Disaster Risk Management in Guatemala

CHALLENGE

Guatemala has been severely affected by natural hazards including volcanic activity, hurricanes, and landslides. The worst disaster was the 1976 earth- quake that killed over 23,000 people and resulted in economic damages estimated at 17.9 percent of gross domestic product (GDP). Over the last decades, further events caused additional human and economic losses, such as Hurricane Mitch (4.7 percent of GDP), the 2001 drought (0.1 percent), and Hurricane Stan (3.4 percent).

This high exposure to natural hazards has threat- ened the sustainability of social programs. Funding resources for social programs were repeatedly diverted to disaster response activities and the subsequent recovery process, without being replenished later. This resulted in an even worse situation for the underprivileged. 

SOLUTION

To address this challenge, the Guatemalan Government took significant steps towards a more proactive approach to disaster risk management and comprehensive disaster risk reduction and financing strategies. These efforts culminated in the adoption of the 2009-2011 National Program for Disaster Prevention and Mitigation (NPDPM). 

The Guatemala Disaster Risk Management Devel- opment Policy Loan with a Catastrophe Deferred Drawdown Option (CAT DDO) was designed to support the implementation of Guatemala’s national disaster risk management program and provide liquidity in the event of adverse natural events. Unlike traditional instruments to finance disaster response and recovery, the CAT DDO makes urgently needed resources available im- mediately after a declaration of emergency. This innovative mechanism allowed the Government to access $85 million to respond to the impacts.

The loan helped the Government cope with the impact of the catastrophic events and improve capacity to implement proactive disaster risk management strategies. With the combined efforts of other partners, it supported improvements in several areas:

• National capacity for risk monitoring and forecasting was improved.
• Existing hydro-meteorological and seismo- logical monitoring networks were upgraded and expanded (increase of 57 percent). The improved data gathering allows for more accurate alerts and has been used to update hazard maps.
• Structural vulnerability of public buildings to earthquakes was assessed and reduced. Earthquake vulnerability assessments for 43 schools and 4 hospitals were completed using the Safety Index. The Government approved new seismic standards and 73 school buildings were repaired and retrofitted to meet these standards.
• Disaster risk information was mainstreamed into planning instruments at the national and municipal levels. National agencies developed and enforced instruments to incorporate disaster risk analysis into public investment projects and development planning. Disaster risk considerations are now incorporated in 96 percent of municipal development plans. In addition, 12 municipalities developed land use plans based on updated hazard maps.
• A risk assessment improved understanding of the fiscal implications of adverse natural events. At the national level, a preliminary Central America Probabilistic Risk Assessment (CAPRA) initiative estimated maximum prob- able losses due to hurricanes and earthquakes. 

WORLD BANK GROUP CONTRIBUTION

The DPL with CAT DDO was a single tranche opera- tion in the amount of $85 million, entirely financed by the World Bank. After the Government issued a national state of emergency following the Pacaya volcano eruption and Tropical Storm Agatha, it withdrew the entire loan amount. The Bank provided policy advice and technical assistance throughout the duration of the DPL between 2010 and 2012.

PARTNERS

The CAT DDO was complemented by technical assistance, funded by the Global Facility for Disaster Reduction and Reduction (GFDRR), to support the Ministry of Education in developing a Seismic Safety Index for vulnerability assessments of education centers. In addition, the Bank collaborated with the Central America Coordination Center for Natural Disaster Prevention (CEPREDENAC), United Nations International Strategy for Disaster Reduction (UN/ISDR), and the Inter-American Development Bank (IDB) to support the CAPRA initiative. The European Commission, USAID, the Spanish Agency for International Development Cooperation (AECID), and other international organizations also supported the Government’s disaster risk management efforts.

MOVING FORWARD

Guatemala recently developed a comprehensive National Strategy for Disaster Risk Reduction 2012-2017 and is positioned to start designing ex- ante Disaster Risk Finance and Insurance (DRFI) solutions. The Bank will support the Government in preparing and implementing a DRFI strategy tailored to its specific needs and capabilities. SEGEPLAN is expected to cooperate on issues related to incorporating and strengthening disaster risk management into land use plans and develop- ment plans. It will also identify legal instruments to ensure the application of disaster risk management at the municipal level and promote construction codes and standards.

BENEFICIARIES

The liquidity provided by the DPL with CAT DDO upon the declaration of emergency after the Pacaya volcano eruption and Tropical Storm Agatha in 2010 helped attend to the needs of more than 910,000 citizens who had been adversely affected by the two events. In addition, the improvements of institutional capacity for disaster risk assess- ment, reduction, monitoring and forecasting benefit the country as a whole.