Economic and social effects of "El Nino" in Ecuador, 1997-8

Natural disasters, like the “El Niño” phenomenon often hit hardest on the poor.
Yet it is often difficult to separate the effects on living conditions produced by the
inclement weather conditions from general inadequacies in infrastructure and lack of
economic development. Furthermore, there may be controversy as to how to value
damages due to the natural disaster: just to repair and rehabilitate or to reconstruct to
prevent and enhance development. This methodological problem related to the
measurement of the costs also affects policy choices. How much should one focus on
emergency relief and what can be done to obtain better prevention against recurring
weather shocks such as the El Niño phenomenon? Ecuador’s policy orientation appears to
have been greatly oriented at reactive, relatively untargeted emergency relief, whereas
this study recommends greater emphasis on pro-active and targeted developmental
investment.
This study finds that economic and social costs of “El Niño” in Ecuador have
been substantial. Most economic costs relate to losses of agricultural production and
damages to infrastructure. Increased health risks are most critical in the social sectors.
Close to 300 deaths directly linked to the floods are to be lamented and about a quarter of
the Ecuadorian population has been exposed to increased risk of diseases and mortality.
Outcomes suggest that most of the agricultural income losses be borne by small
farmers in the production of rice, corn, coffee and cocoa and to a lesser extent by
agricultural workers in the sugar cane industry and banana plantations. The overall
impact on the already high poverty incidence in the affected areas could be as large as 10
percentage points. The disaster has also been beneficial to some, in particular the wealthy
shrimp producers who saw productivity go up by over 25%, while banana exporters could
compensate production losses through higher export quota en export prices. Health risks
are greatest in areas with poor sanitary infrastructure and overall social conditions. The
affected areas largely coincide with areas hit in previous occurrences of El Niño, the
previous being in 1982-3.
This study proposes methodologies to identify different types of risks associated
with natural disasters such as El Niño and to establish degrees of vulnerability to such
risks by geographical areas and population groups. This should help to set policy priorities towards preventive investment and better protection of the most vulnerable
population.