Mexican Volcanic Belt: implications for tectonics and volcanic stratigraphy. Retrieved from terrapub.co.jp/journals/EPS/pdf/5207/52070467.pdf Anan, K. (2011). Rural Poverty Report. Retrieved from ifad.org/rpr2011/report/e/rpr2011.pdf Arnold, M. (2008). The role of risk transfer and insurance in disaster risk reduction and climate change adaptation. Sweden: Swedish Commission on Climate Change and Development. 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