4.1 Cost-benefit analysis of disaster mitigation in health services

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A cost-benefit analysis is one of the available decision-making tools for promoting investment in risk reduction include. This type of analysis is based on the principle of comparing the cost and benefits of an individual project, and judging the project acceptable if the benefit exceeds the cost.

A report prepared by ECLAC calculates that more than US$3.120 billion was lost in the countries of the Americas over a 15-year period as a result of damage to health infrastructure. Estimates of indirect losses are considerably greater, reflecting increased health care costs for the millions of people who remained without health services for prolonged periods.


Moreover, studies conducted by PAHO show that in the case of health infrastructure, the costs of retrofitting are relatively low when compared to the investment in the infrastructure they are designed to protect. The profitability of this type of investment is measured by comparing its cost with the economic and human losses that a disaster would cause in its absence. Unfortunately, however, the benefits of mitigation measures are much more evident, and investment gets major attention only after a disaster.

The cost-benefit analysis of mitigating the impact of a disaster depends on the type of event, the type of construction, and the moment of intervention, since the sooner safety measures are incorporated the more economical they are. Thus, for example, including earthquake safety considerations when planning new buildings can increase total cost of the building (infrastructure and equipment) by approximately 4%, while the cost of strengthening existing facilities to resist earthquakes may average between 8% and 15% of total cost. Read more in the PAHO publication Protecting New Health Facilities from Natural Disasters.

It should be noted that although the goal in this context is to make an economic argument that shows the advantages of investing in mitigation, ensuring that hospitals are safe in a disaster and that health services continue functioning is above all a social issue. The benefits that accrue on this side are hard to quantify, but efforts to ensure them should not be contingent on their economic performance.