Extreme weather events lead to significant physical, economic and social impacts with short- and long-term consequences for affected regions. The methodologies used to assess the impacts often focus on the insured losses associated with private capital and public infrastructure. However, these estimates do not reflect the losses, monetary and non-monetary, associated with damage to uninsured assets. In addition, in the absence of systematic methods for measuring and recording impacts experienced by the informal sector—both households and small businesses—losses experienced by these segments are not reported, particularly in the developing world. This paper uses primary data collected from a survey of households and small businesses to estimate the uninsured losses due to a major flood event in the city of Mumbai, India. A detailed characterization of the losses is attempted, by disaggregating losses into monetary damage to property, physical capital, assets, equipment and inventory as well as loss of income, investment and disruption of essential services. Aggregate estimates of losses at the city level are computed and compared with the insured private and public losses traditionally reported in the literature. Our results indicate that the uninsured private losses suffered by individuals and small businesses significantly exceed the damage to public infrastructure. In the absence of insurance or government assistance, these costs represent a significant out-of-pocket expenses for the households and businesses. These findings have significant policy implications in terms of highlighting the vulnerability of the informal sector to extreme weather events in cities of the developing world.
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This empirical study was part of the research project funded by the Asia Pacific Network for Global Change Research (APN) under the ARCP 2010. The project was funded for three cities—Mumbai, Bangkok and Manila. The authors acknowledge the support and funding received from the APN for this study and also appreciate the valuable inputs of the collaborators.
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Patankar, A., Patwardhan, A. Estimating the uninsured losses due to extreme weather events and implications for informal sector vulnerability: a case study of Mumbai, India. Nat Hazards 80, 285–310 (2016). https://doi.org/10.1007/s11069-015-1968-3
- Extreme weather event
- Uninsured losses
- Informal sector
- Impact assessment