Measuring Natural Risks in the Philippines: Socioeconomic Resilience and Wellbeing Losses

Traditional risk assessments use asset losses as the main metric to measure the severity of a disaster. Here, an expanded risk assessment is proposed based on a framework that adds “socioeconomic resilience” — that is, the ability of affected households to cope with and recover from disaster asset losses — and uses “wellbeing losses” as its main measure of disaster severity. Using a new agent-based model that represents explicitly the recovery and reconstruction process at the household level, this risk assessment provides new insights into disaster risks in the Philippines. Its first conclusion is the close link between natural disasters and poverty. On average, estimates suggest that almost half a million Filipinos per year face transient consumption poverty due to natural disasters. Nationally, the bottom income quintile suffers only 9% of the total asset losses, but 31% of the total wellbeing losses. As a result of the disproportionate impact on poor people, the average annual wellbeing losses due to disasters in the Philippines is estimated at US$3.9 billion per year, more than double the asset losses of US$1.4 billion. The second conclusion is the fact that the regions identified as priorities for risk-management interventions differ depending on which risk metric is used. While cost-benefit analyses based on asset losses direct risk reduction investments toward the richest regions and areas, a focus on poverty or wellbeing rebalances the analysis and generates a different set of regional priorities. Finally, measuring disaster impacts through poverty and wellbeing impacts allows the quantification of the benefits from interventions like rapid post-disaster support and adaptive social protection. While these measures do not reduce asset losses, they efficiently reduce their wellbeing consequences by making the population more resilient.