The submerged economy of risk: the case of the Dominican Republic

After spending over a year talking to hundreds of people in the Dominican Republic who live in risk areas and are affected by floods, the same questions kept arising: What measures would you take to keep your house, your crops and your cattle from being flooded out and your buildings from being destroyed? If you were able to manage risk in this country, where would you aim your strategies? The same answers also kept cropping up. More “picks and shovels” for emergency agencies, an effective communications system for early warning and rapid evacuation, greater collaboration among organizations, better facilities, and the one heard most often: “raise public awareness about risk.” I agree with all these responses, in particular with raising public awareness to educate people about what risk is all about.

Foto: E. Bustillo

Foto: © E. Bustillo

In the city of Baitoa, located in Santiago province, downriver from the Taveras dam, a woman living alongside the river told me her house had been destroyed by the “discharge from the dam during Tropical Storm Olga,” in December 2007. And, to my question as to why she rebuilt her house on the same site where it had been destroyed by the flood, she said that she did not have any money to build in town and there, where she was living, no one asked her for money. This is but one example of the many similar stories one hears throughout the country.

But I am not going to talk about the people who are unaware of existing risks, but rather about those who know it well. They know it so well that they take advantage of catastrophes and disasters, and profit from the flooding of their cropland and pastures, and from the loss of their home and other assets.

In the Dominican Republic, it is well known that many people live in areas that are highly exposed, and therefore, at high risk —such as riverbanks, unstable hillsides, entire neighborhoods crammed into highly dangerous urban ravines... It appears that there can be a payoff from living in a high-risk area, because of the high probability of being the prize-winning victim in the next catastrophe. With a little luck, the Civil Defense Bureau will come and get them out of their homes, which will then be knocked down by floods, rains or some other natural phenomenon. The result: thousands of homeless, and public institutions building houses in areas that are supposedly not at risk, in order to house all these people. According to ECLAC, floods in November 2003 left 16,160 houses damaged or destroyed, with a cost of 62 million pesos (US$1.8 million) for rebuilding and relocation processes.

Most of the people who were relocated either had informal subsistence jobs, or devoted themselves to farming or livestock, and now their uninsured lands and herds have been harmed, or they are out of work altogether. Now, they have no capacity for saving and their source of income has dwindled or dried up. But they do have a house, the sale of which could give them enough money to live off of for a few years, until the next disaster comes along.

In May 2009, during a seminar on “Risk Management Inclusion in Planning and Public Investment,” Guarocuya Félix, Undersecretary of Planning, stated that, “natural disasters require allocating approximately 1 percent of the national budget each year to mitigation measures and compensation for damages.”

Public institutions invest money in building houses, but in the end, the situations looks similar to the way things were before the disaster: people living in the same areas that were affected. And this not only refers to residents who were living in those areas before, but also more people who move there and are eager to “win a house” in the coming years. Their exclusion from society forces these people to become outlaws. The submerged economy often offers livelihoods to the disadvantaged who take a beating from an economic system that has failed to meet their needs.

But is it only the people who engage in these practices who benefit from this risk? No. They are the true losers in this system, which forces them to gamble with their lives and put a price on their children’s heads, in order to provide for them while subsisting in makeshift housing.

The true “submerged economy of risk” develops when these situations are permitted, when quick fixes are sought for short terms of no more than four years, in time to earn votes for the next election. These are the true hidden revenues earned from disaster.

The definition of risk has been amply studied, along with the elements involved in it: hazard, exposure and vulnerability. With regard to hazard, nothing can be done; these are natural and no one can keep a tropical storm, hurricane and other adverse natural events from occurring. In the face of vulnerability, which refers to the intrinsic conditions in the population for anticipating, surviving, resisting and recovering in the face of adverse events, numerous measures exist, though some are long-haul and costly. This falls outside the study of risk and gets more into macroeconomic concepts at the government level. We are left to deal with exposure: if we are vulnerable, but we are not exposed, our risk will be considerably less.

Foto: E. Bustillo

Foto: © E. Bustillo

There are a great number of things that can be done to reduce the level of exposure of the population. The first of these measures would be not to allow communities to grow on river flood areas, even less so when these people have already been relocated elsewhere. To achieve this, risk needs to be mainstreamed into all public sectors, so that all regulations consider risk management. One solution would be to enact a law that prohibits selling houses obtained as part of disaster relocation processes. Another measure would be to enable some of the country’s institutions, such as the Civil Defense Bureau, the Dominican Army or the National Police, to take actions to prevent people from settling in defined risk areas. Obviously, implementation of these measures is complex in a society that has historically lived with risk and whose perception of it is much more permissive than what would be desirable. For this reason, these measures and actions would be unpopular, but that does not make them any less necessary.

If we are truly determined to deal with a problem that hits the Dominican society time and again —in particular its most disadvantaged citizens— tangible results must be achieved, rather than simple band-aid solutions that leave the problem festering and waste time and effort. When public monies are invested, criteria must be used that look further than the next election —towards the transformation from a society that “faces risk” repeatedly into one that “manages risk” as effectively as possible to reduce its consequences.

Eduardo Bustillo
Researcher. Natural Risk Group (NATRISK), University of
Valladolid (Spain)