The Philippines could lose about 27 percent of its government revenue because of the impact of natural disasters, according to a report published by the United Nations Office for Disaster Risk Reduction Disasters (UNISDR) report.
The report, “2013 Global Assessment Report on Disaster Risk Reduction [GAR13]”, said the Philippines has “an equally significant fiscal vulnerability to wind damage.”
It added that these losses could easily exceed government revenue and potentially increase the debt burden.
“These types of losses are here defined as ‘fiscal losses,’ as they represent the sovereign or fiscal risk of a government in case of a disaster. They are calculated as part of total annual average losses to buildings, both public and private,” the report stated.
Moreover, the UNISDR report noted that the Philippines has consistently experienced financing gaps owing to disasters since 2000.
However, it cited that reviews of budget allocations also show that in the Philippines, disaster risk reduction investments are trending upward.
The report said that the country’s investments for disaster risk reduction increased from 1.4 percent to 2.1 percent of the country’s national budget between 2009 and 2011.
On the other hand, GAR 13 said that in today’s globalized world, even businesses in safe locations may be affected by disasters that hit suppliers and partners on the other side of the globe.
“Destruction of a bridge in a flash flood, for example, may isolate a local smallholder farm, workshop or restaurant from markets and suppliers for days. And many such businesses go bankrupt because they lack the cash flow or reserves to be resilient,” it added.
The report also stated that when business is interrupted, skilled workers may leave, market share may be lost to competitors, relationships with key suppliers and partners may be severed and confidence and reputation may be eroded.
“You can’t insure against loss of business and loss of reputation,” said Andrew Maskrey, lead author and head of the Risk Knowledge Section of the UNISDR.
Within this landscape, GAR13 emphasized that the reduction of disaster risks is taking on new significance and urgency for all global players.
Investments in disaster risk management are increasingly being seen less as a cost and more of an opportunity to strengthen resilience, competitiveness and sustainability.
Furthermore, the report argues that if businesses become more risk sensitive, governments will be encouraged to invest more heavily in disaster risk reduction.
It maintained that effective disaster risk management will become a basic requirement for competitive countries and cities that are successful in attracting business investment.
The report also noted the growing ties between public and private initiatives to model and estimate disaster risks are beginning to strengthen these efforts.
Disaster risk management platforms and applications are now being developed to allow businesses to incorporate these data into their investment decisions, it added.