How much did Ondoy cost? For starters, try P23 billion

No stranger to storms, and yet none the wiser for it, the Philippines is reeling once again from the aftermath of a relatively mild weather disturbance that has cost billions of pesos in property and hundreds of lives lost. Nearly two weeks after tropical storm “Ondoy" dumped record rainfall in the nation’s capital and surrounding regions, the National Disaster Coordinating Council (NDCC) on Thursday estimated the damage from widespread flooding it caused at P10.45 billion, broken down into P3.864 billion in infrastructure and P6.766 billion in agriculture.

In its cost estimates, the government counts the damage to buildings like this but not to ordinary homes destroyed by disaster.GMANews.TV

But an independent rapid study brings the economic losses to more than twice that amount, based on government figures as of Oct. 8. Calculations derived from the official reports released by the NDCC, DepEd, and Department of Agriculture as well as statistical reports give a preliminary assessment of P23 billion, indicating that the government is grossly underestimating the impact of Ondoy. The amount does not even include the losses of flood victims like the family of lawyer Edward Lorenzo, whose two-storey house in a Quezon City suburb was one of the thousands that were ravaged by the storm. Two of their cars were submerged in the flood along with the entire first floor, which will take up to three months to renovate, he says. In addition to NDCC estimates, this initial assessment includes damage to housing and other infrastructure, civil aviation losses, and foregone revenues of 337 people who died in the floods. The economic cost also computes systems losses arising from the damage to infrastructure and related activities that impair productivity. With very limited data from the government and private sector, these estimates are conservative and do not include other items that were destroyed, as well as expenditures arising from the disaster. These include destruction of household items, foregone revenues and damage in assets of business establishments, unaccounted donations, sanitation and garbage disposal, water quality, environmental costs, destroyed sea transport, medical and burial expenses, and health expenses to curb water-borne diseases, among others. Irrecoverable land and income The calculations also used conservative assumptions in coming up with the figures for the cost to airlines from almost two days of canceled and delayed flights and access cost for students from the week-long class holiday. In disasters like “Ondoy," the fact that many of the fatalities could still have led productive lives is often overlooked. To calculate the foregone revenues from the dead, essential factors such as the distribution of the population according to age, life expectancy of Filipinos, and employment status were taken into account. Based on the latest census and human development report figures, the expected productivity of the 337 victims had they not perished in the disaster reached P360.2 million.

Sources: NDCC Situation Report No. 25, National Statistical Coordination Board, Department of Labor and Employment, National Wage and Productivity Commission, and 2007/08 Human Development Report

The figure is based on the average wage income of Filipinos, and do not reflect the potential earnings of businessmen like Tony Chua, manager of the basketball team Barako Bull, or David Fernando, co-founder of Smart Communications Inc. Like hundreds of others, they lost their lives in the unprecedented floods that affected both rich and poor in Manila. Similarly, with more than four million people affected by the storm, there is a huge loss in economic production that has not been measured. Assuming a five-day absence from work of the labor force, a conservative estimate of losses would amount to P2.358 billion in the agricultural and non-agricultural sectors. In the NDCC report, a huge chunk of the storm damage was recorded in agriculture. But what it failed to mention is that aside from direct losses, an additional P2.26 billion in losses from yearly foregone revenues are expected as 35,207 hectares of agricultural land were deemed to have “no chance of recovery," according to NDCC, citing DA figures. P23 assistance per affected person So far, the total amount of assistance from government agencies and NGOs is valued at around P97 million, including thousands of sacks of rice distributed to the victims. When correlated to the total number of affected persons in NDCC’s tally which stands at 4,119,658, however, the amount translates to a mere P23.51 per person. What can this buy? Aside from one kilo of NHA rice (P18.25), not much else really.

Sources: NDCC Situation Report No. 25, UNICEF (UN and GoP Joint Appeal valued at US$74,021,809, see http://www.unicef.org/media/media_51364.html), Bangko Sentral ng Pilipinas (exchange rate P/US$47.92, average of Jan-Sept 2009)

But then again, not all the victims benefited from disaster relief. According to the NDCC, only one-fourth of the affected population or 1,041,107 people received assistance. This means each person received P93.04 worth of assistance more than a week after “Ondoy" struck. The amount represents the value of social protection that the government has provided each person for such a catastrophic risk, which may increase as more support pours in but certainly does not compare with the properties and lives lost. As for evacuees, one interesting ratio to consider is the number of persons housed in the 455 evacuation centers, many of them public schools. On average, there are 632 persons in one evacuation center. But if all the individuals affected by Ondoy are taken into account, the ratio would reach 9,054 persons to one evacuation center. The figures, of course, vary by region. For instance, Central Luzon would have 14,219 evacuees per center if all affected persons are housed there. But in terms of actual occupants, only an average of 659 evacuees are found in each of the region’s 61 evacuation centers.

Source: NDCC Situation Report No. 25

Social impact If most of the affected persons are not getting any help, where do they go? Most likely, they get support from relatives, friends, and social networks. In economics and sociology circles, these are known as “informal arrangements" (as opposed to “formal arrangements" consisting of government or international support). When catastrophic events such as the massive flooding from “Ondoy" wipe out a host of material property that can be used as collateral, the only assets left are friends and relatives that act as social insurance. They are extremely valuable in allowing disaster victims to maintain their consumption patterns and go on with their lives, despite the sudden drop in income and spike in expenses as a result of the damage sustained during unexpected events. Where should the money go? In the wake of “Ondoy," United Nations Development Programme country director Renauld Meyer told a Senate hearing that $75 million worth of assistance would be sought for the victims. He said the package would include “distribution of food, non-food such as health equipment and blankets and clothing, shelter, education, health, and other very urgent needs" based on an assessment of the municipalities affected by the floods. However, no one has been talking about livelihood assistance for the families of the victims who died in the floods, especially those whose breadwinners died rescuing stranded individuals. Another priority would be the improvement of the capacity of the Philippine Atmospheric Geophysical and Astronomical Services Administration (Pagasa) to predict rainfall and its weather forecasting in general. One of its main weaknesses is the lack of Doppler radar equipment, as only one is currently operational in Baler in Aurora. Eight more are expected to be operational by the end of next year, but Pagasa chief Prisco Nilo has said previously that 12 are needed to cover the entire Philippines, which gets more than a dozen storms per year.

Despite the risk of getting swept away by floods again, squatters start rebuilding shanties under the San Mateo Bridge in Rizal after they were evicted from school evacuation centers. GMANews.TV

Funds are also needed to relocate residents living in hazardous areas and floodplains in order to prevent another disaster of “Ondoy’s" magnitude. Whether government officials will risk unpopularity by forcibly evicting squatters or rejecting applications for building permits in high-risk areas, however, is another question. Growth center The systems losses in these initial estimates include a report from Meralco that the damage it incurred from “Ondoy" reached P830 million, representing nearly one-third of its income for the first half of 2009. However, this does not include reports from the private sector such as the Philippine Chamber of Commerce and Industry, which estimated that businesses in metropolitan Manila suffered at least one billion pesos in losses from the floods. With much of the economic activity in the country centered in the National Capital Region and surrounding areas, the extent of destruction from “Ondoy" is certainly under-reported. Many of the areas around the Laguna de Bay have remained unproductive as these are submerged in floods. No doubt, the estimates of damage from “Ondoy" will rise as more official data is released. It would be good if the government, with its access to data and abundance of personnel, deems it proper to provide its constituents a true picture of the economic impact of “Ondoy." – GMANews.TV Assad Baunto holds master’s degrees in economics from Oxford University and the University of the Philippines. Yasmin Arquiza was a Reuters fellow at Oxford and is currently the managing editor of GMANews.TV. Both are recipients of the Ford Foundation's International Fellowships Program and have written research papers on development issues for various multilateral agencies.