Measuring Disaster Risk

Economic losses caused by natural disasters in Latin America and

the Caribbean 1900-2009 (US$ million)
Over the past century, population growth, unplanned urbanization, overexploitation of natural resources and the effects of climate change
have dramatically increased the economic costs of natural disasters for Latin America and the Caribbean, underscoring the need for
countries to better manage these risks.

50000
45000 43,015
40000
34,327
35000 33,964

Estimated Cost in
2009 US$ million
30000
25000
19,747
20000
15000 13,038

10000 5,690
5000 729

Source: EM-DAT,

9
90

94

96

98

00
Bureau of Labor

-1

-1

-1

-1

-2
00

40

60

80

00
Statistics and IDB

19

19

19

19

20
Staff calculations

Note: Disasters considered are earthquakes, floods and storms. All U.S. dollars figures were inflation-adjusted using the U.S. Consumer Price
Index For All Urban Consumers, as reported by the Bureau of Labor Statistics. Latin American and Caribbean countries included in the calcula-
tions: Argentina, Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala,
Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and Venezuela.

Disaster Deficit Index (2008)

The Disaster Deficit Index (DDI) shows potential economic losses countries can face and their governments’ financial capacity to address
such costs. It measures the state’s capacity to pay in order to recover from the economic losses if a catastrophic event – the type that can
occur once every 50, 100 or 500 years – were to happen in 2008. A DDI greater than 1.0 indicates economic losses would exceed the
state’s financial capacities (the greater the DDI, the greater the financial gap).

economic costs That exceed

8
7 For a natural disaster event that
7
can occur once every 100 years

state financial capacity

Index above 1 shows
6

4 3.15 3.14
2.8
3 2.42 2.28
1.94
1.53
2
0.77 0.73
0.67
1 0.32
0.29 0.13
0.1 0.07 0.03
0

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Local Disaster Index (2001-2005)

The Local Disaster Index (LDI) evaluates the social and environmental risks stemming from recurrent small-scale disasters, looking at
death tolls, numbers of affected people and damages to housing and crops. It measures a country’s propensity to suffer these types of
disasters and their cumulative impact on development. An index below 20 implies a high concentration of small disasters in a few local
areas. An indicator between 20 and 50 indicates a normal propensity and a number above 50 indicates that a majority of the areas of a
country’s territory suffer small disasters.

80
71
70
Local Disaster Index

63 58
60
50 48
43
40 37
32
30 27
20
10 2
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Prevalent Vulnerability Index (2007)

The Prevalent Vulnerability Index (PVI) gauges the fragility and exposure of human and economic activity in disaster-prone areas and the
social and human capacity to absorb the impacts of disasters. The three composite indicators that make up this index consider factors
such as demographic growth, population density, poverty and unemployment levels, soil degradation caused by human action, gender
balance, social expenditures and insurance of infrastructure and housing. An index of 20 or less indicates low levels of vulnerability while
an index between 20 and 40 indicates a medium level. An indicator between 40 and 80 shows high vulnerability.
Prevalent Vulnerability Index

60
52 52 51
50 49
47 46
43 43 40
40 39 38
37 35 34 33 32 31
30
22
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Source: IDB
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Disaster Risk Management Index (2008)

The Risk Management Index (RMI) measures a country’s risk management performance. It combines several measures to evaluate the
capacity to identify and reduce risks, respond and recover from catastrophes as well as to provide financial protection and risk transfer. An
index below 50 is considered unsatisfactory; a number between 50 and 75 is considered safisfactory and an index above 75 is considered
outstanding.
Disaster Risk Management Index

50
45 45
45 43 41 41
40 38
37
35 34
33
30 29
27 27 26
25 24
23 23
20
15
10
5
0
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Source: IDB
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