Economics of Natural Disasters Part 2

17 Jan

On Food Supply and Agriculture

Ivan Ante

Introduction

We can only measure so much of the destruction caused by Super Typhoons Ondoy and Pepeng, but what we cannot fully quantify are the factors that escape economic models and theories – the lost productivity of the people who died or were injured from the weeklong disaster, the potential efficiency of trade had the roads, bridges, ports and terminals been spared, the growing hopelessness and weariness on the part of those who lost everything. The two recent typhoons certainly brought the issue of climate change right to our doorstep. As a third world country, we felt the brunt of climate change in relatively sparse quantities, yet the devastation was unimaginable. Clearly, our environmentally unsound practices have proven quite damaging, especially to the economy.

Immediate Effects

An agricultural country, the Philippines depends heavily on farming to sustain its booming population. The Philippines was one of the less fortunate countries severely affected by the drastic change in climate. An estimated Php27 Billion in infrastructure and agriculture was lost at the onset of the two typhoons.

As we have seen, agricultural products such as rice, corn, poultry and pork grew scarce in supply , as we had to import rice and about 8 million chicken and poultry products to avoid a food crisis until the first half of 2010. This also meant the importation of agricultural products will likely increase until our local producers can provide for our own needs. Last year, our agricultural imports were valued at Php361.182.78 Trillion and this huge amount will likely balloon due to the shortfall caused by the twin typhoons.

At the same time, our agricultural exports suffered, resulting in a reduced agricultural income, thus increasing our trade deficit (agricultural). This made our food supply unstable and highly dependent on our trading partners who are also faced with imminent destruction from storms. They may or may not opt to sell, resulting in a food crisis reminiscent of last year’s rice shortage. The reliance on agricultural imports is fatal and unsustainable for both local producers and consumers.

Looking Ahead

Climate change is just not about huge amounts of rainfall, submerged farms and houses – it is also about drought. If there is extreme wetness (El Niño), certainly there is extreme dryness (La Niña). For instance, the hottest temperature in the country was recorded in 1998 and in that time, El Niño related events cost the country about Php828 Million. To put things in perspective El Niño related incidents at the period of 1990-2003 cost the Philippines about USD370 Million or a whopping Php17.390 Billion! This kind of extreme weather continues to affect our agriculture as we fall further behind the ideal sustainable and inclusive growth.

For example, think of a household of two people and their only food source is what they plant in their backyard (for this example, let’s use corn). In the first month, they harvested 3 units of corn and their monthly consumption is 2 units of corn/month. So they have an extra supply of corn. In the 2nd month, the couple adopted a child who eats 2 units of corn/month, and they harvested 3 units of corn again. That household consumed 4 units of corn that month (2 for the child and 2 for the couple) using up their corn surplus from the previous month. During the 3rd month, the couple adopted another child who eats 1 unit of corn/month. Unfortunately, this month they only harvested 2 units of corn due to an unexpected storm that destroyed one corn. So they have a supply of 2 units of corn and a demand for 5 units (2 for the couple, 2 for the 1st child and 1 for the 2nd child). So what will they do? This simple household shows that a high population rate coupled with an inconsistent food supply is not sustainable even for such a simple household.

One Response to “Economics of Natural Disasters Part 2”

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  1. Economics of Natural Disaster Part 2 « The Home Organization of …- Typhoon Pepeng - January 17, 2010

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