Smart Investments Can Stem Losses

Every $1 invested in prevention can save $5 in future losses

There was once a golf course in Lajitas, Texas along the Rio Grande where players could hit a little half wedge shot over the 90 or so yards of water onto a green that was across the border in Mexico. It was the only place in the world where you could hit your tee shot in one country and have it land on the green in another.

In 2008, Tropical Storm Lowell began dumping rain near Lajitas. The Rio Grande pushed over its banks, and quickly became a quarter-mile wide rush of water. The golf course was submerged for more than a month, and irreparably damaged.

Flood preparedness: An investment that makes sense

The disappearance of a golf course under water certainly wasn’t the most serious repercussion of that 2008 event or any other major flood. However, that flood did have a significant economic impact, and it’s relevant to some current work being undertaken to reduce the likelihood of flooding around the world.

Flood preparedness is among the most important aspects of proactive global risk management. From 1995 to 2015, floods caused $662 billion in economic damage, according to the UN Office for Disaster Risk Reduction. In the U.S., floods are the most frequently occurring natural disaster. However, a multiyear academic cooperation by the Z Zurich Foundation, the International Institute for Applied Systems Analysis and the Wharton School showed that over the most recent two decades, nearly 87 percent of flood relief funds are spent on emergency response, reconstruction and rehabilitation, and only 13 percent are spent on reducing and managing flood-related risks.

“A better balance in spending can help reduce the impacts of severe storms,” says Mike Foley, CEO, Zurich North America Commercial. “Research shows that every $1 spent on disaster preparedness saves $5 in future losses. That’s important, because while floods are natural occurrences, they affect more people globally than any other natural hazard. It’s estimated that floods cost communities more than $250 million every year and cause some of the world’s largest social and humanitarian losses each year.”

Applying lessons learned

Data can play a key role in increasing resilience and improving the quality of flood preparedness. “Not only can more and better data provide a baseline to measure progress, it can also help everyone to understand what works in practice and how well it works,” says Foley. “Communities can learn from each other and tailor their actions to their own context. Doing this in a transparent way can encourage public dialogue and foster innovative solutions backed by empirical evidence.”

Collaborative efforts and transparent benefits to communities are gaining traction, including in New Orleans, which is home not only to the PGA Tour’s Zurich Classic of New Orleans, but also to ongoing efforts to help the community build resilience to flooding. This can be seen up close at the City Park Golf Courses in the Bayou District, part of one of America’s largest urban parks. The renovation of the golf courses has included the installation of a game-changing flood management system that is protecting homes, businesses and the livelihoods of residents in the community. Zurich donated $1 million to help in the construction of a new hydraulic weir, which can be visualized as a very large concrete bathtub. Three times larger than its predecessor, the weir features a 10-foot-wide hydraulic gate. Before a major rainstorm, the gate will be lowered to drain the adjacent City Park lagoons, increasing the storm water capacity by the equivalent of 400 football fields of water measuring one foot in depth, and helping to prevent widespread flooding during heavy rains.

“That’s a good example of risk mitigation worthy of investment,” says Foley. “Everyone in the community will benefit in multiple ways.”

“It’s estimated that floods cost communities more than $250 million every year and cause some of the world’s largest social and humanitarian losses each year.”

Thirty years ago, on April 26, 1986, Reactor No. 4 at the Chernobyl Nuclear Power Plant malfunctioned and exploded during a routine test. The blast threw radioactive smoke, dust, and debris into the atmosphere, where it traveled as far as Norway. It was the world’s largest nuclear accident, releasing 10 times more radiation than the catastrophic meltdown of reactors in Fukushima prefecture, Japan, in the wake of an earthquake and tsunami in 2011. The $ 15 billion initial cleanup— including the hurried construction of an immense concrete sarcophagus to entomb the radioactive remains—helped destabilize the already wobbly Soviet Union, which broke into 15 countries in 1991. The site is now administered by Ukraine, which faces a complex challenge: It must manage an engineering marvel that’s been designed to contain Chernobyl’s poisonous remains and deal with the painful economic aftermath, all while negotiating with international creditors to keep the national economy from collapsing.

The sarcophagus, which is braced against damaged sections of the reactor building, wasn’t expected to last more than 20 to 30 years. To provide a century more of protection, Ukraine, with the assistance of the European Union, has since 2012 been constructing the New Safe Confinement. The 850-foot-wide steel shield weighs more than 30,000 tons and, at 360 feet tall, could accommodate the Statue of Liberty, pedestal to torch. In November the NSC, which looks like a giant aircraft hangar, is expected to glide on Teflon and stainless steel skids about 1,000 feet long over the top of the entombed reactor. (There’s still too much radiation emanating from unit 4 for construction to be done directly over it.) A membrane, made from the same material used to keep seawater out when a submarine launches a ballistic missile, will then be attached between the sarcophagus and the shield to trap radioactive dust and debris.

“We have engineering specialists, concrete, electrical, ventilation, heavylifting, radioprotection specialists, translators, and logisticians,” says Nicolas Caille, the project director for Novarka, which designed and built the NSC. “We have people from all over working here. The world has financed this project.” It’s also been something of a jobs program for Ukraine. About 6,000 people are employed in the zone. They get into their work clothes in changing rooms, and each one carries an essential piece of gear: a radiation meter. Workers stay at their jobs not by the hour but by how much radiation they’ve taken. Radiation varies around the site; higher dose rates closer to the sarcophagus require special suits. But a typical dose is about 0.006 millisieverts per day. The highest dose anyone got on the site in 2015 was 13 msv. Nuclear workers in the U.S. have a limit of 50 msv of radiation per year, the equivalent of 1,000 X-rays.

Almost all the workers live in the town of Slavutych, population 25,000, which the Soviets built in 1986 to house people who were either working at the nuclear power plant or displaced by the radioactive fallout. It was also home to the thousands of “liquidators,” who made up the cleanup crews. Untold numbers of them died from exposure, but they prevented the contamination from getting even worse.

Those heroics are now deep in the past. Winded from the long climb up the NSC’S scaffolding, one worker, who asked not to be named because he wasn’t authorized to speak to the press, puffs on a cigarette and says, “To be honest, I’m not proud of my job. It’s not like in Soviet times, when we were told we

The New Safe Confinement rises above the desertedehent,nimetremainsunt vendisquidofchernobylque volupta ecesto tes et officat officiant.

were doing everything for the pride of the fatherland. I’m just doing this to put food on the table for my family.” He pulls down about $235 a month—6,000 hryvnias, the local currency—about $60 more than the average income in Ukraine. The completion of the arch doesn’t gratify him or many of the town’s other residents. It fills them with foreboding. “The arch is the city,” says Anastasia Romanenko, 16, hanging out at the local amusement park. “When the arch is finished, the city is finished.”

Once the NSC is done, most of the residents of Slavutych will have to find other work. That won’t be easy. Unemployment in Ukraine is now well above 10 percent; the economy shrank by almost 10 percent in 2015, partially as a result of the separatist conflict backed by Russia in the industrial cities of the east. Although inflation has eased, in March it still stood at more than 20 percent. The country wouldn’t have been able to afford the arch at all without foreign assistance. Over the years, Ukraine has received more than $370 million from the U. S. alone to care for Chernobyl.

Enormous amounts of money have been poured into the engineering of the NSC. A custom jacking process was created to lift the thousands of feet of giant steel tubing, imported from Italy, that forms the building’s structure. The tubes are attached with some 600,000 specialized bolts, each costing about €15 ($17). “It’s the Rolls-royce of bolts,” says Caille. The structure’s been designed to withstand fire, the freezing temperatures of Ukraine’s winter, and a Level 3 tornado. Two giant cranes made in Minnesota, each with the dimensions of a Boeing 737, are suspended inside the NSC. Controlled remotely from a nearby radiationproof bunker, they’ll carry a platform fitted with a manipulator arm, a core drill, a concrete crusher, and a 10-ton vacuum cleaner that will remove radioactive debris. The automation will cut down on the need to expose humans to the dangerous levels of radiation. But it will also reduce the jobs in Slavutych.

Ukraine will be financially responsible for operating the remote-controlled cranes and treating the remnants of the power station, which is necessary to eliminate all risk of radioactive contamination at the site. The other Chernobyl reactors have been decommissioned but not dismantled. So far, there’s been little discussion of how that will be done. In December, President Petro Poroshenko honored the memory of those killed in the days after the nuclear disaster and indicated that this year’s commemorations would focus on the heroic work of the liquidators. But while the government has acknowledged the need to invest resources into the area of the catastrophe, it hasn’t put forward any plans.

Kiev has been dealing with other problems. It’s been embroiled in political infighting for months. The impasse was broken only on April 14 with the naming of Volodymyr Hroisman as prime minister. His first task is to unlock the third disbursement of a $17.5 billion bailout from the International Monetary Fund. It’s been held up since October because of the political wrangling. Hroisman must continue with anticorruption reform to get the money. That would then open the way for more than $4 billion in bilateral aid from the U.S. and the EU, among other allies. The government also needs to stave off recession and more fully implement accords with the pro-russian rebels that have slowed, but not completely halted, fighting in the east.

Despite its crucial role in containing Chernobyl for the past 30 years, Slavutych is too small a cog right now to catch the embattled government’s eye. Dmitry Korchak of the Regional Development Agency, which the town has charged with planning for its future, believes Slavutych can be saved. He thinks with all the soon-to-beunemployed engineers, physicists, biologists, and research scientists around, the government should build a university and turn Slavutych into a tech and research and development hub. Early in April, Korchak tried to organize a meeting to begin raising support and awareness for his rebranding campaign and his organization’s plans for the town. About 50 people said they’d come. But the day of the meeting was the first day of warm spring weather. “Everyone went into the forest to grill kebabs and drink beer,” he says. Only 12 people showed up. Six of those were organizers. <BW>

proposed, among other things, bolstering the independence of the central bank, reducing the state’s role in the oil sector, and loosening various mandates that straitjacket the national budget.

Also important to a jaded electorate will be to expand anticorruption laws—many of them enacted under Rousseff. Last month the public prosecutor’s office (which has led the Petrobras investigation) said it had gathered 2 million signatures on a petition asking Congress to consider 10 new laws that would help it bring corrupt officials to justice.

Ideally, all or most of this should get done by the end of summer. Municipal elections scheduled for October will revive the political parties’ animal spirits, reducing the prospects for cooperation. If a President Temer wants to get on the right side of history, he’ll need to move quickly.

To read Noah Smith on finance’s domination of the economy and Justin Fox on why housing is so expensive, go to

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