Staying safe from natural disasters really pays
After Hurricane Sandy battered New York in 2012, American entrepreneur Ramsey Green and his partners came up with an innovative way to protect houses from extreme weather — one that would also be affordable for their occupants. The startup MyStrongHome, which works in the coastal areas of Alabama, Louisiana and South Carolina, allows homeowners to pay for a new, reinforced roof out of savings from the lower insurance bills they get thanks to their dwelling being safer.
Green estimates that potential losses in a storm would be 30 to 60 per cent lower in the strengthened homes. The work, carried out by the firm’s contractors, typically costs around $10,000.
Participants make a down-payment of between $2,000 and $3,000, and pay back the rest over five to seven years.
“There is also a public benefit in terms of people not being displaced in a disaster,” Green said this month at a New Orleans conference on resilience, which tackled how to fund projects that help cities, communities and individuals stand up to disasters and other threats.
When it comes to reducing risks, the problem is not a shortage of ideas but rather a lack of cash to put them into practice, said experts in the city that has largely bounced back from the destruction wrought by deadly Hurricane Katrina in 2005. Phillip Kash, a resilience consultant with urban development group HR&A Advisors, said it remained a challenge to turn into revenue the gains from equipping real estate developments and other infrastructure to better withstand storms, floods and other natural hazards.
“The resilience benefits aren’t the benefits that are paying for the projects yet,” he told a discussion on bankrolling such efforts.
That is why philanthropic dollars from organisations like The Rockefeller Foundation — which backed the development of MyStrongHome — or government grants such as the US National Disaster Resilience Competition are key to making the case that investing in stronger property and community cohesion yields financial returns, he added.
New Orleans Mayor Mitch Landrieu said it was still harder to persuade elected representatives to pay for measures to reduce disaster risks before a crisis than to get them to appropriate money to clean up after one. “We haven’t done a good job of telling that story of why it makes no sense not to invest upfront in resilience,” he said.
Having concrete examples of the financial benefits of doing so to feed into public policy discussions would help, he noted.
Efforts are under way to quantify what has been labelled the “resilience dividend”, with the New York-based Rockefeller Foundation leading the charge.
Together with the RAND Corporation, a non-profit research organisation, it has developed a model to value the economic and social worth of resilience work, in the hope of enlisting more support from decision makers.
In one case, RAND assessed projects by aid agency Oxfam in southeast Pakistan that aim to cushion farmers from the negative effects of food price swings.
To cut their reliance on loans from middlemen and crop losses due to extreme weather, farmers received a season’s worth of agricultural inputs, while grain banks and cooperatives were set up.
RAND estimated Oxfam’s intervention increased agricultural income by approximately 20 per cent — or $400 — per household in the year after it was made, enabling families to spend more on farm equipment and goods at local businesses, or on their children’s education.
Longer term, farmers changed the way they worked, using new fertilisation and cropping practices, it found.
Janice Barnes, global resilience director with architecture and design firm Perkin+Will, emphasised the importance of understanding how risks can escalate across society.
In a community that is regularly flooded, for example, mold in homes may lead to chronic disease problems, making it a public health issue.