LAHORE (PR) - The recent earthquake in Nepal has once again reminded us of the risks posed by natural disasters in South Asia region.
In Pakistan, approximately 3 million people are affected by natural catastrophes each year, which equates to approximately 1.6 per cent of the total population. According to an analysis of historical natural disaster data, since 1973 approximately 77 per cent of the all the people affected by natural disasters were impacted by flooding events.
Pakistan faces a major financing challenge arising from natural catastrophes, with flooding causing an estimated annual economic impact of between 3 and 4 percent of the Federal Budget.
These findings are presented in a report prepared by the World Bank in close partnership with the National Disaster Management Authority (NDMA), Ministry of Finance (MoF), the Securities and Exchange Commission of Pakistan (SECP), the Provincial Disaster Management Authorities (PDMAs) and the Provincial Finance Departments.
The objective of the report is to highlight fiscal impacts of frequent natural disasters on the budget of the Government of Pakistan and to present options for a national disaster risk financing strategy drawn from international best practices.
Preliminary analysis in this report estimates the annual economic impact of flooding at between US$ 1.2 billion and US$ 1.8 billion, equivalent to between 0.5 per cent and 0.8 per cent of national GDP; however simulations show that a major flood event (occurring, on average, once every 100 years) could cause losses in excess of US$ 15.5 billion, which equates to around 7 per cent of national GDP, equivalent to almost 40 percent of the Federal Budget.
To consider in terms of annual probability, there is a one per cent chance in any year that a major event of this size will occur. While the Government tries to meet the needs arising from the aftermath of natural disasters, the funding gaps especially for reconstruction of affected infrastructure lead to its deterioration especially the protective capacity resulting in additional losses in proceeding disaster events.
This report presents the Government of Pakistan with a series of options for consideration that could help the government increase its immediate financial response capacity against natural disasters and better protect its fiscal balance.