The Corruption of Disasters
January 7th, 2011
Almost exactly one year ago, just before sunset, the strongest earthquake to hit the region in over 200 years struck Haiti, the poorest country in the Americas, just outside the capital city, Port-au-Prince. Homes, schools, and government buildings were reduced to rubble. An estimated 150,000 to 200,000 people died and the total damages are estimated between $8 and $14 billion. That’s about 110% of Haiti’s GDP.
In 2008 a 7.9 magnitude earthquake struck Sichuan Providence in Western China, killing about 70,000 people. A number of buildings collapsed, including a three-story school, which killed 127 students. Yet many neighboring government buildings around the school were largely undamaged.
I give these examples for a reason. Developing countries are particularly susceptible to property damage and death as a result of earthquakes, largely because of poor-quality construction. There are much higher death rates in similar-sized earthquakes close to population centers in the developing versus the developed world. The 1988 earthquake in Armenia, for example, was half the size of the 1989 earthquake near San Francisco, California, and yet 25,000 people died in Armenia compared to 100 in California.
Much of the damage and deaths are preventable through proper mitigation efforts. A report by the World Bank and U.S. Geological Survey reports a mere $40 billion in disaster prevention could have reduced the damage as a result of disasters in the 1990s by $280 billion.
Better regulation in developed countries does not explain the difference.
In fact, one study which studied a cross-section of countries, found there is no association between the number of procedures required to perform construction and the number of worker accidents. Moreover, greater regulation in countries at similar levels of income was actually found to correlate with lower compliance with international quality standards.
So what does explain this difference?
While design of regulations may be adequate in many developing countries, enforcement is often lacking. In the wake of the 2008 Sichuan earthquake, grief-struck parents whose children died in the collapsed school sought answers from public officials. Their search raised questions about the enforcement of building codes and in particular, shed light on public corruption in construction and disaster-mitigation regulation in China.
Indeed, according to Transparency International, construction is ranked as the most corrupt industry in the world. It makes sense. Adherence to building codes is often not readily visible, but rather requires a periodic inspection for compliance by a trained official. That official has little personal incentive to see the buildings comply with standards and may even believe the likelihood of a disaster is remote. The construction company may be able to save money by paying the official, instead of implementing the necessary mitigation measures.
In the case of disaster preparedness, it is truly the low-level corruption that kills. To be devastating, corruption doesn’t have to be a scandal on the national scale. While it is hugely damaging when a few federal judges and a handful of national legislators take bribes and pay offs, it can be equally or even more damaging when many local officials do so.