THE Inter-American Development Bank (IDB) has declared that the Caribbean and Latin America face potentially crippling economic and social costs from natural disasters and needs to do more to reduce risks and prepare government finances to respond to eventual catastrophes.

A new set of indicators by the IDB details the potential economic losses a group of 17 countries in this region could suffer in the event of a natural disaster and evaluates how effective their governments are in managing these risks. The indicators show that the region’s systems and policies to manage disaster risk are still unsatisfactory.

The latest results of the risk indicators was presented during the Ninth Consultative Meeting of the Global Facility for Disaster Reduction and Recovery, which will be held at IDB headquarters from October 4-7.

The system of indicators, developed in 2005 with financial support from the IDB’s Multi-donor Disaster Prevention Trust Fund and the Japan Special Fund, allows countries to better assess their risks, serving as a useful guide for policymaking and government actions to reduce human, infrastructure, financial, and economic losses caused by earthquakes, floods and other natural events.

The IDB is currently working with 15 countries in the Caribbean and Latin America in projects related to disaster risk management.

Human and economic losses stemming from natural disasters have increased over the past century in this region as a consequence of population growth, unplanned urbanisation, overexploitation of natural resources and probably the effects of climate change.

The IDB said earthquakes, floods and storms caused US$34 billion in economic losses in 2000-2009, compared with losses of US$729 million in the in the 1940s.

For example, the indicators show that if Peru were hit today by an earthquake similar to the one that hit Chile earlier this year, it could suffer economic losses of as much as US$15.8 billion. A similar event could cause losses of as much as $5.2 billion in Mexico, $3.8 billion in Colombia and $3.5 billion in Ecuador.

Jamaica’s Prime Minister Bruce Golding has already placed a value on the damage caused by last week’s torrential rains at over $10 billion with the Minister of Finance Audley Shaw expected to plead Jamaica’s case at this week’s IMF/World Bank Annual Meetings held in Washington DC.

“The region faces significant levels of risk that have apparently not been fully gauged by policymakers and society in general. Latin America and the Caribbean have shown unsatisfactory levels of risk management,” said Héctor Malarín, head of the IDB’s Rural Development, Environment and Disaster Risk Management Division.”

In order to improve their risk management, countries need to upgrade their policies, enhance integration among agencies at the central and subnational levels of government as well as invest to reduce, retain and transfer these risks,” Malarín added.