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Naec 29 9-2014 jacobzone
1. Boosting economic and social
resilience and the governance of
critical risks
Stephane JACOBZONE
Public Governance and Territorial Development
OECD NAEC Seminar 29 September 2014
2. A new context: Governments are facing
novel risks in a complex landscape
β’ Increased major shock events
β Large-scale, novelty, complexity, trans-boundary
and cascading effects
β’ Increased vulnerabilities of modern societies
β Mobility, interdependency, interconnectedness,
climate change, concentration, urban & coastal
development
β’ Reduced capacities of national governments,
new stakeholders, increased citizenβs
expectations
4. Resilience isβ¦
β¦ the capacity of a system to absorb disturbance and reorganise
while undergoing change so as to still retain essentially the same
function, structure, identity, and feedbacks.
Source: OECD (2014). Boosting Resilience through Innovative Risk Governance. OECD Publishing, Paris.
5. Resilience isβ¦
β¦ the capacity to adapt to changing conditions without
catastrophic loss of form or function
β¦.A dynamic perspective: an emergent property of what a
system does, rather than a static property that the system has: it
is an outcome of a recursive process that includes: sensing,
anticipation, learning and adaptation.
This applies to SOCIAL AND ECONOMIC SYSTEMS
Source: OECD (2014). Boosting Resilience through Innovative Risk Governance. OECD Publishing, Paris.
6. An economic analysis of resilience:
Minimising welfare losses
Source: OECD (2009), OECD Factbook 2009: Economic, Environmental and Social Statistics. Source: Mirdoudot, S. and K. De Backer (2012), βMapping Global Value Chainsβ.
Trend GDP
Major shock :
- Economic crisis
- Disaster
Time
GDP
Severity of impact
Duration
Shaded area corresponds to
GDP the welfare loss
7. An economic and welfare analysis of
resilience
Source: OECD (2009), OECD Factbook 2009: Economic, Environmental and Social Statistics. Source: Mirdoudot, S. and K. De Backer (2012), βMapping Global Value Chainsβ.
β’ An economic challenge : case fatality reduced in OECD
economies, but economic impacts have increased
β’ An argument for economic competitiveness
β’ Requires a 360 degree approach to understand the
economic vulnerability and impacts:
o Macroeconomic shocks are not the only ones
o Disaster impacts, local impacts but also macroeconomic
propagation
o Impacts on government revenues, stock markets
o Some hypothesis may not always hold
o Need to rethink government strategies integrating a risk
dimension into long term and national security planning
8. β’ Some disasters caused economic losses in excess of 20% of GDP
(Chile, NZ), with local economies especially affected
β’ Shocks propagate across economic sectors and geographic
boundaries through interconnected economies
β’ Considerable uncertainty challenges good policy making for
resilience
The dynamics of shocks
-10%
-5%
0%
5%
10%
15%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Annual Regional GDP growth
to previous year
The impact of disasters on local economies
Abruzzo Queensland New York
9/11 Attacks
LβAquila Earthquake
6/4/2009
Queensland
Flooding
2010/11
Source: OECD (2012), Large regions, TL2: Demographic statistics, OECD Regional Statistics (database), accessed on
14 November 2013, doi: 10.1787/data-00520-en
9. Multiple economic effects: Japan
β’ In the aftermath of the earthquake in 2011β Japanese economy
contracted by 0.7% in real GDP and fiscal deficit increased to 9.5%
as a result of the disaster in 2011
β’ Industrial production fell by 15 % compared to previous month,
β’ Impacts of power supply, corporate earnings,
β’ Less impacts in terms of employment, prices remained stable,
β’ Local effects: exodus of younger generations in the affected areas
exacerbating aging
β’ Past earthquakes did boost public fixed capital formation and
government final consumption expenditure, implications for
public debt.
Source: Higuchi et al, ESRI discussion paper 2012,
Cabinet Office, annual report on the Japanese economy, July 2011
10. Multiple economic effects: New Zealand
β’ Stimulus peak from the rebuild 2 %of GDP.2011
β’ Resilient economy: GDP rose by 0.9 %
β’ Higher damage estimates: continuing after shock.
Huge impact on public debt: 20 points of GDP,
β’ Huge impact on public debt: 20 points of GDP,
β’ Current account widening,
β’ Ex post estimates of the costs have risen
significantly,
11. Boosting Resilience
β’ Multiple layers of resilience
β’ Systemsβ approach to strengthening
resilience through risk governance
12. β’ Implementing OECD Recommendation on the
governance of critical risks
β’ Integrating interconnectedness, policy
implications and policy trade offs
β’ Analysing the vulnerabilities to a wide range
of shocks, including disasters and man made
threats
β’ Promoting an integrated understanding of
resilience and of its risk implications
Addressing resilience gaps : A NAEC
approach through the High Level Risk Forum
13. Objective: Ensure that governments develop
robust frameworks for the governance of critical
risks and their resilience to major shocks
Adopted by the OECD Ministers in May 2014
Close cooperation with the UN and the revision of the HFA
13
The OECD Recommendation on the
governance of critical risks
1. A holistic approach to risk management
2. Risk assessment, foresight, financing framework
3. Whole-of-society approach to prevention
4. Strategic crisis management
5. Transparency, accountability, improvement
Source: OECD (2014), Recommendation of the Council on the Governance of Critical Risks
B
14. β’ Importance of ensuring decision making
under uncertainty
β’ Building multiple layers of resilience
β’ Maximising the benefits of working together
at community level, at national level and
through international cooperation
β’ Building Trust is essential
CONCLUSION
