an investment of MAD 2.7 billion would save over 5,800 lives and correspondingly reduce injuries and trauma for a much large population, while achieving benefits of MAD 26.5 billion, equivalent to a Benefit Cost Ratio (BCR) of 9.8 and Internal Rate of Return (IRR) of 29%. These results are based on selecting the ten most cost-beneficial mitigation actions from a set of 51 that were examined using MnhPRA. The IRR is based on a simplified calculation assuming all capital investment being made at project initiation (see box for more details). International experience further reinforces these findings that if appropriately managed – disaster risk reduction projects, especially those that are community based with participatory approaches, can achieve high IRRs and have significant economic spin-off effects. A major study of disaster mitigation for the US Congress found that, overall, mitigation produced benefit-cost ratios of four. Evidence based on disaster risk management activities in developing countries confirms this finding. There is a clear rationale for public intervention as, in general, disaster risk management investments mitigate market failures and provide public goods type infrastructure. Returns tend to be higher for simpler activities that were not very capital-intensive that is, local community projects, which is a key – focus of the Program. Table 8 Summary of possible BCR values in disaster risk reduction projects Country Hazards BCR max Malawi Drought 24.0 Sudan Drought 1,800.0 Fiji Flood 7.3 India Drought 3.5 Earthquake 2.0 World (35) Flood 60.0 World (35) Wind damage 6.07 (35) Earthquake 5.1 Fiji 7.3 Germany 9.0 Austria 1.7 Peru 3.8 Indonesia Flood 2.5 Philippines Flood 31.0 Nepal Flood 3.5 Nepal Flood 18.6 Iran Flood 1.3 Pakistan Flood 25.0 India Flood 2.5 Pakistan Flood 25.0 Bangladesh Cyclone; flood 4.9 India Flood 57.8 Philippines Flood; lahar 30.0 USA All 5.1; overall average 4 China All 4.0
an investment of MAD 2.7 billion would save over 5,800 lives and correspondingly reduce injuries and trauma for a much large population, while achieving benefits of MAD 26.5 billion, equivalent to a Benefit Cost Ratio (BCR) of 9.8 and Internal Rate of Return (IRR) of 29%. These results are based on selecting the ten most cost-beneficial mitigation actions from a set of 51 that were examined using MnhPRA. The IRR is based on a simplified calculation assuming all capital investment being made at project initiation (see box for more details). International experience further reinforces these findings – that if appropriately managed disaster risk reduction projects, especially those that are community based with participatory approaches, can achieve high IRRs and have significant economic spin-off effects. A major study of disaster mitigation for the US Congress found that, overall, mitigation produced benefit-cost ratios of four. Evidence based on disaster risk management activities in developing countries confirms this finding. There is a clear rationale for public intervention as, in general, disaster risk management investments mitigate market failures and provide public goods type infrastructure. Returns tend to be higher for simpler activities that were not very capital-intensive – that is, local community projects, which is a key focus of the Program. Table 8 Summary of possible BCR values in disaster risk reduction projects Country Hazards BCR max Malawi Drought 24.0 Sudan Drought 1,800.0 Fiji Flood 7.3 India Drought 3.5 Earthquake 2.0 World (35) Flood 60.0 World (35) Wind damage 6.07 (35) Earthquake 5.1 Fiji 7.3 Germany 9.0 Austria 1.7 Peru 3.8 Indonesia Flood 2.5 Philippines Flood 31.0 Nepal Flood 3.5 Nepal Flood 18.6 Iran Flood 1.3 Pakistan Flood 25.0 India Flood 2.5 Pakistan Flood 25.0 Bangladesh Cyclone; flood 4.9 India Flood 57.8 Philippines Flood; lahar 30.0 USA All 5.1; overall average 4 China All 4.0