28356 NUMBER 47 * EDPrecis Operations Evaluation Department June 1993 Bank Lending for Reconstruction: the Mexico City Earthquake Worldwide, disaster losses was ill prepared for the tremors. Its public and private agencies the victims amount to billions of dollars annually. vulnerability stemmed from its moved into camps around the dam- Developing countries suffer most in geomorphic conditions but also from its aged tenements. i contrast, the victims terms of lives lost, human resources deteriorated housing stock. Most of the of the Central American earthquakes diminished, and physical losses as a homes wrecked by the earthquake were largely hidden from view: those share of their GNP. Earthquakes, were typical of the "vecindades" which left homeless in Nicaragua fled to other floods, hurricanes, and droughts housed Mexico City's poorest fani- cities and to the homes of friends and become disasters when they outstrip a les-inner city tenements where 20 family; the Guatemalans set about vulnerable community's ability to years of rent control had left housing rebuilding their homes in the country- cope. overcrowded and in ill repair. side; El Salvadorans continued to live in the ruins behidnd the facades of the The Bank assists with disaster The Mexican government had tenements or in gullies near the river. recovery within a development already made a commitment to framework. Experience has shown improve low-income housing. Two The Cabinet announcement was that reconstruction by itself is not national agencies, FONHAPO and followed by a decree expropriating enough: measures must be taken to FOVI, were emerging with workable some 5,500 rental properties damaged reduce the risk of future disasters and programs and the Bank had come to in the earthquake, as well as those to safeguard people vulnerable to FONHAPO's aid with a loan for $150 considered to have dangerously them. The Mexico City earthquake million in 1985. deteriorated and those lacking individ- reconstruction project was a success ual services. The decree protected the in a sector housing construction- Very soon after the quake (October earthquake victims from eviction. and context-emergency-where the 7), the Cabinet approved a program to Landlords offered little resistance since Bank has had few successes. A recent rebuild housing for the victims on the most of the properties had long since audit by OED analyzes the reasons sites of the ruined tenements. The ceased to yield much income. why the project succeeded and the announcement underlined the Presi- implications for future reconstruction dent's involvement in the reconstruc- Institutional arrangements projects.* tion as a problem of national impor- tance. The massive reconstruction effort Disaster and response set straightforward goals in housing This decision differed radically _____________ The earthquake of September 19 from those of Mexico's neighbors, and 21, 1985 in Mexico City left some Guatemala, and Nicaragua, which "Perfornance Audit Report, 250,000 people homeless and 900,000 when faced with similar emergencies Mexico: Earthquake Rehabilita- with damaged homes. Nearly 1,700 tion and Reconstrution schools were damaged and 30 percent ment plans. The Mexican earthquake Project", Report No. 12149, June of the city's hospital capacity was victims had made their presence felt 1993. 0EDreport are available destroyed. and their plight visible. Aweekafter to Bank Executive Directors and the quake, a march of 3,000 strong staff frorn the Internal Dcui- Despite a history of earthquakes began the first of a series of protests by ment. Unit and from Regional and updated building codes, the city those left homeless. With the aid of Infortihtion Services Cnters. The Bank's role Bank Assistance for Emergency Recovery The Bank has assisted with more * Shortages of skilled manpower Tae f r iondby than 130 crises following natural and and construction materials often rsihane $81 million o man-made disasters, and since 1985 delay recovery, an elled, urban ro has devoted 3-5 percent of its portfolio each year to emergency Prevention mechanisms need to b approved a new loan of $400 million recovery operations. built into the reconstruction process. for the reconstruction effort by March Bank staff, used to "normal" projects, 1986. The Bank's financial support One of the Bank's most important sometimes assume that emergency was key, but so was the wisdom to tasks is to help countries reduce their recovery involves adjusting normal understand and back a good program, vulnerability. Vulnerability stems procedures, estimating losses, and a fully "owned" and managed by the from a number of factors, key among one-to-one replacement of needed Mexican authorities. which is poverty, which can make buildings and supplies, but this safety less attainable and recovery approach may in fact increase Housing reconstruction more difficult. Environmental vulnerability. degradation and mismanagement RHP intensifies the disastrous effect of In the mid 1980s, the Bank became natural events-as when deforesta- aware of the need to focus its disaster The agency created for housing tion results in the silting of rivers and assistance on recovery issues and to reconstruction, Renovacion Habitacio- downstream flooding. Decisions help rehabilitate sectors that could nal Popular (RIF), managed the made in the course of development attract further investment. One can increase or decrease vulnerabil- offspring of this concem has been the demolition, clearance, reconstruction, ity. As cities grow along coasts, flood design of flexible "time-slice" and repair of more than 42,000 plains, and fault lines, more people operations to finance recovery within apartments while supervising the and investments are placed at risk to an overall scheme closely linked to temporary shelter and predicament of natural hazards. But often a ten- development objectives, some 85,000 families. dency toward vulnerability is reversible, and becomes less menac- Some successful projects: Created by Presidential decree ing when it is understood. three weeks after the earthquake, RHP aNepal Earthquake Reconstruction started out with staff borrowed from The Bank has learned that the best Project: emphasized disaster-resistant sectoral ministries, and without projects for emergency response are reconstruction of housing and previous planning or experience in flexible and pay special attention to schools, adoption of improved emergency situations. Tis factor reducing future risks: building codes and techniques, and explains its first weeks of apparent intense community participation. inaction while it developed an * Managers in affected countries * Rio Flood Reconstruction Project in effective organization. It soon often lack practical knowledge of Brazil: emphasized reduction of crisis management. disaster vulnerability and creation of regrouped into a much tighter * Institutional weaknesses are a "prevention culture". structure based on a direct link compounded by the multisectoral - Income Generating Project for between the Director General and 13 nature of the disruption, by break- Refugee Areas in Pakistan: involved modules which became the key of the downs in the country's lifelines- the refugee community in alleviating reconstruction effort. (See Box.) basic communication channels and the damage of natural resources such infrastructure-and often by a as fuelwood, pasture land, and water. By December 1985, after it had limited ability to ensure that funds - Sudan Emergency Flood Reconstruc- surveyed the damaged buildings and for reconstruction are productively tion Program: smooth international families left homeless and introduced used. coordination, a new building code, RI-I decided to: Demolish buildings in danger of health, and education. The education was left to a newly created agency, immediate collapse. and health components of the recon- R eP, which was given a two-year life Rebuild all tenements in danger struction were managed successfully span. Commercial banks were used of collapse or unfit to live in, even by the standard agencies in charge of initially to handle savings accounts to when the problems stemmed from school and hospital construction. finance temporary assistance to the general deterioration and lack of homeless, but the task proved too maintenance, not just from earthquake For housing, the project relied on complicated for them. The project damage. In practice, most of this several existing agencies but the bulk was completely managed by goven- housing was rebuilt entirely; RHP of the work, including demolition, ment agencies, although some NGOs found that repairs and retrofitting clearance, management of temporary participated in financing or building often would cost more than new housing, and new home construction about 3 percent of the homes. construction, particularly given the June 1993 overall decision to rebuild with private bathrooms and kitchens. How Did They Do It? Effective Participation RHP's objectives thus evolved: RHP was charged with register- had to be signed by the owners before first from rebuilding what had been ing, housing, and consoling the construction could begin. damaged in the earthquake to rebuild- earthquake victims while negotiat- ing what could be damaged in a future ing new solutions with them. It had About half the families continued earthquake, and then to replacing the to deal first with homeless families to live in temporary shelters in the city's deficient tenements with inde- living in the street and with wide- streets, with RHP supplying water, pendentspread distrust of its intentions sanitation, and cooking implements. ments built accordingtoneart- RHP went from dealing with to Another half took advantage of RHers mens biltaccrdig t anearh-collaborating with the insurgent rental aid program. Families who quake-resistant building code. neighborhood reconstruction moved out of the shelters to live with committees, with opposition parties, family or friends or in vacant apart- Construction, repairs, and rehabili- and NGOs. ments were given a monthly subsidy tation were linked with occupants' (whose cost per family was consider- purchase of housing units and geared RHP's 13 modules were reception ably less than that of the temporary to their income levels. centers to attend to the earthquake shelters). Meanwhile, the modules victims. Each module formed a became important for maintaining RHP performed extremely well, renovation council, made up of contact with families who had calling into question the view that no victims, that helped count the people dispersed. new agency should be created to deal displaced and verified the identity of with disasters. It was disbanded after those who claimed certificates of For owner-occupied apartments its two-year mandate was completed, right to a replacement dwelling, which needed repairs and rehabiita- leaving its portfolio to FONHAPO Representatives of the different tion, RHP established ten depots in which continued to build housing for agencies offering housing and the key locations throughout the city thevarious NGOs met with victims at where families could go to pick up thereminig fmiles,the modules and worked out which construction materials and to get solution would be best for each technical advice. The depots were Choice of housing type family. later transferred to FONHAPO. RHP discarded its initial proposal Since the basic commitment was To minimize disruption of normal to finance self-help and progressive to rehouse families on the sites activities, RIF carried on most of its development units which would have where they had lived before the activities at night. Meetings with varied according to buyers' income quake, the modules sorted out the beneficiaries and counseling went on levels. Since most of the victims had groupings of people to be housed in from evening on. The task of trucking similar economic and family situations, each new apartment building, and some 2,500 tons of rubble out of the it chose a standard design formula at a worked with them during the design city, and bringing in an equivalent standard price. The apartments varied phase. Families joined together in load in new building materials was somewhat from site to site, but were all determining the materials for carried out from midnight to five a.m. the same size, arranged in groupings of common areas, pavings, planters. The Bank's supervision missions fewer than 20. The designs respected location of water tanks and shrines, adjusted their hours to meet with the life style of the beneficiaries, and so on. Every apartment plan RHP's nocturnal shifts. maintaining the common areas and patios, and low density, while respect- ing the needs of each family for space plan for financing finished apartments they had been before the disaster. The and privacy. The financing plan and and purchasing used housing, in project took important steps in price were designed to be affordable to addition to the expropriation policy, prevention and mitigation, rehabilitat- families who earned from one to 2.5 the Bank recognized that disaster ing and replacing dilapidated build- times the minimum wage (40 percent reconstruction could differ from ings. The project had a substantial of victims were in this group). Families standard housing reconstruction effect on Mexico's disaster awareness who could afford larger units were projects, and that it was more impor- (see Box), and the city, particularly its offered recently built apartments on the tant to support the borrower's plan poorest residents, will not be as outskirts of Mexico City. than to foist its own solutions on to vulnerable to the next natural disaster. clients. The project thus looked very The housing component is most different from the Bank's traditional Achievements impressive. Some 78,000 families housing and disaster reconstruction were rehoused. The number of units projects of the 1970s, which had As a result of the project the completed exceeds the number emphasized progressive housing and victims of the earthquake were able to anticipated at appraisal by about 12 serviced lots. In accepting the Mexican resume, or improve on, their lives as percent. The reconstructed housing is OED Pr&cis damaged and vulnerable buildings Reducing Urban and Natural Risks came to light than had been originally counted. by Manuel Aguilera Gomer Dr. Aguilera, now President of the Coordination of public agencies Steering Committee of the PRI of Mexico and the community to give the rescue * Disaster recovery and the Bank. The City, was Director General of the effort unity and balance; Popular Housing Reconstruction Unit - International exchange of experi- sucs of the icoreoftrt ences to introduce Mexico City to pasroject an th u mpotanel oft When urbanization pushes advanced technologies for preventing beyond a certain point, risk and and responding to disasters. about the Bank's capacity to under- vulnerability become constant factors take emergency projects. But the that must be considered in the design Reorienting urban development experience underlines the fact (also and implementation of urban mentioned in OED audits of the development policies. Not until the For many years, urban growth Guatemalan and Nicaraguan 1985 earthquake did we become fully meant that most investments went to earthquake reconstruction projects), aware of our profound vulnerability expand major infrastructure-water that Bank assistance will only be as an urban community. The first supply, storm drainage, the subway- effective if government is sincerely step in reducing the vulnerability of largely in the modem parts of the cty. comitted to reconstruction. the Federal District has been the Many of the major infrastructure 0 Disaster reconstruction projects: redesign and implementation of an systems must continue to provide a The experience emphasizes the integrated civil protection system. centralized service for the urban importance of quick response and The second is a reorientation of the whole. But most government action- flexibility in getting a project under- urbanization process and the city's whether to reduce pollution, improve development model. the urban space, or diminish foresee- way. able risks-should be a local, decen- cos hubang proes Traitioa low-h Modernizing the civil protection system tralized, response to the priority demands of specific, localized, social right response to disasters. The The basic purpose of this system entities. decision to rebuild for the earthquake is to guarantee an organized, speedy, victims on the sites of their former and efficient government and In the future, most investments in housing was key. It respected community response to any emer- Mexico City must be made in mixed community and neighborhood gency and to coordinate joint efforts urban habitats. To integrate them relationships, as well as location with to restore normalcy in services and fairly will require a stress on commu- relation to employment, as few the rhythm of daily life. The project nity development rather than the housing projects manage to do. to modernize civil protection has five continuing growth of vast metropoli- Institutions and project manage- elements: tan programs. Aggregate demand ment: RHP, which drew many of its must yield to priority demand-which 'I professional staff from FONHAPO * Fostering solidarity; should be met mainly from local and other parts of the housing sector, * Local decentralized responses to resources. Through group representa- seems to have gained strength and emergencies; tion, communities must participate * Training for each population directly in managing everything that nai fro th act thatit as a group by zone and type of activity; bears on their daily lives, new body estuaele missionand A shortlife pan,tailoeddtotheatsk.; Sdanger in setting up new institutions of a quality rarely found in public sector undamaged schools to bring them up to in emergencies is that they may live housing, or private housing for low- standards set by new construction on after the emergency is over. income families, anywhere, and at codes. This was the first Bank-support- * Superzfision: The project was reasonable cost. ed reconstruction project to support actually underway during its pre- such preventive measures. sumed appraisal, but was backed The schools componeni t cost some 20 with substantial supervision. Its percent more than its appraised costs Project costs were about 9 percent history is one of continual adjust- but appears to have widely surpassed more than programmed. Unit costs ments to speed up administrative its goals (by 179 percent). The city were actually reduced during the processes and to avoid stagnation for government retrofitted some 3,000 reconstruction process, but more lack of money or materials. C)FD Pr&is is produced by the Operations Evaluation Department of the World Bank to help disseminate recent evaluation findings to development professionals withinand outside the World Bank. The views here are those of the Operations Evaluation staff and should not be attributed to the World Bank or its affiliated organizations. Please address comments or enquiries to the managing editor, Rachel Weaving, E-t204, World Bank, telephone 473-1719. June 1993