Policy Research Working Paper | Conflict_and_Development | World Bank

The economics of natural disasters : concepts and methods

2010-12-21T05:00:00.000Z

Large-scale disasters regularly affect societies over the globe, causing large destruction and damage. After each of these events, media, insurance companies, and international institu-tions publish numerous assessments of the "cost of the disaster." However these assessments are based on different methodologies and approaches, and they often reach different results. Besides methodological differences, these discrepancies are due to the multi-dimensionality in disaster impacts and their large redistributive effects, which make it unclear what is included in the estimates. But most importantly, the purpose of these assessments is rarely specified, although different purposes correspond to different perimeters of analysis and different definitions of what a cost is. To clarify this situation, this paper proposes a definition of the cost of a disaster, and emphasizes the most important mechanisms that explain and determine this cost. It does so by first explaining why the direct economic cost, that is, the value of what has been damaged or destroyed by the disaster, is not a sufficient indicator of disaster seriousness and why estimating indirect losses is crucial to assess the consequences on welfare. The paper describes the main indirect consequences of a disaster and the following reconstruction phase, and discusses the economic mechanisms at play. It proposes a review of available methodologies to assess indirect economic consequences, illustrated with examples from the literature. Finally, it highlights the need for a better understanding of the economics of natural disasters and suggests a few promising areas for research on this topic.

How do governments respond after catastrophes ? natural-disaster shocks and the fiscal stance

2011-02-07T05:00:00.000Z

Natural disasters could constitute a major shock to public finances and debt sustainability because of their impact on output and the need for reconstruction and relief expenses. This paper uses a panel vector autoregressive model to systematically estimate the impact of geological, climatic, and other types of natural disasters on government expenditures and revenues using annual data for high and middle-income countries over 1975-2008. The authors find that, on average budget, deficits increase only after climatic disasters, but for lower-middle-income countries, the increase in deficits is widespread across all events. Disasters do not lead to larger deficit increases or larger output declines in countries with higher initial government debt. Countries with higher financial development suffer smaller real consequences from disasters, but deficits expand further in these countries. Disasters in countries with high insurance penetration also have smaller real consequences but do not result in deficit expansions. From an ex-post perspective, the availability of insurance offers the best mitigation approach against real and fiscal consequences of disasters.

Nature, socioeconomics and adaptation to natural disasters: new evidence from floods

2011-06-30T04:00:00.000Z

The authors analyze the determinants of fatalities in 2,194 large flood events in 108 countries between 1985 and 2008. Given that socioeconomic factors can affect mortality right in the aftermath of a flood, but also indirectly by influencing flood frequency and magnitude, they distinguish between direct and indirect effects of development on flood mortality. The authors find that income is negatively associated with the frequency of floods and, conditional on their magnitude, the fatalities they cause in developing countries. However, for developed countries they find that increased income is associated with more fatalities, both directly (conditional on flood occurrence and magnitude) and indirectly through an increase in the frequency and magnitude of flood events. Also in contrast to the literature, they find that the effect of governance on flood frequency and fatalities in developing countries is U-shaped, with improvements in governance reducing the numbers of floods and deaths when governance is weaker but raising them when governance is stronger.

Efficiency in public procurement in Rural Road Projects of Nepal

2011-07-26T04:00:00.000Z

Transport infrastructure is important for economic growth. In Nepal, about 20 percent of rural residents have to spend more than 3 hours to go to the nearest marketplace or agriculture center. Public procurement is an important policy instrument to use resources wisely and efficiently. This paper analyzes a series of policy questions, from procurement design to contract management and project quality assurance. The paper finds that the competition effect is significant. To enhance competition, bidding documents can be distributed free of charge on a website. The bid preparation period can be extended. Security issues are also found to be particularly important to avoid unnecessary cost overruns and project delays. Heavy rainfall and the bidders' low-balling strategy are identified as other factors of project delays. The quality of roads would deteriorate with not only security incidence but also time, precipitation and traffic volume.

What did the Maoists ever do for us ? education and marriage of women exposed to civil conflict in Nepal

2011-07-27T04:00:00.000Z

Between 1996 and 2006, Nepal experienced violent civil conflict as a consequence of a Maoist insurgency, which many argue also brought about an increase in female empowerment. This paper exploits within and between-district variation in the intensity of violence to estimate the impact of conflict intensity on two key areas of the life of women in Nepal, namely education and marriage. Overall conflict intensity had a small, positive effect on female educational attainment, whereas abductions by Maoists had the reverse effect. Male schooling was not significantly affected by either conflict measure. Conflict intensity and Maoist abductions during school age both increased the probability of early female marriage, but exposure to conflict during marriageable age does not appear to have affected women's long-term marriage probability.

Education and conflict recovery : the case of Timor Leste

2011-08-22T04:00:00.000Z

The Timor Leste secession conflict lasted for 25 years. Its last wave of violence in 1999, following the withdrawal of Indonesian troops, generated massive displacement and destruction with widespread consequences for the economic and social development of the country. This paper analyzes the impact of the conflict on the level and access to education of boys and girls in Timor Leste. The authors examine the short-term impact of the 1999 violence on school attendance and grade deficit rates in 2001, and the longer-term impact of the conflict on primary school completion of cohorts of children observed in 2007. They compare the educational impact of the 1999 wave of violence with the impact of other periods of high-intensity violence during the 25 years of Indonesian occupation. The short-term effects of the conflict are mixed. In the longer term, the analysis finds a strong negative impact of the conflict on primary school completion among boys of school age exposed to peaks of violence during the 25-year long conflict. The effect is stronger for boys attending the last three grades of primary school. This result shows a substantial loss of human capital among young males in Timor Leste since the early 1970s, resulting from household investment trade-offs between education and economic survival.

The effects of conflict on fertility in Rwanda

2011-08-22T04:00:00.000Z

The aim of this paper is to study the short and long-term fertility effects of mass violent conflict on different population sub-groups. The authors pool three nationally representative demographic and health surveys from before and after the genocide in Rwanda, identifying conflict exposure of the survivors in multiple ways. The analysis finds a robust effect of genocide on fertility, with a strong replacement effect for lost children. Having lost siblings reduces fertility only in the short term. Most interesting is the continued importance of the institution of marriage in determining fertility and in reducing fertility for the large group of widows in Rwanda.

The "resource curse" in MENA ? political transitions, resource wealth, economic shocks, and conflict risk

2011-08-23T04:00:00.000Z

The recent political upheavals in the Middle East and North Africa region have exposed growing concerns about conflict risk, political stability, and reform prospects across its societies. Given the prevalence of oil and gas resource endowments in the region, which a voluminous literature suggests can be associated with adverse development consequences, this paper examines the interplay between their associated rents and political economy trajectories. The contribution of the paper is threefold: first, to examine the quantitative evidence of violent conflict in the region since 1960; second, to provide a nuanced review of the regional case study literature on the relationship between resource endowments, political stability, and conflict risk; and third, to assess how prospective political transitions have implications for the World Bank Group's work in the region on public sector management and private sector development. The authors find that resources and regimes have intersected to provide stability and limited violent conflict in the region, but that these development patterns have yielded a set of policy choices and development patterns that are proving increasingly brittle and unsustainable. A major institutional challenge for reforms will be to consolidate a requisite degree of inter-temporal credibility and stability in these regimes, while expanding inclusiveness in state-society relations.

Explaining the demand for sovereignty

2011-11-28T05:00:00.000Z

Why do groups want to secede and where are we most likely to see demands for self-determination? This paper proposes an economic explanation whereby a tradeoff between income and sovereignty implies that, other things being equal, richer regions are more likely to want more autonomy and conflict arises due to a disparity between desired and actual levels of sovereignty. The authors provide simple empirical tests using new data collected at the level of second-tier administrative subdivisions in 48 decentralized countries. They find a positive association between, on the one hand, relative regional income, regional population share, natural resource endowment, and regional inter-personal inequality and, on the other hand, observed sovereignty levels. Ethnically distinct regions have lower sovereignty, but this association is only conditional on controlling for the interactive effects between ethnic distinctiveness and regional inter-personal inequality.

Human rights as demands for communicative action

2012-01-18T05:00:00.000Z

A key issue with human rights is how to allocate duties correlative to rights claims. But the philosophical literature, drawing largely on naturalistic or interactional accounts of human rights, develops answers to this question that do not illuminate actual human rights problems. Charles Beitz, in recent work, attempts to develop a conception of human rights more firmly rooted in, and helpful for, current practice. While a move in the right direction, his account does not incorporate the domestic practice of human rights, and as a result remains insufficiently instructive for many human rights challenges. This paper addresses the problem of allocating correlative duties by taking the practices of domestic courts in several countries as a normative benchmark. Upon reviewing how courts in Colombia, India, South Africa, Indonesia, and elsewhere have allocated duties associated with socio-economic rights, the paper finds that courts urge parties to move from an adversarial to an investigative mode, impose requirements that parties argue in good faith, and structure a public forum of communication. The conclusion argues that judicial practice involves requiring respondents to engage in communicative, instead of strategic, action, and explores the implications of this understanding of human rights.

Optimizing the size of public road contracts

2012-04-05T04:00:00.000Z

Procurement packaging has important effects on not only the bidders' bidding behavior, but also contractors' performance. By changing the size of public contracts, procurers can encourage (or discourage) market competition and improve contract performance, avoiding unnecessary cost overruns and project delays. In practice, there is no single solution about how to package public contracts. With procurement data from road projects in Nepal, this paper examines the optimal size of road contracts in rural areas. The optimum varies depending on policy objectives. To maximize the bidder participation, the length of road should be about 11 kilometers. To minimize cost overruns and delays, the contracts should be much larger at 17 and 21 kilometers, respectively. Compared with the current procurement practices, the findings suggest that procurers take more advantage of enlarging road packages, although contracts that are too large may increase the risk of discouraging firms from participating in public tenders.

Natural resources, weak states and civil war : can rents stabilize coup prone regimes ?

2012-05-16T04:00:00.000Z

This paper argues that state weakness is broader than implied previously in the civil war literature, and that particular types of weakness in interaction with natural resources have aggravating or mitigating consequences for the risk of civil war. While in anocracies or unstable regimes natural resources can be expected to increase the risk of civil war, we suggest that resource wealth allows weak leaders to stabilize their relationship with their inner elite circle. In particular, for regimes at risk of coup d'etat, the availability of substantial resources is more likely to be channeled in ways that deter rebellion, plausibly countering the grievances generated by natural resources and rebels' viewing of such resources as a prize for taking over the state. Data from 1946-2003 and multiple empirical operationalizations broadly support our argument. These findings are consistent with work showing that resource rents can induce stability in state - society relationships.

Estimating the causal effects of conflict on education in Côte d'Ivoire

2012-06-06T04:00:00.000Z

This paper estimates the causal effects of civil war on years of education in the context of a school-going age cohort that is exposed to armed conflict in Cote d'Ivoire. Using year and department of birth to identify an individual's exposure to war, the difference-in-difference outcomes indicate that the average years of education for a school-going age cohort is .94 years fewer compared with an older cohort in war-affected regions. To minimize the potential bias in the estimated outcome, the authors use a set of victimization indicators to identify the true effect of war. The propensity score matching estimates do not alter the main findings. In addition, the outcomes of double-robust models minimize the specification errors in the model. Moreover, the paper finds the outcomes are robust across alternative matching methods, estimation by using subsamples, and other education outcome variables. Overall, the findings across different models suggest a drop in average years of education by a range of .2 to .9 fewer years.

Creating jobs in South Asia's conflict zones

2012-06-25T04:00:00.000Z

This paper describes the key challenges to job creation in conflict-affected environments in South Asia. It uses household survey data since the early 2000s for Afghanistan, India, Nepal, and Sri Lanka to document the characteristics of labor markets in conflict-affected areas, exploiting the spatial and time variation in armed conflict within countries. The analysis finds that, across countries, labor markets look very different in conflict-affected areas when compared with non-conflict or low-conflict areas. Employment rates are higher in large part because women participate more in the labor market, but work tends to be more vulnerable, with more self-employment and unpaid family work. The authors show that these differences often pre-date the conflict but are also exacerbated by it. They also examine the constraints on the private sector activity in such areas, using firm surveys when possible. Finally, the paper reviews the existing literature and the policy experiences of several countries to draw some policy implications for job creation efforts in the conflict-affected areas of South Asia. It particularly highlights the role of the private sector and community initiatives, in conjunction with public policies, to improve the environment for successful job creation.

Winning hearts and minds through development ? evidence from a field experiment in Afghanistan

2012-07-12T04:00:00.000Z

In areas afflicted by civil conflict, development projects can potentially serve an important counterinsurgency function by redressing grievances of marginalized groups and reducing violence. Using a large-scale randomized field experiment in Afghanistan, this paper explores whether the inclusion of villages in the country's largest development program alters perceptions of well-being, attitudes toward government, and violence in surrounding areas. The results indicate that the program generally has a positive effect on all three measures, but has no effects in areas with high levels of initial violence. These findings demonstrate that development programs can buttress government support and limit the onset of insurgencies in relatively secure areas, but that their effectiveness is more constrained in areas where insurgents are already active.

Why follow the leader ? collective action, credible commitment and conflict

2012-08-21T04:00:00.000Z

Most analyses of conflict assume that conflicting groups act in a unitary fashion. This assumption is often violated: to reduce their risk of replacement, group leaders prevent both group members and soldiers from acting collectively, making it difficult for leaders to make credible commitments to them. Lifting the assumption that groups are unitary shifts the analysis of a wide range of conflict issues. The effects of income shocks and rents on conflict risk become contingent on collective action. Leader decisions regarding collective action explain the forcible recruitment of child soldiers and predation on civilians: leaders who prefer to limit military organization are more likely to pursue these tactics. Leader decisions regarding collective action also introduce an unexplored mechanism by which state capacity is created and a specific reason to regard state capacity as endogenous to conflict risk. This focus, finally, suggests that interventions to reduce conflict risk, such as safety net payments or service delivery, are likely to be most difficult to deliver precisely where leaders are most reluctant to allow collective action and where, therefore, conflict risk is highest.

Violent conflict and gender inequality : an overview

2013-02-21T05:00:00.000Z

Violent conflict, a pervasive feature of the recent global landscape, has lasting impacts on human capital, and these impacts are seldom gender neutral. Death and destruction alter the structure and dynamics of households, including their demographic profiles and traditional gender roles. To date, attention to the gender impacts of conflict has focused almost exclusively on sexual and gender-based violence. The authors show that a far wider set of gender issues must be considered to better document the human consequences of war and to design effective postconflict policies. The emerging empirical evidence is organized using a framework that identifies both the differential impacts of violent conflict on males and females (first-round impacts) and the role of gender inequality in framing adaptive responses to conflict (second-round impacts). War's mortality burden is disproportionately borne by males, whereas women and children constitute a majority of refugees and the displaced. Indirect war impacts on health are more equally distributed between the genders. Conflicts create households headed by widows who can be especially vulnerable to intergenerational poverty. Second-round impacts can provide opportunities for women in work and politics triggered by the absence of men. Households adapt to conflict with changes in marriage and fertility, migration, investments in children's health and schooling, and the distribution of labor between the genders. The impacts of conflict are heterogeneous and can either increase or decrease preexisting gender inequalities. Describing these gender differential effects is a first step toward developing evidence-based conflict prevention and postconflict policy.

What is a civil war ? a critical review of its definition and (econometric) consequences

2013-04-03T04:00:00.000Z

The authors argue that the academic literature, both qualitative and quantitative, has mislabeled most episodes of large-scale violence in Africa as civil war; these episodes better fit their concept of regional war complexes. The paper seeks to highlight the fundamental flaws in the conception of civil war in the econometric literature and their implications for econometric specification and estimation, problems that this literature is inherently incapable of rectifying. The authors advocate the comparative study of regional war complexes in Africa based on historical narratives.

Schooling, violent conflict, and gender in Burundi

2013-04-22T04:00:00.000Z

This paper investigates the effect of exposure to violent conflict on human capital accumulation in Burundi. It combines a nationwide household survey with secondary sources on the location and timing of the conflict. Only 20 percent of the birth cohorts studied (1971-1986) completed primary education. Depending on the specification, the probability of completing primary schooling for a boy exposed to violent conflict declines by 7 to 17 percentage points compared to a nonexposed boy, with a decline of 11 percentage points in the preferred specification. In addition, exposure to violent conflict reduces the gender gap in schooling, but only for girls from nonpoor households. Forced displacement is one of the channels through which conflict affects schooling. The results are robust to various specifications and estimation methods.

Education and civil conflict in Nepal

2013-05-30T04:00:00.000Z

Between 1996 and 2006, Nepal experienced violent civil conflict as a consequence of a Maoist insurgency, which many argue also brought about an increase in female empowerment. This paper exploits variations in exposure to conflict by birth cohort, survey date, and district to estimate the impact of the insurgency on education outcomes. Overall conflict intensity, measured by conflict casualties, is associated with an increase in female educational attainment, whereas abductions by Maoists, which often targeted school children, have the reverse effect. Male schooling tended to increase more rapidly in areas where the fighting was more intense, but the estimates are smaller in magnitude and more sensitive to specification than estimates for females. Similar results are obtained across different specifications, and robustness checks indicate that these findings are not due to selective migration.