The January 13, 2001 earthquake in El Salvador ... · earthquake in El Salvador. ... poverty in the rural zones farthest removed from national development, ... Margarita (Deputy Chief,

The January 13, 2001earthquake in El Salvador.

Socioeconomic and environmentalimpact.

Economic Commission for Latin America and the CaribbeanSubregional Headquarters in México

UNITED NATIONS

ECONOMICCOMMISSION FORLATIN AMERICAAND THE CARIBBEAN –ECLAC

Distr.RESTRICTED

LC/MEX/L.457February 21, 2001

ORIGINAL: SPANISH

THE EARTHQUAKE OF JANUARY 13, 2001 IN EL SALVADOR:

Socioeconomic and Environmental Impact

________________________This document has not been subject to editorial review.

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TABLE OF CONTENTS

PageSUMMARY ......................................................................................................... v

FORWARD ......................................................................................................... 1

I. GENERAL CONSIDERATIONS............................................................... 3

1. Background ........................................................................................... 32. The Mission........................................................................................... 33. Description of the Phenomenon............................................................ 54. The Affected Population........................................................................ 135. Emergency Response Actions ............................................................... 19

a) Governmental Action....................................................................... 19b) The Salvadoran Red Cross and Other Civilian Organizations ........ 20c) International Cooperation................................................................ 21

II. DAMAGE ESTIMATES ............................................................................. 23

1. Social Sectors ........................................................................................ 23

a) Housing and Human Settlements..................................................... 24b) Health and Sanitation....................................................................... 35c) Education, Sports, and Culture ........................................................ 37

2. Productive Sectors ................................................................................. 41

a) Agriculture and Fishing ................................................................... 41b) Industry, Trade, Services, and Tourism........................................... 43

3. Infrastruc ture ......................................................................................... 50

a) Electricity and Hydrocarbons .......................................................... 50b) Potable Water and Sanitation........................................................... 53c) Transportation and Telecommunications ........................................ 56

4. Environment .......................................................................................... 67

a) Introduction...................................................................................... 67b) The Environmental Situation of El Salvador................................... 68c) The Earthquake’s Impact on the Environment ................................ 70d) Economic Assessment of Environmental Damages........................ 73

5. Recapitulation of the Damages.............................................................. 80

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PageIII. MACROECONOMIC EFFECTS................................................................ 89

1. Summary of the Damage ....................................................................... 892. The Situation before the Earthquake ..................................................... 90

Overview ............................................................................................... 90

3. Forecasts for 2001 after the Earthquake................................................ 924. Central Government’s Fiscal and Economic Policy.............................. 945. The Impact on Employment .................................................................. 97

a) Overall Impact ................................................................................. 97b) Impact by Sectors ............................................................................ 97

IV. CONSIDERATIONS FOR RECONSTRUCTION..................................... 103

1. Some Strategic Guidelines .................................................................... 1032. The National Strategy............................................................................ 1043. Some Concepts for Reconstruction....................................................... 105

a) Toward Correct Environmental Management: RecommendedAction Guidelines ............................................................................ 109

b) Strategies for Employment Recovery.............................................. 110c) Housing and Human Settlements: Guidelines for

Reconstruction................................................................................. 110d) Vulnerability and Framework for Project Development ................. 113

1

FORWARD

This study is the result of a request from the Government of El Salvador to the EconomicCommission for Latin America and the Caribbean (ECLAC) for a comprehensive assessment ofthe effects of the January 13, 2001 earthquake, which substantially affected an extensiveproportion of the country. This tragic event affected the country’s economy, society, and fragileenvironment, aggravating preexisting vulnerabilities conditions in those areas.

The study is submitted pursuant the Salvadoran government’s request to ECLAC.Although the study covers multiple sectors, its aim is to analyze the event’s overall effects,describe the macroeconomic implications thereof, and provide several general guidelines forrehabilitation and reconstruction strategies and programs. This study neither substitutes norinvalidates other partial or sector specific evaluations made by domestic institutions or by otherinternational organizations, financial institutions, or bilateral cooperative institutions whose focusor purpose may be different.

This work was carried out with collaboration from the national authorities, in particular,the Ministry of Commerce —formally authorized by the government to compile the informationand prepare the proposal for reconstruction and domestic development— as well as from theTechnical Secretary of the Presidency of the Republic. Members of the assessment missionconsulted with the respective government ministries for the various sectors; the NationalEmergency Committee (COEN); the Central Reserve Bank (BCR); various national, municipal,and local institutions; public utility companies; representative entities of the productive sectorsand of the country’s municipalities; all of whom are key players in providing emergency servicesand in the recovery process, as well as non-governmental organizations and members of theacademic and scientific communities.

The interdisciplinary, inter-institutional mission that visited the country from January 31to February 13, 2001, hereby submits a comprehensive assessment of the effects of theearthquake that struck the majority of the country’s territory on Saturday, January 13. Thequantification conforms to the ECLAC methodology, establishing the magnitude of the direct andindirect damages, evaluating macroeconomic consequences, and attempting to quantify thedifferential effects in the various Departments and for the country as a whole.1 The resultssubmitted are the mission’s estimates, and reflect the information available at the time.

In any event, the results show that the intensity of this disaster, coupled with otherpreexisting vulnerability factors, have affected the potential for growth and development in the

1 ECLAC’s nearly 30 years of experience in evaluating these events in Latin America and the

Caribbean is reflected in a methodology set forth in the Manual for the Estimation of the SocioeconomicEffects of Natural Disasters (1991). These studies, which quantify damages at the request of governments,have often served to provide orientation for reconstruction plans, programs and projects, and to determinethe need for and the nature of the international assistance required, if any. Among the most recentexamples are the assessments of hurricanes Keith (in Belize, 2000), Mitch (in all of Central America,1998), and George (Dominican Republic, 1998), the earthquake in the coffee-growing region of Colombia(1999), and the landslides and floods in Venezuela (1999).

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country as a whole over the short and mid term. Emergency services and the requiredreconstruction work exceed the capacity of the national government and local authorities(departmental, municipal, municipality) to deal with the disaster’s effects. These limitations areespecially relevant to endeavors aimed at reducing the impact of similar events in the future, andat moving in the direction of mitigating the country’s high vulnerability to seismic, volcanic, andhydrometeorologic phenomena. The country needs to improve its management of the above-described risk, within the framework of changing its approach to environmental management.

This assessment is offered to the national government and the local authorities (on thedepartmental and municipal level), private economic agents, non-governmental organizations(NGOs), and the international community interested in aiding the reconstruction anddevelopment process in El Salvador. Its intention is to provide elements for establishing nationaland local priorities that make it possible to revitalize the affected zones and a restore the dynamicdevelopmental momentum of the country as a whole in economic, social and environmentalaspects, within a framework of appropriately managed risk and reduced vulnerability. To thatend, the assessment provides information upon which to develop programs and projects that canhelp reduce physical and environmental vulnerability, while increasing economic and socialsustainability and stability as a part of the reconstruction efforts.

The study points out the limited utility of a purely economic assessment. It emphasizesthe need to incorporate social elements into the reconstruction efforts. Such elements shouldfocus on alleviating the suffering of population clusters already facing difficult conditions, due topoverty in the rural zones farthest removed from national development, and due to internationalconditions that impact coffee-producing activities. There is a pressing need for social andproductive investment, based on principles of economic, environmental, and social sustainability,governability, and increased gender equality. This means that special attention should be paid andpriority should be given to measures for mitigating vulnerability factors. Such efforts should aimto prevent an increase in risks posed by events such as these, which are recurrent given thegeomorphologic characteristics of the country as a whole. At the same time, they should focus onimproving integration among the various social groups. Furthermore, they should encouragecompetition among rural activities, both with respect to the rest of the country and vis-à-vis theworld market. Support should be given to efforts aimed at diversifying production, at increasingthe added value of rural activities, and at further developing service activities. Taking theseelements into consideration when allocating resources for the rebuilding and replacement of lostphysical infrastructure will help to improve conditions of sustainability and reduce thevulnerability of the country’s development process.

Finally, the study highlights the strength and fighting spirit of the Salvadoran people infacing the suffering and damage caused by the disaster. This creates an optimistic outlook for theopportunity to undertake reconstruction efforts based upon new criteria and values, introducinginstitutional, legal, and structural reforms to various sectors so as to reduce economic, social, andenvironmental vulnerability. In any such reform, it will be important to increase the capacity forsavings, investment and management among the affected population groups and by the country asa whole, as a part of the challenge of reconstruction.

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I. GENERAL CONSIDERATIONS

1. Background

At the request of the Government of El Salvador, a working group was formed to conducta comprehensive assessment of the effects of the January 13, 2001, earthquake in that country.The Economic Commission for Latin America and the Caribbean (ECLAC), with financialsupport from the Salvadoran Fund for Preinvestment Studies (FOSEP), logistical support fromthe United Nations Development Program (UNDP), and in coordination with the Inter-AmericanDevelopment Bank (IDB) and in-country United Nations staff, convened a group of experts,comprised by officials of ECLAC and of various agencies within the United Nations system, aswell as regional Central American organizations and institutions.

The resulting study is being disseminated to Salvadoran governmental entities,international organizations, and cooperating countries within the framework of the specialConsultative Group convened by the IDB.

The study was made possible with the assistance of Salvadoran authorities, both at thenational and local levels, and consists of a comprehensive, detailed assessment of both the directand indirect damages caused by the disaster. It also identifies the sectors and geographic areasthat incurred the heaviest damages so that they might be given priority treatment during post-disaster recovery efforts.

2. The Mission

From January 22 to 25, 2001, a preparatory mission was carried out to identify the sectorsto be assessed, as well as to establish the necessary contacts and institutional connections, and toformally initiate the work of the evaluation mission. The Ministry of the Commerce and theTechnical Secretary to the Presidency provided logistical, institutional, and technical assistance,while area specialists and in-country counterparts for the mission were also identified.

A broad interdisciplinary and interinstitutional team of experts visited the country fromJanuary 31 to February 13, 2001. During that time team members met with the in-country UnitedNations Coordinator and country officers from the various United Nations agencies, as well aswith the Ministry of Commerce —designated the technical point of contact for the mission. Theyalso met with the national authorities, and technical and area experts, both from the governmentand from the private sector, and with other nongovernmental organizations for purposes ofcollecting relevant information on each area to be assessed. The mission was staffed with expertsin the social and economic spheres, and others with expertise in assessing the damage to thecountry’s infrastructure and environmental and cultural heritage. Various institutions andagencies within the United Nations system supported the mission. In particular, support wasreceived from the Food and Agricultural Organization of the United Nations (FAO), theInternational Labor Organization (ILO), the Pan-American Health Organization/World HealthOrganization (PAHO/WHO), the United Nations Environment Programme (UNEP), and theUnited Nations Educational, Scientific and Cultural Organization (UNESCO). Regional Central

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American entities were also involved in the assessment, including: the Central American Bankfor Economic Integration (CABEI), the Counsel for Social Integration (CIS), and the CentralAmerican Commission on Environment and Development (CCAD). To cover the various sectorsto be studied, the participating experts and specialists were grouped as follows:

I. INFRASTRUCTURE− Energy and sanitation; recapitulation of

damages− Jovel, Roberto (consultant)

− Transportation, communications, − Baraqui, Jaime (consultant)

II. PRODUCTIVE SECTORS− Agriculture, livestock, fishing − Tapia, Antonio (consultant)

− Giovannoni, Marco (FAO)− Trade, industry, free zones, and tourism,

in particular small and micro in ruralareas

− Bitrán, Daniel (consultant)

− Rural issues − Flores, Margarita (Deputy Chief, ECLAC-Mexico)

III. SOCIAL SECTORS − Serrano, Pablo (Chief, SocialDevelopment Unit, ECLAC-Mexico)

− Education and culture − Espinoza, Mario (UNESCO)− Gándara, José Luis (UNESCO)

− Employment and restoration ofproduction activities

− Escobar, Javier (ILO-Central AmericanRegion)

− Lazarte, Alfredo (ILO-GenevaHeadquarters)

− Rosal, Mario Hugo (ILO-CentralAmerican Region)

− Trigueros, Rafael (ILO)− Cultural, historic, and archeological

heritage− Carvallo, Ciro (UNESCO)− Guevara, Teresa (UNESCO)− Sánchez, Abraham Roberto (UNESCO)

− Affected population, socioeconomiccohesion (family and communityorganization, indigenous communities,vulnerable population (children,adolescents, the elderly), genderperspective: women as agents of change

− Arenas, Ángeles (UNDP)− Olguín, Gabriela (ILO)− Silva, Alejandra (CELADE)− Velázquez, Luís Álvaro (SISCA)

5

− Health, sanitation, and water services − Bañuelos, Armando (PAHO, infectiousdiseases)

− Clodion, Claude (PAHO-Consultant,Martinique)

− Osorio, Claudio (PAHO-Costa Rica, waterand sanitation)

− Ruales, José (PAHO/WHO, hospitalinfrastructure)

− Toro Ocampo, Horacio (PAHO/WHO)− Zometa, Rosa Ma. (PAHO, El Salvador,

medical care and services)− Housing and human settlements − Simioni, Daniela (Human Settlements

Unit, ECLAC)− Ramírez, Mauricio (UNDP)

IV. ENVIRONMENT ANDVULNERABILITY

− Gómez, José Javier (EnvironmentalDivision, ECLAC)

− Fernández Norberto (UNEP)− Rodríguez, Rafael (UNEP)− Marín, Rebeca (CCAD)

V. MACROECONOMIC EVALUATION − Hernández, René (Industrial DevelopmentUnit, ECLAC-Mexico)

VI. PROJECT DESIGN − Barboza, Roy (CABEI)− Bove, Aldo (CABEI)− Carías, Xiomara (CABEI)− Navarrete, Salvador (CABEI)

The mission was coordinated by Ricardo Zapata Marti, ECLAC’s contact for disasterassessment, and received the assistance of Margarita Flores, Chief in charge of ECLAC’sSubregional Headquarters in Mexico, who took part in the initial visit to the area betweenJanuary 31 and February 4.

3. Description of the Phenomenon

At 11:33 a.m. on January 13, 2001, an earthquake occurred in the Republic of ElSalvador, a nation that, after much effort, had managed to take important steps toward theconsolidation of peace, democracy, and macroeconomic stability, and that, together with the restof the neighboring Central American countries, had agreed upon a strategy of transformation andmodernization for the coming twenty years. That strategy, which would allow the country tomake a qualitative and quantitative leap, both in terms of improved living standards andeconomic development, is now threatened by the impact of the recent natural disaster.

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The earthquake had a magnitude of 7.6 degrees on the Richter scale, and is thus classifiedas a very strong quake.2 Its epicenter was located off the Pacific coast of El Salvador, at a pointlocated 100 kilometers southeast of the city of San Miguel, off of the Salvadoran “Costa del Sol,”at a latitude of 12.8 degrees north and a longitude of 88.8 west (12.8°N, 88.8°W). (See Map 1).The depth of the seismic focus was estimated as approximately 60 kilometers.

Figure 1

LOCATION OF THE EPICENTER OF THE JANUARY 13, 2001 EARTHQUAKE 3

The earthquake was felt not only in El Salvador; its effects were felt with varyingintensity all the way from Mexico to Panama. The following map shows the distribution of theearthquake’s intensity in the Central American region, through lines of equal value, or isoseismiclines.4

2 The Richter scale measures the amount of energy released by an earthquake. Its classification

system is as follows: Strong, between 6.0 and 6.9; Very strong, between 7.0 and 7.9; Extremely strong, 8.0and above. Source: National Earthquake Information Center, United States Geological Survey.

3 Source: National Earthquake Information Center, Denver, Colorado.4 Seismologic Center of Central America, Boletín Informativo III-2001-01-18, San José, Costa

Rica, January 18, 2001.

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Figure 2

LINES OF EQUAL INTENSITY OF THE JANUARY 13, 2001 EARTHQUAKEAND DIAGRAM OF THE GEODYNAMIC EFFECTS

MAP OF ISOSEISMIC LINES (MM)JANUARY 13, 2001 EARTHQUAKE IN EL SALVADOR

1

VIIIVIIIVIIIVIII

VIIIVIII

VIIIVIIIVIIIVIII VIIIVIII

VIVI

VIVIVIVI

VIVI

VIVI

VIVI

VIVI

VV VVVVVV

VV

VVVIIVII

VIIVII

VIIVII

VIIVII

VIIVII

VIIVII

VIIVII

VIIVII

VII+VII+

VII+VII+

VIII+VIII+

VIII+VIII+

IXIX

MAPA DE ISOSISTAS (MM)SISMO OCURRIDO EN EL SALVADOR

13 de Enero de 2001

Fuente : BID, S. Mora

HONDURAS

GUATEMALA

OCEANO PACIFICO

Source: IDB, S Mora

The intensity of the earthquake was recorded at between VI and VIII on the modifiedMercalli scale within Salvadoran territory, while in neighboring countries it fluctuated betweenIII and V. The modified Mercalli scale measures the degree of damage caused by earthquakes tobuildings and furnishings. An earthquake with an intensity of VI can be felt by the populace andcan engender panic, cause the displacement of furnishings, tear off wall surfaces, and causeminor damage to buildings in general. When the intensity reaches VII degrees, the earthquakecauses serious damage to buildings made from adobe; moderate damage to concrete construction;and minor damage to well-designed, well-constructed buildings. A quake with an intensity ofVIII, on the other hand, results in moderate damage to duly designed and constructed buildings,major damage and partial collapse in well-constructed buildings; and the complete destruction ofadobe structures.5 The foregoing illustrates the effects of the recent earthquake within Salvadoranterritory.

The principal earthquake was followed by a large number of aftershocks, many of whichwere of great intensity, and even some with magnitudes high enough to be classified asearthquakes themselves, such as the one on February 7. More than 3,000 new earthquakes have

5 Adapted from the National Earthquake Information Center, Magnitude/IntensityComparison, United States Geological Survey.

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been tallied through February 13. These aftershocks have resulted in additional damage,aggravating the structural instability of affected buildings and of the collapsed embankments andhillsides caused by the initial January 13 quake.

The origin of the earthquake was tectonic. Central America is frequently affected byquakes whose origin is subduction, that is, by the overlapping of the Caribbean and Cocostectonic plates, when energy accumulated in the form of pressure between the two plates alongtheir entire length of contact is released. The map in Figure 3 displays the tectonics of the CentralAmerican region and illustrates this point.

Figure 3

TECTONIC MAP OF THE CENTRAL AMERICAN REGION6

Nonetheless, the January 13, 2001 earthquake was the result of an internal fracture in theCocos Plate caused by gravitational forces.7 Because the quake originated beneath the zone ofcontact between the plates, no tsunami occurred.

The earthquake caused damages of varying type and degree, depending upon locationwithin the country. Tens of thousands of homes and other adobe structures were either destroyed

6 Novelo, David, Sismicidad en Centroamérica, CEPREDENAC, Panama, January 2001.7 Seismologic Center of Central America, Boletín Informativo III-2001-01-18, Op. Cit.

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or were damaged to such a degree that they will have to be demolished. Several thousanddwellings of concrete construction suffered structural damage, or damage to walls and othercomponents. Various high-rise buildings located in areas where the quake’s intensity was greatestsuffered structural damage, and many others of the same type had minor damage to their wallsand other non-structural components. Furnishings were destroyed or damaged in proportion to thedegree of damage suffered by the structure in question.

There were numerouslandslides and collapsed hillsideslocated principally —but notexclusively— in the Cordillera delBálsamo and Costera mountainranges, resulting in damages ordestruction to homes, highways,roads, and other structures. Trafficwas interrupted along the Pan-American Highway, which servesas the principal transportationartery for cargo and commutertraffic within El Salvador, andbetween El Salvador andneighboring countries. Other, lesssevere collapses occurred along other roadways. In at least two cases the earthquake provokedlandslides that were accompanied by liquefaction, causing mudflows and rockflows that buriedentire neighborhoods in at least one city, as well as various stretches of major highways. Highyield coffee-producing hillside agricultural lands were also lost as a result, along with severalcoffee processing facilities, impacting the nation’s principal export product. Detailed studies arealready underway to determine the best method of stabilizing the hillside zones where thelandslides occurred.

Immediately after the quake, the supply of electricity was interrupted, on account ofdamage to the transmission lines and distribution networks in urban areas. Service was restored,however, in less than 24 hours. Water service was also suspended, because there was no power tooperate the pumps, and because storage tanks and supply lines had been damaged. Both fixed andmobile telephony services became overloaded with extremely heavy usage, as individualsattempted to ascertain the safety of family members and relatives. All such services, however,were gradually restored. As such, a week after the disaster, the only regions that were stillwithout services were those that had suffered total destruction.

The majority of the country’s production capacity, however, was relatively unharmed.With the exception of the coffee crop —which was in the process of being harvested, and whichwas affected both by damages to processing facilities and by a shortage of available field labor—the remainder of the agricultural industry was unharmed. Only a small percentage of largeindustry was affected, whereas small to mid-sized businesses were more seriously affected, withdamages to buildings and machinery. Other than in two limited cases, the hotel industry reportedvery minor damage, though occupancy rates have suffered as a result of cancelled reservations.

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Trade activity, on the other hand, particularly microenterprise activity and small-scaletrade, suffered considerable damage to installations, inventory and operations. Completecessation of operations was limited, however. Indeed, most activity was resumed, albeit underprecarious conditions.

Given the Salvadoran people’s long history of surmounting adversity, and thedemonstrated willingness by the international community to lend its assistance, the country isonce again prepared to embark upon reconstruction efforts.

El Salvador, like all of Central America, is an area frequently prone to major seismicphenomena. In the last century alone there were ten earthquakes that caused significant damage,although their origin may have been either tectonic or volcanic. On the other hand, the recentearthquake was the second largest in terms of magnitude, taking second place only to theearthquake of 1915, which measured 7.9 on the Richter scale. (See the graph in Figure 4). Whatdistinguished this quake, however, is that it felt throughout the country, whereas the majority ofprevious quakes had relatively localized effects. In this context, it becomes necessary to make acomparison between the January earthquake and the 1986 quake that hit San Salvador. First ofall, the January 2001 earthquake had a significantly higher magnitude (7.6 versus 5.5). Secondly,the 1986 quake was limited primarily to the metropolitan region. In that sense, the Januaryearthquake in El Salvador bears more similarity to the 1976 Guatemalan earthquake, both interms of magnitude and scope.

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Figure 4

RICHTER MAGNITUDE OF EARTHQUAKES OCCURRING INEL SALVADOR DURING THE 20TH CENTURY 8

0

1

2

3

4

5

6

7

8

RIC

HT

ER

MA

GN

ITU

DE

1912 1915 1917 1919 1932 1937 1951 1965 1982 1986 2001

To fully appreciate its impact, it is useful to compare the effects of the January quake inEl Salvador with similar, recent events in Central America and throughout the world.

8 National Earthquake Information Center, Earthquake Search Results 1900-1999, United

States Geological Survey.

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Table 1

CHARACTERISTICS OF RECENT EARTHQUAKES

Location Year Magnitude Number ofDeaths

Damages (millions ofdollars, at 1999 rates) 9

Chile 1960 9.5 ... ...

Alaska 1964 9.2 130 ...

Managua 1972 6.2 6,000 3,018

Tangshan, China 1976 8.0 255,000 ...

Guatemala 1976 7.5 23,000 2,154

Mexico City 1985 8.1 8,000 6,197

San Salvador 1986 5.5 1,200 1,346

Ecuador 1987 6.8 1,000 1,438

Limón, Costa Rica 1991 7.5 55 ~1,000

Kobe, Japan 1995 6.7 ... ...

Armenia, Colombia 1999 5.8 1,185 1,540

San Salvador 2001 7.6 726 ...

The preceding table, which uses damage estimates compiled by ECLAC for those casesoccurring in Latin America,10 reveals several items of interest. First, despite its relatively highmagnitude, the January earthquake claimed a limited number of lives within the context of thecases analyzed in the table. Comparing the death tolls from the Guatemala and Managua quakes(23,000 and 6,000, respectively), it seems obvious that the lower statistics from the January 2001quake were due to the fact that the quake occurred during the day, while the population was alertand able to reach safety, while the other two events occurred during the night. Second, for eventson which solid data is available, the amount of damage incurred depends a great deal on thedegree of development of the country in question. Specifically, the more developed a country, thegreater the value of damages sustained, as the amount of assets in question is greater.

The recent earthquake in El Salvador can also be viewed within the framework of a seriesof disasters with diverse causes and characteristics, which have affected Central America inrecent years. The number of fatalities and victims, as well as the amount of damages and lossesresulting from the January 13 quake, when added to the statistics for previous disasters in theregion, starkly underscores the region’s vulnerability to extreme natural disasters.11 Between1970 and 1999, damages caused by natural disasters in the region totaled US$22.5 billion (at the

9 ECLAC estimates.10 Economic Commission for Latin America and the Caribbean, Latin America and the

Caribbean: The Impact of Natural Disasters on Development, 1972-1999, Mexico, 1999.11 In a recent document, the IDB and ECLAC pointed out the correlation between such

vulnerability and development: A Question of Development: How to Reduce Vulnerability to NaturalDisasters” (LC/MEX/L.428), March 7, 2000.

13

1999 rate), or the equivalent of US$748 million per year, which represents 1.8 percent of thegross domestic product for the region. During the same period, natural disasters caused the deathor disappearance of 55,734 persons, and injured an additional 110,076, while directly affecting3.2 million individuals.12

4. The Affected Population

The scope of the earthquake went well beyond the bounds of El Salvador, with effectsnoted in Guatemala, and even in the Mexican highlands, some 2,000 kilometers away. As such,all of El Salvador was strongly impacted by the effects of the quake. The coastal Departmentswere clearly hit the hardest, although the greatest damage often occurred to their inlandmunicipalities and communities.

To better understand why such a large percentage of the population was affected, it mustbe noted that the highest population density, both in El Salvador as in the rest of Central America,is located in the vicinity of active or dormant volcanoes, as well as in the areas where the contactbetween the tectonic plates produces earthquakes with some frequency. This situation is clearlyillustrated in the following map.

12 Jovel, Roberto, El impacto económico y social de los desastres naturales en la región

centroamericana, Conference on Medicine and Disasters, School of Medicine, University of El Salvador,San Salvador, 2000. See also, The Transformation and Modernization of Central America in the XXICentury, Annex: Recent Central American Development, General Secretariat of the Central AmericanIntegration System, San Salvador, 2001.

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Graph 1

LOCATION OF THE POPULATION AND OF THE EPICENTERS OF EARTHQUAKESOCCURRING IN THE 19TH CENTURY IN CENTRAL AMERICA 13

An explanation exists for these demographics. Namely, the populace has always chosen tosettle in these high-risk zones since they are generally the areas with the most benign climate andthe best agricultural lands, as well as the best infrastructure.

Moreover, a relatively large percentage of the population, especially in urban areas, isliving in highly vulnerable zones due to a dearth of sufficiently detailed maps revealing suchvulnerabilities, along with regulations or other legal measures that can be duly implemented.14

For that reason, as well as those discussed above, damages and losses attributable tonatural disasters in Central America, including El Salvador, have been quite high. As such, theregion’s heads of state have decided to adopt a proactive approach to this issue, which would

13 USGS, Seismic Hazard Map of North and Central America and the Caribbean, Washington,

D.C., 1998.14 See La transformación y modernización de Centroamérica en el siglo XXI, Anexo: El

desarrollo centroamericano reciente, Op. Cit.

15

reduce the vulnerability to, and the impact of, natural disasters, while strengthening the entitiescharged with emergency response. Specifically, the Central American Presidents, during their20th annual summit held in Guatemala City on October 18–19, 1999, adopted a strategicframework for the reduction of physical, social, economic, and environmental vulnerabilities, aswell as the impact of natural disasters.15 The January 2001 earthquake, however, occurred duringthe earliest implementation stage of the Five-Year Central American Plan approved at saidsummit.

In addition, the majority of the affected dwellings and buildings, with the exception ofthose in the areas of the earthquake’s greatest intensity, or those in areas where landslidesoccurred, were of dated construction and made of unsound material (adobe). For all of the abovereasons, extensive damage occurred throughout the country. In particular, the quake impactedboth urban and rural areas in the vicinity of the Cordillera Costera mountain range, negativelyaffecting living conditions for the entire Salvadoran population.

The Departments of Usulután (97%), La Paz (77%), and San Vicente (56%) suffered theheaviest damages in terms of the percentage of total population affected. At the other extreme,the northern Departments, which were most affected by Hurricane Mitch, includingChalatenango, Morazán, Santa Ana, and the most populated of all —San Salvador— saw only amarginal percentage of their populace directly affected by the quake, although San Salvador didexperience damages to its physical infrastructure. (See the table on the following page).

Moreover, in the interior of each Department there were frequently stark contrastsbetween some areas that were practically leveled and other, neighboring sites where damage wasrelatively minor. Hardest hit in the Department of La Libertad were the municipalities of NuevaSan Salvador and Comasagua. In the Department of Santa Ana, it was the Santa Ana municipalitythat suffered the brunt of the impact. In Sonsonate, damages were concentrated in themunicipality Armenia. More generalized damages were seen in Usulután, although themunicipalities of Santiago de Maria, Jiquilisco, Berlín, Usulután, and San Agustín sufferedespecially heavy damages to their building structures, the majority of which are one-story.

This high percentage of totally or partially destroyed dwellings and other buildingssharply contrasts with the relatively low death toll. Specifically, there were 827 deaths and 4,520injuries.16 Yet it should be noted that 485 of the deaths —that is, nearly 60%— occurred in theLas Colinas neighborhood of Santa Tecla (in the municipality of Nueva San Salvador,Department of La Libertad), which is practically a suburb of San Salvador. A massive landslideburied the homes at the base of the hillside in mud, leaving very few survivors. In addition to thistragic incident, which ultimately became the most representative image of the national disaster,there were also rural communities whose buildings were almost completely destroyed, but whichincurred very few deaths. In part, the timing of the quake, the ability to get out into the open sincethe houses were one-story, and the relatively soft building materials used in local construction,

15 See the Declaration of Guatemala , October 19, 1999.16 According to data provided by the National Emergency Committee (COEN) as of February 2,

2001. The urgency of the situation made it impossible to break down the statistics by age and sex.

16

such as bahareque16B and adobe, all serve to explain why, fortunately, the human losses were nothigher.

Department TotalPopulation (a)

PopulationAffected (b)

Percentage of theTotal Population

Dead Injured

Total 6,340,486 1,160,316 18.3 827 4,520

Ahuachapán 322,795 67,784 21.0 - 80

Cabañas 158,823 1,098 0.7 - 7

Chalatenango 203,803 492 0.2 - 4

Cuscatlán 208,825 37,740 18.1 20 43

La Libertad 675,075 143,215 21.2 585 1,364

La Paz 297,726 227,034 76.3 32 153

La Unión 297,765 12,523 4.2 1 8

Morazán 180,493 180 0.1 - 3

San Miguel 486,784 62,478 12.8 19 43

San Salvador 1,981,308 40,189 2.0 24 386

San Vicente 165,230 92,395 55.9 29 53

Santa Ana 558,761 38,432 6.9 47 295

Sonsonate 451,140 96,402 21.4 44 1,295

Usulután 351,956 340,354 96.7 26 786

Source: ECLAC, based on figures from the National Emergency Committee (COEN)(a) Population estimates for January 2001, based on projections from the Latin American and

Caribbean Demographic Centre (CELADE).(b) Population considered by COEN to have been affected, with or without loss of dwelling.

In a substantial number of cases, the technical deficiencies in these structures explain theirlimited resistance to seismic waves, their collapse, and the resulting enormous number of familiesleft homeless. The extremely high percentage of direct victims in the above-mentionedmunicipalities and in entire Departments, such as Usulután, raises critical problems, both at thenational and local levels. Isolation, due to cut-off roads where landslides had occurred, is anotherfactor that hindered rescue efforts, compromised responses to the emergency in general, andaggravated the situation in many heavily damaged zones.

A high proportion of the Salvadoran populace —18.3 percent— was directly affected bythe earthquake. According to partial estimates, approximately half of this number lost theirhomes. Many others suffered temporary or permanent interruption to their sources of income, asthe economic life of many communities collapsed. Schools and religious centers were lost.Communities were isolated, basic services were suspended, and the people had to focus their

16B Bahareque is a construction technique that, like adobe, employs mud-based construction.Unlike adobe, however, the mud mixture is not formed into bricks, but is instead applied over aframework of sticks from a cane-like plant.

17

energies on what was often a dramatic emergency situation. 17 The effects of the earthquake ondaily life had patently different intensities and characteristics depending upon factors such as:location (urban versus rural, the latter suffering much more), gender, and ethnicity (indigenousversus nonindigenous population). For example, there were some cases where civil-registryand/or court archives were lost to the detriment of the affected parties. In general, one couldsafely say that the entire country suffered the effects of the earthquake, even if only in terms ofthe anxiety and stress, which without doubt extended to the large Salvadoran Diaspora, themajority of which resides in the United States, which did not delay in providing support.

As will be seen in more detail below, 130,000 housing units suffered considerabledamage, of which nearly 93,000 were completely destroyed (of these, nearly 700 were buriedunder landslides). In addition to the immediate rescue efforts, this dramatic housing situationrequires extraordinary attention, as its scope and gravity have far exceeded the capabilities of thegovernment and Salvadoran society. Shortly after the disaster, the President of El Salvadordeclared a state of emergency and issued a call for international assistance. These measures andthe arrival of equipment from abroad, which have supplemented the country’s internalcapabilities, made it possible to set up shelters, dormitories, and other forms of refuge to housethe homeless population. At the beginning of February, these numbered 142 and housed nearly33,000 persons. This population may have reached 60,000 at its highest point, which, however,comprises only 10 percent of the population estimated to have lost their homes.

In contrast to the situation after Hurricane Mitch, which occurred two years ago, thecountry’s schools and churches were not very useful for temporarily housing the homeless.Rather, based on safety concerns, and given that it is the dry season in El Salvador, open areaswere preferred, such as public parks and sports fields. According to partial data —as not all suchcenters took a census— some 56% of shelter residents are minors, 24% are women, and theremaining 20% are men.

Such data are necessary to better guide assistance efforts, as different age and gendergroups have different basic needs, which could go unattended if we are unaware of thecomposition of the affected population. It is also known that women and adolescents run aheightened risk of being victimized by sexual violence in the type of crowded conditionsprevalent in these temporary shelters and makeshift camps.

The additional tasks undertaken by the populace in the various stages of the emergency,recovery, and reconstruction typically coincide with those that are socially assigned by gender,meaning that women are generally tasked with those activities that directly benefit the family unitand the community (standing on line to receive food and supplies; hauling water and firewood;food preparation, cleaning, and clothes washing; caring for the physically and emotionally infirm;caring for children, the elderly, and disabled persons; community organizational efforts, etc.).Such tasks typically go uncompensated monetarily, which means that women as a group tend tosuffer a loss of wages in post-disaster periods, since they can no longer carry out the variouswage-earning activities that they performed prior to the disaster. Production-related activities,

17 The tally of those injured and otherwise affected underwent a jolt of its own on January 22, as

numbers of the affected suddenly jumped to almost double initial estimates, from 500,000 to more thanone million, due to the delay in reporting and delivering statistical information.

18

which generally are remunerated, are typically are performed by men (debris removal, housingreconstruction, road repair, and other types of community employments).

These facts take on a greater relevance if it is taken into account that women serve asheads of household in 28.2% of all of the country’s family units. If these factors are not takeninto account, there is a risk that these situations of emergency, recovery, and reconstruction couldfurther exacerbate the inequity between the sexes. Of these temporary shelters, refuges anddormitories, 46 (one third of the total) are located in the Department of La Libertad, whichborders on San Salvador, providing shelter to nearly 60% of the total homeless population. Thethree installations in the municipality of Nueva San Salvador alone, of which the El Cafetalónshelter is the largest, are housing more than 10,000 refugees. In the neighboring Department ofSan Salvador, 20 shelters were constructed, whereas in the Department of Usulután, the 21available camps are insufficient to meet the needs of the population. The map below details thedistribution of refugees by municipality as of January 24. In addition, many of the disastervictims have taken refuge in the homes of friends or relatives. Given that the majority of theeffected areas are rural communities, and because the country is still in the midst of the dryseason, one common practice has been to erect tents, or, in their absence, simple plastic sheeting.Since the rainy season begins each year at the end of April, this practice could soon become aproblem.

Republic of El SalvadorNational Emergency Committee

Effects of the January 13 Earthquake in El SalvadorNumber of Temporary Shelter Inhabitants by Municipality

Information compiled on the basis of data provided by the National Emergency Committee (COEN)Preliminary information subject to correction

As of: January 24DesInventar Disaster Inventory System

19

As part of the administrative decentralization of this country, local municipalgovernments have taken on the task of distributing items among the affected population such asfoodstuffs, potable water, clothing, basic equipment for the refuge camps, and reconstructionmaterials through storage centers. However, humanitarian aid from the government also centeredaround the shelters, with support from international organizations and NGOs, as well as from thesurrounding population, who responded in great measure to gender and other specific needsthroughout the emergency.

5. Emergency Response Actions

Emergency action in response to the earthquake was relatively swift and coordinated, duein part to the experience and degree of organization acquired in the wake of the Hurricane Mitchdisaster, which occurred a little more than two years ago. Furthermore, certain disaster preventionand mitigation measures were already in place. Governmental emergency response measures hadto be deployed as quickly as possible. These efforts frequently received support from theinternational community. Civilian organizations also played an exceptional role, in particular theSalvadoran Red Cross, to which the government conferred special responsibilities in rescue workin the administration of emergency efforts. The private sector also responded remarkably,ensuring the distribution of both national and international aid. El Salvador has traditionally beenthe recipient of significant flows of foreign assistance, which in this exceptional situation tooklittle time in arriving. Assistance was received from bilateral and multilateral governmentsources, civilian organizations, and individuals. All of these actions were accompanied by highlevels of community organization, most notably in the rural areas, where men and women sharedcollective work, which, in the overwhelming majority of cases, was without any remunerationwhatsoever.

a) Governmental Action

The governmental entity in El Salvador charged with emergency response, prevention,and mitigation is the National Emergency Committee (COEN), an agency of the Ministry of theInterior. As noted above, the President of El Salvador declared a national state of emergency afew hours after the quake, and also made a call for international assistance. Rescue efforts werebegun under the direction of the Armed Forces, and soon received support from specializedrescue team sent by a large number of foreign governments.

Work commenced for reopening the more than 500 roads and highways that were cut offby landslides, redoubling efforts in an attempt to overcome the isolation of a great number ofcommunities. Simultaneously, rescue efforts were intensified. Using tents that were eitheravailable or promptly received through international assistance, some 130 shelters were set up,mostly in open spaces, given that a large number of schools and churches, which under othercircumstances might have served as temporary housing, were damaged to the point where theycould not offer a minimum level of safety.

Likewise, the business sector was deeply involved in the National Solidarity Commission(CONASOL), which was fundamentally created to ensure transparency in the prompt and

20

efficient distribution of foreign and domestic aid, including both cash and in kind assistance. ThisCommission operates in close contact with the Ministry of Foreign Relations. Simultaneously,bank accounts were opened for the receipt of donations within the framework of the operations ofthe Financial Solidarity Committee (CONFISOL), also recently created.

The mobilization of the various national government agencies was impressive. This wasparticularly true in the case of health and sanitation agencies and those tasked with reopening theroadways. Also of note was the work of the Social Investment Fund for Local Development(FISDL), which managed the great demand for temporary shelter modules.

The Salvadoran President appointed the Minister of the Economy to coordinate thereconstruction efforts, and on January 17, requested that the Legislative Assembly approve loansin the amount of US$170 million to meet emergency needs. It should be noted that the earthquakein El Salvador caused the postponement until March of a meeting of the Inter-AmericanDevelopment Bank’s (IDB’s) Regional Advisory Committee for Central America. Originallyscheduled for January 18–19 in Madrid, Spain, this meeting has entailed a great deal ofpreparation on the part of all of the Central American governments. Having now implementedreconstruction projects in response to Hurricane Mitch, the purpose of this meeting currentlyhinges on obtaining financing for the region’s long-term economic revitalization. The meetingwill be held in Madrid, following the Consultative Group Meeting on the post-earthquakereconstruction of El Salvador.

b) The Salvadoran Red Cross and Other Civilian Organizations

The Salvadoran Red Cross, in close coordination with the COEN and the various socialservice agencies of the Salvadoran national government, conducted major search and rescueoperations, provided first aid and evacuations and, above all, the distribution of food, water, andmedicine, the latter of which was channeled through it by the Ministry of Health. Thanks to theefforts of volunteers —initially, around 2,200— the Salvadoran Red Cross has been able to assistsome 62,000 persons, in an effort it intends to expand so as to provide food to 30,000 families(150,000 men, women, children, and elderly persons) and build 23,500 temporary housing units,among several other activities designed for implementation through in a three-phase plan. 18

In addition to its relationship with the International Federation of the Red Cross (IFRC)and with its national partners, the Salvadoran Red Cross has strengthened its ties with otherdomestic and foreign government organizations, which have also gone out of their way to offersupport. In response to an international call for assistance, the IFRC was able to contribute nearlyUS$1.5 million, which supplemented donations in kind, which are difficult to quantify, from theCanadian Red Cross and that of the United States, and an even larger response of $2.7 millionfrom the Spanish Red Cross. Among the contributions from the various NGOs, OXFAM’s standsout, at US$150 million.

18 See El Salvador: Earthquake Appeal No. 02/2001, International Federation of Red Cross

(IFRC). Through this international call for assistance, the agency hopes to collect 5.4 million Swiss francsto assist 154,000 victims during 14 months.

21

The government also requested that the Salvadoran Catholic Church play a role in therelief efforts for those families most affected by the earthquake. Given the Church’s relations tomajor Catholic organizations abroad, it was able to mobilize various other Catholic entities,among them, Catholic Relief Services from the United States, to lend their immediate assistance.

Other non-Catholic religious organizations, such as Action by Churches Together (ACT)and the World Lutheran Foundation, concentrated their efforts on the families that were thepoorest and that were receiving the least services.19

Also of note are the efforts of international NGOs that traditionally operate within ElSalvador, such as the United Kingdom’s OXFAM, among many others, which worked incoordination with the Red Cross.

c) International Cooperation

As noted above, the National Solidarity Commission (CONASOL) was established tosupervise, together with the Ministry of Foreign Relations, the transparency in the receipt anddistribution of international aid, and is comprised of representatives from the business sector.Two years ago, during the receipt of assistance in the wake of Hurricane Mitch, the NationalAssociation of Private Enterprises (ANEP) had taken on this function.

For receipt of the large sums of aid that began to arrive, the Armed Forces centered theoperations at the Comalapa airport as opposed to the Ilopango airport. For these purposes,following the system employed in other countries, the Government used the SUMA (SupplyManagement) data processing system developed by the Pan-American Health Organization(PAHO) of the World Health Organization (WHO) to track the origin and destination of in kindassistance. As occurred after Hurricane Mitch, the reaction of donors was immediate, frombilateral and multilateral sources as well as from private organizations and individuals. Inaddition, in the particular case of El Salvador, the large expatriate community in North Americaprovided an overwhelming response, sending large sums of money back to their families as wellas large amounts of in-kind donations. This aid was channeled individually or through expatriateorganizations, thanks to the mobilization efforts of Salvadoran consulates abroad.

Among the emergency aid provided by the agencies of the United Nations, the WorldFood Program (WFP) provided an initial contribution of US$200,000 as part of its emergencypackage, while the PAHO provided assistance in covering basic sanitation needs with an initialbudget of US$770,000 (primarily in kind), which soon rose to US$1.7 million. The UnitedNations Children’s Fund (UNICEF) provided a contribution of US$500,000, principally used forthe distribution of potable water, medical supplies and equipment, and educational materials. TheUnited Nations Development Programme (UNDP) provided an initial contribution US$50,000 in

19 See Chris Herlinger, Dateline ACT: El Salvador 01/01—Priority to assist people in rural

areas, January 22, 2001. Published by Reliefweb. The author is the press officer for ACT in El Salvadorand information officer for the Worldwide Response Program of Church World Services (CWS), NewYork. The web page for ACT in Geneva, Switzerland, can be located at the following URL:http://www.act-intl.org.

22

cash, while disaster specialists were sent from the Office for the Coordination of HumanitarianAffairs (OCHA), the White Helmets (volunteers from the United Nations), and from theInternational Labor Organization (ILO), among others.

The United Nations System put out a call on January 26 to raise US$34.9 million in orderto cover the post-earthquake needs of the first six months (February through July 2001). Of thatsum, US$12.7 million is to be channeled through the UNDP to construct housing and restoreliving conditions for rural families, who were the group most affected by the earthquake. US$9.9million is to be used for food assistance, through the WFP, and US$6 million will be earmarkedfor health and sanitation services, via PAHO and UNICEF. An estimated 200,000 individualswill benefit from the programs to be put in place.

Bilateral aid came from various countries, much of it in kind and thus difficult to quantify(for example, personnel, rescue equipment, etc.). Outstanding among this assistance was thecontribution from Spain, nearing US$9.5 million, as well as those from the United States (US$5.9million), Germany (US$5 million) and Italy (US$3.7 million). The United Kingdom, Mexico,Switzerland, Japan, Venezuela, and the other Central American countries also provided aid. Theassistance from Spain was primarily comprised of cash donations (US$7.7 million), while that ofthe U.S. Agency for International Development (USAID) was principally geared towardsupporting the projects of CARE and the Cooperative Housing Foundation (CHF).

In total, quantifiable foreign bilateral and multilateral assistance received as of February 2is US$17.8 million. In addition, the United Nations System issued an international call forapproximately US$35 million in assistance for the restoration efforts.

23

II. DAMAGE ESTIMATES

Applying ECLAC’s methodology, 20 various national sources of information were used inpreparing the damage estimates, both from the government and the private sector. Among thesesources were preliminary and partial reports issued by the government and its various agencies,as well as reports from the United Nations working group based in El Salvador, interested donorssuch as the World Bank, and various bilateral cooperation agencies. The reports and theconsolidated appeal prepared by the United Nations Office for the Coordination of HumanitarianAffairs (OCHA) were also consulted.

Available information indicates that a detailed accounting of the earthquake’s effects isstill ongoing in many areas and sectors. Nonetheless, this document was based upon the availableinformation and makes the most accurate approximations possible under the circumstances. Thestatistics presented are based on information provided by official sources and national entities.However, they also incorporate estimates made by the mission, in accordance with ECLAC’smethodology.

The quantification of damages was made in terms of direct and indirect damages,assessing both present values and replacement values, initially measured in physical terms. Theassessment of indirect damages, that is, the effect on the various income flows and the increase incosts and expenditures caused by the disaster, is assessed in terms of current prices. On the basisof these quantifications, Chapter III of this study analyzes the impact of the disaster in overallterms, that is, its impact on macroeconomic performance and on the economic equilibrium to beexpected as a result of the earthquake. The assessment has been made in terms of current U.S.dollars (at the official exchange rate of 8.75 colones per U.S. dollar).

1. Social Sectors

This chapter includes the sectors of housing and human settlements, which were the sectors mostaffected by the earthquake: health and sanitation, education, science, and sports, culture, andcultural heritage. Each sector is treated separately, with a qualitative description of damages thatoccurred, followed by a quantification of the direct and indirect damages, as well as an estimateof the costs of reconstruction, taking into account the need to reduce future vulnerability, and thecorresponding effect upon the external sector of the country.

Each sector was analyzed by a group of both Salvadoran and international specialists, whomade use of estimates already available within the country as a base for arriving at more refinedestimates.

20 ECLAC, Manual for the Estimation of the Socioeconomic Effects of Natural Disasters, op.

cit.

24

a) Housing and Human Settlements

The earthquake caused the highest amount of damage in the housing and humansettlement sector. An estimated 92,768 housing units were destroyed and another 130,005suffered minor to major damage, depending upon their structural characteristics and the type ofsoil in the affected areas. 21 (See Table 2 and Map 1.)

Unlike previous disasters, this earthquake caused damage of varying magnitudes invirtually all of the country’s Departments. Most affected were the Departments of Usulután, with74% affected; San Vicente, with 69%; and La Paz, with 64%. Certain other Departments such asSonsonate, La Libertad, and Cuscatlán, were affected at a rate of between 20% and 30%. Theremaining Departments were affected to a lesser degree.

Several municipal capitals were completely destroyed. In Usulután, for example, themunicipalities of Berlín, California, Jiquilisco, San Agustín, Santa Elena, San Francisco Javier,and Santiago de María were severely affected, as were the La Paz municipalities of Mercedes laCeiba, San Pedro Nonualco, and San Rafael Obrajuelo. In La Libertad, the municipalities ofJayaque and San José Villanueva were affected, while in Sonsonate, the municipality of SanJulián saw a high percentage of its dwellings damaged or destroyed.

21 Other institutions such as the Social Investment Fund for Local Development (FISDL), theCorporation of the Municipalities of El Salvador (COMURES), and the Vice Ministry of Housing andUrban Development are carrying out detailed surveys and have furnished preliminary information.Nonetheless, the basic information used in the analysis and calculations included in this report wasprovided by the National Emergency Committee (COEN) on January 31, 2001.

25

Table 2

EFFECTS TO THE HOUSING SECTOR

DepartmentMunicipalities

Affected

ExistingHousingUnits 22

HousingUnits

Affected

HousingUnits

Affected(%)

HousingUnits

Destroyed

HousingUnits

Destroyed(%)

HousingUnits

Damaged

HousingUnits

Damaged(%)

Total 223 1,259,697 222,773 18 92,768 8 130,005 10Usulután 23 72,075 53,463 74 27,045 38 26,418 36San Vicente 14 30,875 21,370 69 4,633 15 16,737 54La Paz 22 58,863 37,936 64 16,088 27 21,848 37Sonsonate 18 82,554 24,821 30 8,809 11 16,012 19La Libertad 22 12,279 30,946 24 16,388 13 14,558 11Cuscatlán 16 39,693 8,584 22 4,150 11 4,434 11Ahuachapán 8 58,133 9,171 16 3,417 6 5,754 10San Miguel 20 96,106 12,905 13 2,902 3 10,003 10Santa Ana 13 114,971 7,649 7 3,265 3 4,384 4La Unión 19 60,100 2,439 4 328 1 2,111 3San Salvador 22 414,122 12,866 3 5,566 1 7,300 2Cabañas 9 28,780 506 2 157 1 349 1Chalatenango 7 40,802 84 0 17 0 67 0Morazán 10 35,344 33 0 3 0 30 0

According to information provided by the Vice Ministry for Housing and UrbanDevelopment, the housing shortage in El Salvador in 1999 amounted to 555,604 units, of which507,227 (91%) corresponded to a qualitative deficit, that is, housing that needed improvements,and 44,377 (9%) corresponded to a quantitative deficit. The loss of more than 90,000 housingunits and the deterioration of more than 130,000 is added to the total accrued housing shortage.

22 Projections made by the Latin American Demographic Center (CELADE) on the basis of the

5th National Population Census and the 4th Housing Census, 1992, Publication of the Ministry ofCommerce’s Department of Statistics and Census (DIGESTYC). Source: ECLAC, estimates made on thebasis of figures provided by the National Emergency Committee (COEN).

26

Map 1EFFECTS OF THE JANUARY 13, 2001 EARTHQUAKE IN EL SALVADOR

PERCENTAGE OF HOUSING UNITS AFFECTED(GRAPH WITH THE DISTRIBUTION OF DESTROYED AND DAMAGED HOUSING UNITS)

EFECTOS DEL TERREMOTO DEL 13 DE ENERO DE 2001 EN EL SALVADORPORCENTAJE DE VIVIENDAS AFECTADAS

(GRAFICO CON LA DISTRIBUCION DE VIVIENDAS DESTRUIDAS Y DAÑADAS)

SANTA ANA

AHUACHAPAN

SONSONATE

LA LIBERTAD

SAN SALVADOR LA PAZ

CHALATENANGO

CABANAS

SAN MIGUEL

MORAZAN

LA UNION

SAN VICENTEUSULUTAN

SAN MIGUEL

LA UNION

SANTA ANA

AHUACHAPAN

SONSONATE

LA LIBERTAD

SAN SALVADOR LA PAZ

CHALATENANGO

MORAZAN

LA UNION

SAN VICENTEUSULUTAN

SAN MIGUEL

LA UNION

Fuente: información del COEN al 2 de febrero de 2001

N

EW

S

30 0 30 60 Kilometers

% Viviendas afectadas0.1 - 6.7 %6.7 - 15.8 %15.8 - 30.1 %30.1 - 74.2 %

Tipo de afectación% Viviendas destruidas% Viviendas dañadas

Type of Impact% of Housing Destroyed% of Housing Damaged% of Housing AffectedSource: Information from the National Emergency Committee (COEN) as of February 2, 2001

Comparing data contained in the Multiple Purpose Home Survey for 1999, prepared bythe Ministry of Commerce’s Department of Statistics and Census (DIGESTYC), against figuresrepresenting the percentages of the various types of construction materials used in home buildingin the various regions, demonstrates that the houses affected by the earthquake were located inzones in which the predominant building materials include adobe and bahareque (wattle anddaub, that is, straw and mud on a wood frame). (See Table 3 and Map 2).

27

Table 3

TYPOLOGY OF THE WALLS OF THE AFFECTED HOUSING UNITSBY DEPARTMENT

(Percentages)

Department HousesAffected

BaharequeWalls

WallsAdobe

ConcreteWalls

OtherWalls

Total 18 11 26 53 8Usulután 74 19 35 34 11San Vicente 69 17 50 25 6La Paz 64 12 45 33 8Sonsonate 30 11 24 46 17La Libertad 24 13 20 58 7Cuscatlán 22 14 45 35 4Ahuachapán 16 14 37 29 19San Miguel 13 16 22 51 8Santa Ana 7 8 41 43 6La Unión 4 16 40 34 8San Salvador 3 7 5 80 6Cabañas 2 16 51 25 6Chalatenango 0 5 69 22 2Morazán 0 20 45 17 17Source: ECLAC, on the basis of figures provided by the National EmergencyCommittee (COEN) and the Multiple Purpose Home Survey for 1999, from theMinistry of Commerce’s Department of Statistics and Census (DIGESTYC).

Similarly, by comparing the data from the Multiple Purpose Home Survey for 1999against the poverty indices for the various regions of the country, (See Table 4 and Map 3), thegreatest damage can be seen in the Departments having the highest poverty levels.

28


PERCENTAGE OF HOUSING UNITS AFFECTED, BY DEPARTMENT(GRAPH WITH THE DISTRIBUTION OF HOUSING UNITS ACCORDING TO BUILDING MATERIALS)

SANTA ANA

AHUACHAPAN

SONSONATE

LA LIBERTAD

SAN SALVADO R LA PAZ

CHALATENANG O

CABANAS

SAN MIGUEL

MORAZAN

LA UNION

SAN VICENTEUSULUTAN

SAN MIGUEL

LA UNION

SANTA ANA

AHUACHAPAN

SONSONATE

LA LIBERTAD

SAN SALVADO R LA PAZ

CHALATENANG O

MORAZAN

LA UNION

SAN VICENTEUSULUTAN

SAN MIGUEL

LA UNION


N

EW

S

PORCENTAJE DE VIVIENDAS AFECTADAS POR DEPARTAMENTO

EFECTOS DEL TERREMOTO DEL 13 DE ENERO DE 2001 EN EL SALVADOR

Fuente: información del COEN al 2 de febrero de 2001Encuesta de Hogares de Propósitos Multiples 1999. DIGESTYC

(GRAFICO CON DISTRIBUCION DE HOGARES SEGUN MATERIAL DE CONSTRUCCION)


Tipo de materialConcretoBahareque y adobeOtros materiales

Type of MaterialConcreteBahareque and adobeOther materials

% of Affected Housing Units

Source: Information from the National Emergency Committee (COEN)as of February 2, 2001

Multiple Purpose Home Survey 1999,Ministry of Commerce’s Department of Statistics and Census (DIGESTYC)

It is also possible to identify the existence of a high percentage homes with female headsof household in the Departments most affected by the earthquake (See Table 5 and Map 4). Thesehomes represent elevated socioeconomic vulnerability indices. Thus, particular attention shouldbe paid to this group during future phases of physical and social reconstruction, providing, amongother things, specific programs and credits for one-parent families, as well as remuneration forthe work performed by women in the various phases of emergency response, restoration, andreconstruction.

29

Table 4

HOUSING BY DEPARTMENT ACCORDING TO POVERTY INDICESAND HOMES WITH FEMALE HEADS OF HOUSEHOLD

(Percentages)

DepartmentHousing

UnitsAffected

Homes withFemale Headsof Household

RelativePoverty

ExtremePoverty

NoPoverty

Usulután 74 31 30 25 44San Vicente 69 27 29 31 40La Paz 64 31 29 21 51Sonsonate 30 25 30 19 52La Libertad 24 28 20 13 67Cuscatlán 22 28 25 14 61Ahuachapán 16 20 24 36 40San Miguel 13 33 27 18 55Santa Ana 7 28 27 18 54La Unión 4 28 27 24 49San Salvador 3 30 21 7 72Cabañas 2 27 24 40 36Chalatenango 0 29 27 29 44Morazán 0 27 31 28 41Source: ECLAC, on the basis of figures provided by the National Emergency Committee(COEN) and the Multiple Purpose Home Survey for 1999, from Ministry of Commerce’sDepartment of Statistics and Census (DIGESTYC).

The earthquake caused partial destruction inthe majority of cases and total destruction in a smallerpercentage. The damage occurred to both structuraland non-structural components of the homes affected.Field visits made by the mission corroborated thehypothesis that the majority of homes that weredestroyed had been constructed with materials such asbahareque and adobe, neither of which are veryresistant to seismic activity. In addition, thesematerials were already highly deteriorated given their age, which diminished their ability to

withstand loads such as those provoked by theearthquake. Bahareque and adobe are not only usedas fill, but also as material for structural elements.These materials are often combined with others,such as wood or cane for reinforcement, but withthe passage of time, the support materials havedeteriorated to such an extent that, in the majorityof cases, their useful life was over by the time theearthquake struck.

30

The housing that demonstrated a higherdegree of structural resistance was built frommaterials with a greater degree of physical-mechanical capacity and employed better-qualitybuilding techniques. Such is the case of housingbuilt from materials such as concrete blocks,fired bricks, prefabricated slabs, structuralmasonry and other systems. Nonetheless, insome particular cases, damage to these types ofstructural systems were observed, due to afailure to observe technical building standards.

Homes of concrete construction that were affected by the earthquake did not collapse intheir entirety. Their columns and beams typically suffered damage but remained standing,significantly reducing the number of victims. Houses constructed of adobe and bahareque, on theother hand, collapsed from sheer fragility, or were so heavily damaged as to require demolition orextremely costly repairs.

As could be observed during the field visits, the destruction and/or demolition of so manyhomes has also generated a large quantity of debris, which has not yet been adequately handledand whose permanent disposal is still pending.

31


PERCENTAGE OF HOUSING UNITS AFFECTED, BY DEPARTMENT(GRAPH WITH THE DISTRIBUTION OF HOUSING UNITS ACCORDING TO POVERTY LEVELS)

N

EW

S

PORCENTAJE DE VIVIENDAS AFECTADAS POR DEPARTAMENTO


(GRAFICO CON DISTRIBUCION DE HOGARES SEGUN SITUACION DE POBREZA)

SANTA ANA

AHUACHAPAN

SONSONATE

LA LIBERTAD

SAN SALVADOR LA PAZ

CHALATENANGO

CABANAS

SAN MIGUEL

MORAZAN

LA UNION

SAN VICENTEUSULUTAN

SAN MIGUEL

LA UNION

SANTA ANA

AHUACHAPAN

SONSONATE

LA LIBERTAD

SAN SALVADOR LA PAZ

CHALATENANGO

CABANAS

SAN MIGUEL

MORAZAN

LA UNION

SAN VICENTEUSULUTAN

SAN MIGUEL

LA UNION

Fuente: información del COEN al 2 de febrero de 2001Encuensta de Hogares de Propósi tos Multiples 1999. DIGESTYC


% Viviendas afectadas

6.7 - 15.8 %15.8 - 30.1 %30.1 - 74.2 %

0.1 - 6.7 %

Condición de pobrezaHogares no pobresHogares pobres

Poverty levels: HouseholdsOver the Poverty LineUnder the Poverty Line

% of Housing Units Affected


Multiple Purpose Home Survey 1999Ministry of Commerce’s Department of Statistics and Census (DIGESTYC)

The assessment of the damages to the housing and human settlement sectors includes thevalue of direct and indirect damages, as well as reconstruction costs (See Table 5).

Total direct damages were US$224.8 million. These include:

− The value of homes destroyed or damaged. With regard to housing that was completelydestroyed, the value was calculated at 20% of the cost of the property at the time of theearthquake. For damaged housing units, the percentage was calculated at 25% of the valueprior to the earthquake.

− An estimated value, calculated on the basis of preliminary data, of damaged public sectorbuildings (among them government ministry buildings, churches, and city halls), withoutincluding buildings that housed education or health services, or buildings with a culturalheritage value, which are quantified in another section of this report. Costs to repair damagesin infrastructure and public urban areas, such as plazas, parks, sidewalks, light posts, andother public works, have been similarly calculated.

32


PERCENTAGE OF HOUSING UNITS AFFECTED, BY DEPARTMENT(GRAPH WITH THE DISTRIBUTION OF HOUSING UNITS ACCORDING TO GENDER OF HEAD OF HOUSEHOLD)

SANTA ANA

AHUACHAPAN

SONSONATE

LA LIBERTAD

SAN SALVADOR LA PAZ

CHALATENANGO

CABANAS

SAN MIGUEL

MORAZAN

LA UNION

SAN VICENTEUSULUTAN

SAN MIGUEL

LA UNION

SANTA ANA

AHUACHAPAN

SONSONATE

LA LIBERTAD

SAN SALVADOR LA PAZ

CHALATENANGO

CABANAS

SAN MIGUEL

MORAZAN

LA UNION

SAN VICENTEUSULUTAN

SAN MIGUEL

LA UNION


(GRAFICO CON DISTRIBUCION DE HOGARES SEGUN EL GENERO DEL JEFE DEL HOGAR)

Fuente: información del COEN al 2 de febrero de 2001Encuesta de Hogares de Propósitos Multiples 1999. DIGESTYC

EFECTOS DEL TERREMOTO DEL 13 DE ENERO DE 2001 EN EL SALVADORPORCENTAJE DE VIVIENDAS AFECTADAS POR DEPARTAMENTO

N

EW

S


Género% Jefatura Masculina% Jefatura Femenina

GenderMale head of householdFemale Head of Household

% of Housing Units Affected


Multiple Purpose Home Survey 1999Ministry of Commerce’s Department of Statistics and Census (DIGESTYC)

− The costs of demolition, removal, transport, and the permanent disposal of debris iscalculated at US$27.9 million. This figure was calculated on the basis of volume unitestimates for housing that was destroyed and damaged in the country, taking intoconsideration actual market costs.

− The cost of fixtures, furnishings and other household belongings of the affected families’in both rural and urban areas. These values were determined through interviews, field visits,and item descriptions in home surveys. Also considered were kitchen utensils and items usedby women for housekeeping purposes.

− The term “housing” also refers to a space in which a combination of familyresponsibilities and income-generating activities are conducted by women who participate inthe informal economy. Due to a lack of data, however, direct and indirect losses to these typesof in-home income-producing activities (patio economy, the raising of small animals, foodpreparation for sale, small-scale seamstress work, etc.) could not be quantified.

33

Indirect damages were calculated at US$32.4 million and include the cost of temporaryhousing, which will soon be indispensable with the coming of the rainy season. The cost oflatrines and sanitation services has been added to these figures. Currently, the government andvarious national and international organizations are distributing temporary housing made ofvarious materials (zinc and wood panels, prefabricated sheet materials, fibrocement panels, andfireproof structural panels). Among the various options, the most suitable seem to be constructionmaterials which offer the possibility of being reused in permanent construction.

Income-generating work previously conducted by women, both domestic and commercial,will be seriously affected, to the extend of the increase in women’s responsibility in caring fortheir temporary housing and their families during the emergency phase. Despite the importanceof this issue, sufficient information is not available to properly estimate these damages.

The value of lost public sector revenues resulting from unpaid property taxes on destroyedhousing has not been included in the assessment since El Salvador does not have property taxes.Calculations have also excluded non-payment for services such as trash collection, othermunicipal services, and commercial patents, due to a lack of available information. Such non-payments result in diminished revenues for the individual municipalities, despite expectations ofincreased revenues from construction taxes.

In terms of secondary effects, for macroeconomic assessment purposes, US$39.9 millionwas calculated as lost earnings with respect to destroyed housing, reflecting the loss of comfort(the damage) suffered by families who have lost their homes. This value is based on averagerental prices of urban and rural housing, with the loss diminishing as new homes are adding to thereal estate market, based on a three-year construction horizon.

The cost of reconstruction in the housing and human settlement sector is estimated atUS$620 million. This figure has been calculated based upon the per unit value of various types ofdwellings (differentiated by urban and rural areas), and distinguished by the type of materialsused in their construction (improved earthquake-resistant adobe, concrete, and fired brick). Thevalue presented include financing and labor costs.

According to preliminary information from the Vice Ministry of Housing and UrbanDevelopment, it is estimated that approximately 20,000 housing units should be relocated to lessvulnerable areas. The estimated cost of these units includes the value of the land and the attendantpublic development works. In cases of relocation, it is necessary to provide property titles. In thisregard, it is important to keep in mind the high percentage of homes with female heads ofhouseholds (See Map 4), a fact which necessitates special treatment granting in favor of women,or co-ownership rights between men and women, as factors to promote development and providesocial stabilization.

In addition, the costs of reconstruction include the cost of repairs to damaged homes,replacement of household items and furniture, repair to public buildings and the reconstruction ofurban infrastructure. Significantly, reconstruction efforts will require the importation of buildingmaterials (steel, wood, glass, toilets, locks, etc.) and other household items to properly equip thehousing units. This will account for approximately 25% of the estimated reconstruction costs.

34

In conclusion, direct damages to this sector are estimated at US$196.9 million, whichincludes damages to and destruction of structures, furniture, and equipment. In addition, indirectcosts of US$60.2 million will be incurred for demolition, debris removal, and the construction oftemporary housing. Therefore, the total could exceed US$257.2 million in this sector alone. Ofthis sum, 72% (US$184.7 million) reflects losses incurred by the private sector, while theremaining 18% reflects damage to the public sector. Reconstruction using appropriate damagemitigation techniques, is expected to total US$620.1 million, which will have a negative effect onthe balance of payments —due to the need to import equipment and materials not locallyproduced— in an amount of approximately US$143.5 million, distributed throughout thereconstruction period. (See Table 5).

Table 5

DAMAGES AND LOSSES IN THE HOUSING AND HUMAN SETTLEMENT SECTOR (in thousands of dollars)

Direct SectorComponent Total Damages Indirect Public Private

Effect on theBalance ofPayments

Total 257,197.3 196,951.8 60,248.5 72,465.0 184,732.3 143,474.5Housing destroyed 23

Urban sectorRural sector

52,685.620,625.032,060.6

52,685.620,625.032,060.6

-- 52,685.620,625.032,060.6

97,421.1

Housing damagedUrban sector 24

Rural sector

72,713.216,551.156,162.1

72,713.216,551.156,162.1

-- 72,713.216,551.156,162.1

18,178.3

Public buildings 25 17,097.4 17,097.4 -- 5,097.4 12,000.0 1,274.4Urban infrastructure26 1,858.8 1,858.8 -- 1,858.8 …Furnishings / equipment 27 52,593.3 52,593.3 -- 5,260.0 47,333.3 26,600.7Demolition and clean up 27,867.5 -- 27,867.5 27,867.5 -- …Temporary housing and services 32,381.3 -- 32,381.3 32,381.3 -- …

Source: ECLAC, on the basis of official and private figures, and the mission’s own estimates.

23 5,000 homes classified as historical were excluded from this calculation, as they have been

accounted for in the corresponding assessment to that sector.24 10,000 homes are inhabited under the auspices of the Social Fund for Housing (FSV).25 This refers to preliminary assessments based on partial information, and does not include

information on damages to the sectors of education, health, or historical heritage, all of which areaccounted for in the assessments of those particular sectors. Damages to churches not classified ashistorical have been included in these figures.

26 Includes damage to urban infrastructure and other equipment (parks and plazas, and otherpublic installations).

27 Includes damage to the infrastructure, piers, and boats of Lake Coatepeque.

35

b) Health and Sanitation

El Salvador’s healthcare system had to face theextraordinary demands generated by the earthquake, in aparticularly adverse situation. On the one hand, its infrastructuresuffered considerable damage, much greater than that caused byMitch. On the other hand, a high proportion of the earthquakevictims (18% of the total population) required medical attentionas a result of the disaster.

As a result of the earthquake, 113 health installations ofthe Ministry of Public Health and Social Assistance (MSPAS)were affected, of which 19 suffered severe damage, another 19reported moderate damage, and the remainder reported minordamages. The hospital infrastructure suffered a 63% rate of damage (19 hospitals). Noteworthyare the cases of the San Rafael Hospital of Santa Tecla (La Libertad Department), San PedroHospital (Usulután), and San Juan de Dios Hospital (San Miguel) because of the severity ofdamages. In addition, the Rosales and Neumológico (San Salvador) maternity hospitals had to beevacuated. This took a total of 2,021 hospital beds out of service during the emergency.Additionally, 27% of the country’s Health Units (85) were affected, principally those located inthe districts of La Libertad, Usulután, La Paz, San Miguel, and Sonsonate.

The replacement of the hospital system (the majority of which is obsolete) and damagedequipment and furnishings requires structural reinforcement and up-to-date technology to renderit operational and reduce its vulnerability. Supplemental resources will be needed for thisundertaking.

In addition to the loss of healthcare centers, the sanitation authorities had to undertakecampaigns to prevent epidemics, distribute sufficient potable water among the population, restoreaffected sanitation systems, provide medical care to more than 4,000 injured people, bury thedead and, in general, provide medical care to an enormous number of victims assembled inshelters dispersed throughout the country. Cut-off roads often made these efforts difficult andexpensive.

The MSPAS coordinated national efforts as well as those of theinternational community. The Red Cross of El Salvador took onthe immediate rescue efforts, while the MSPAS and the SocialSecurity Institute of El Salvador (ISSS), with the help ofSalvadoran civil society and private efforts, offered emergencymedical care. The Pan-American Health Organization (PAHO)and UNICEF immediately implemented their respectiveemergency programs. The PAHO principally afford sanitationand vaccination programs, while UNICEF provided theproduction of potable water. These agencies were soon joinedby rescue teams from other countries and medical and hospitalbrigades installed in communities and shelters.

36

Between January 13–22, the MSPAS reported provides the following medical attention to2,700 injured people, 2,300 surgeries, 200,000 medical consultations (30,000 of which wereurgent), 125,000 nursing activities, 145,000 clinical lab exams, 13,000 dental exams and 55,000environmental sanitation activities. These actions controlled outbreaks of enteric and respiratoryillnesses. A significant part of these actions was concentrated in urban areas, with lesser coveragein rural areas and zones of extreme poverty.

Prior to the earthquake, the health system had initiated a reform process with the goal ofproviding universal coverage. The MSPAS provides approximately 55% of the services; ISSScontributes an additional 18% (mainly to the urban population); the private sector contributes anestimated 20% of the medical attention; and other informal providers and sub-systems of theSocial Security system contribute the remaining 7%. Nevertheless, a large portion of thepopulation (mostly rural) does not have access to the services. An estimated 70% of MSPAS’shospital network is over 30 years old, and because of the successive natural disasters and thelimited maintenance resulting from a scarcity of resources, was highly vulnerable to the effects ofthe earthquake.28 Beyond the financial requirements of responding to the emergency, thereconstruction of the Salvadoran healthcare system should be guided by the principles that haveserved as a basis for reforms already in progress, with the principal aim of providing universalcoverage and improving equity and quality in the delivery of services. This process runs the riskof coming to a standstill as resources are channeled toward new needs.

In sum, the Salvadoran healthcare system suffered an estimated 49.4 million dollars indirect damages to its infrastructure and equipment, and another 12.0 million dollars in indirectdamages in the form of emergency care provided free of charge and the necessary preventivecampaigns. The total damage caused to the healthcare sector thus totaled 61.3 million dollars(See Table 6). The reconstruction of the healthcare infrastructure, however, will generate greatercosts, especially with the introduction of epidemiological rehabilitation measures, and measuresto reduce the system’s vulnerability to future disaster situations. This reconstruction cost isestimated at US$231 million.

28 According to the information available, the MSPAS infrastructure included 30

hospitals, 354 health units and 141 rural health clinics, in addition to laboratories andadministrative buildings, among other units. The facilities of the ISSS are much lesscomprehensive, with 10 hospitals and an outpatient services network.

37

Table 6

DAMAGES AND LOSSES IN THE HEALTH SECTOR CAUSED BY THE EARTHQUAKE

(in thousands of dollars)

Direct SectorComponentTotal Damages Indirect Public Private


Total 61,343.0 49,361.0 11,982.0 61,313.0 30.0 41,871.0 29

InfrastructureMSPASISSSPrivateISRI

41,376.0033,000.0

4,846.030.0

3,500.0

41,376.033,000.0

4,846.030.0

3,500.0

-- 41,346.033,000.0

4,846.0--

3,500.0

30.0----

30.0--

Furnishing, equipment & medicine 7,985.0 7,985.0 7,985.0Unforeseen Expenditures andIncomeEmergency careForgone incomeCare not providedIncrease in costsIncreased expenditures: medicineEpidemic preventionVector controlCommunity educationPsycho-social rehabilitation

11,982.04,177.03,685.01,912.0

520.0250.0650.0541.0145.0102.0

-- 11,982.04,177.03,685.01,912.0

520.0250.0650.0541.0145.0102.0

11,982.04,177.03,685.01,912.0

520.0250.0650.0541.0145.0102.0

--

Source: ECLAC, on the basis of official information, and the mission’s own estimates .

c) Education, Sports, and Culture

i) Education. According to the Ministry of Education (MINED), the country has5,878 educational centers,30 of which 4,858 belong to the public sector (83% of the total) and1,058 to the private sector (17%). In total there are 44,425 classrooms, of which 31,505 (71%) arepublic and 12,920 (29%) are private, with the private schools servicing fewer students perclassroom.

The public sector reported 1,366 damaged facilities (28% of the total). Of these, 96 werecompletely destroyed (2%); 191 suffered severe damage (4%); 1,079 were moderately damaged(22%); and 27 of these were utilized as shelters. By Department, the highest number of damagedschools were located in San Salvador (20%), followed by Usulután and La Paz (13% each).

According to the MINED census, enrollment for the year 2000 was 1,555,905 studentsincluding all levels. Close to 430,000 students were affected by the damages to the educationinfrastructure and approximately 100,000 (6% of the total) will face serious hardships forreceiving an education, due to the total destruction of, or severe damages to the buildings. Such

29 This refers to the effect of imports for reconstruction efforts to reduce vulnerabilities.30 National Department of Evaluation and Inventory, Datos preliminares Censo 2000, Ministry

of Education, San Salvador, 2001.

38

cases require relocation to other sites and/or construction of temporary classrooms, a situationthat will worsen with the approaching rainy season, starting in May.

There is little information regarding theprivate education sector, given that the MINEDauthorities do not have an official list of theaffected buildings. Until now, the only availableinformation source regarding the private sectorhas been partial information from the SalvadoranAssociation of Engineers and Architects (ASIA).ASIA has been carrying out evaluations inresponse to requests by interested individuals. Asa result, damages to the private sector have beenestimated using the same damages coefficient aswas applied to the public facilities, based on auniverse of 1,058 buildings. The results indicatethat 18 buildings will likely require completereconstruction, 37 will have suffered severedamage, and 210 will have sustained moderate damage.

With regard to the private universitiesevaluated by ASIA, 11 of the 15 institutionsreviewed had no damages, which willfacilitate the beginning of the academic year.However, the University of El Salvador, afterassessing its campus, determined that the mostdamaged facilities are those of Humanities,Engineering, Agronomy, Chemistry, andPharmacy.

In all the cases of destruction ordamage to educational centers, whether public

or private, it was necessary to delay the beginning of the academic year until January 15. Theauthorities have ordered that starting dates may be determined on a case-by-case basis, to becompensated by an equally extended close of the school year. Damages not only included theinfrastructure but also furniture, equipment, and didactic materials.

ii) Sports Facilities. A large part of the country’s major sports are played at facilities of theNational Sports Institute of El Salvador (INDES), while the Cuscatlán stadium of San Salvador isthe most important private center for spectator soccer games.

In general, the damage caused by the earthquake to the country’s sports facilities can bedescribed as moderate to light. Detailed damage estimates have been made by INDES for thefacilities it administers nationwide. The most significant data correspond to the sports centerslocated in the cities of San Salvador and Nueva San Salvador, and in the municipality ofAyutuxtepeque, where the Central American Sports Villa is located. INDES has estimated thedata for the rest of the country, as well, on an overall basis.

39

The principal damages occurred in the urban sportsfacilities, whose infrastructure characteristics are more complexthan those of the rural facilities. The rural facilities are extremelysimple, the majority being open sports fields without bleachers,or with very basic bleachers and some simple structures, such aslocker rooms and concession stands. Damage to four soccerstadiums —perhaps the country’s most popular sport— wasreported: those of San Miguel and Santa Ana, both municipallyadministrated, the Flor Blanca stadium in San Salvador (run byINDES), and the Cuscatlán stadium (privately owned). Theprivate sports facilities did not report major damage, nor has acomplete assessment been done, although organizations such asthe Sports Stadiums of El Salvador (EDESSA) and ASIA have carried out partial studies. In anycase, the damages to these buildings have kept some events from taking place, resulting in lostprofits.

iii) Culture. The earthquake caused significant losses to the cultural heritage of thecountry, affecting not only the public historical heritage (cultural assets, historical buildings,museums, archeological sites, valuables, and archives), but also private historical heritage(churches, housing located at historical centers, libraries, and collections) and culturalinfrastructure that is not government owned, such as cultural spaces (among them 145 culturecenters, libraries, and theaters), recreational parks, and cultural centers in indigenouscommunities or artisan communities.

Many of these losses cannot be recuperated, while others can be totally or partiallyrestored. In this regard, the Endowment for Cultural Heritage of the National Council for Cultureand Art (CONCULTURA), under the auspices of the Ministry of Education, is working closelywith the owners of the affected assets.

In summary, the above sectors suffered direct damages in anamount totaling US$149.5 million, a very high percentage of whichwere concentrated in the subsectors of cultural heritage and education.Additionally, indirect damages were incurred as a result of the need toconstruct some provisional classrooms or pay overtime to privateteachers. In additional, sports installations suffered a loss of income inan estimated amount of US$3.0 million. The damages sustained by thehistorical and cultural heritage of El Salvador also include indirectdamages through loss of profit in other sectors, such as tourism, and in

40

micro, small and medium enterprises (a large percentage of which are run by women). Thesedollar amounts are accounted for in their respective sections to avoid duplication. The totalamount of damages sustained equals US$153.2 million, of which 74% (US$114 million)corresponds to the private sector, while the remaining 16% (US$39.2 million) corresponds to thepublic sector. The reconstruction of these sectors will require an estimated 231.4 million dollars,which would impact the balance of payments in an estimated amount of US$73.1 million (SeeTable 7).

Table 7

DAMAGES AND LOSSES IN THE EDUCATION SECTOR CAUSED BY THE EARTHQUAKE


Damages SectorComponent Total Direct Indirect Public Private


Total 153,189.0 149,470.0 3,719.0 39,231.0 113,958.0 73,102.0EducationInfrastructureFurnishings and equipmentTemporary classrooms

54,424.044,664.0

6,779.02,981.0

51,443.044,664.0

6,779.0--

2,981.0----

2,981.0

33,948.0 21,582.0 44,174.0

SportsInfrastructureReduced income

1,844.01,106.0

738.0

1,106.01,106.0

--

738.0--

738.0

738.0 … 821.0

CultureHistorical heritageNon-historical infrastructure

96,921.094,653.0

2,268.0

96,921.094,653.0

2,268.0

… 31 4,545.04,545.0

--

92,376.090,108.0

2,268.0

28,107.0

Source: ECLAC, based upon official and private-sector figures, and the mission’s own estimates.

31 The direct damages in this subsector produced indirect damages that are quantified in other

sectors, such as tourism, micro, small and medium enterprises, etc.

41

2. Productive Sectors

a) Agriculture and Fishing

Generally, disasters attributable to natural phenomena of geological origin do not inflictdamage upon agriculture, cattle raising, and fishing production. Yet the characteristics of theearthquake in El Salvador were such that these industries were, indeed, significantly affected.

The past decade had been a difficult one for agriculture in El Salvador, as reflected in agrowth rate of a mere 1.2%. Low international prices for coffee and other export productscontributed to this situation, along with factors of a strictly domestic nature. In this sense theearthquake aggravated long-standing problems in the agricultural industry.

One of the sectors affected the most heavily by the earthquake was coffee. Damages andproduction losses were inflicted upon coffee-growing lands themselves and upon coffee-processing facilities.

The coffee harvest was well underwaywhen the earthquake struck. In fact,approximately 85% of the harvest had beencompleted. The part remaining was precisely thatof the highland areas, which produce the highest-priced, highest-quality coffee, meeting foreigndemand. It is estimated that only 3% of this high-grade coffee is recoverable, given accessibilityproblems for transporting the crop and aninsufficient labor supply, since people aredevoting their energies to reconstructing their ownhomes. Furthermore, plantation owners had beeninvesting very little in their plantations due to problems with international coffee prices. As aresult, a 25% reduction had been anticipated for the 2001 harvest.

In addition, landslides occurred on approximately 795 hectares of land, most of whichwas of moderate elevation and which fortunately had already been harvested. Recovery of 80%of these lands is feasible, so long as appropriate restoration work is carried out, for examplelevel-curve terracing, etc. The remaining 20% will no longer be usable for coffee production, butwhere possible, could be used for the planting of forests or fruit trees.

Coffee-processing plants also suffered damages, mostly to their infrastructure. A total of25 coffee processing plants, which process 20% of the production, were severely affected.Nonetheless, it is anticipated that these plants can be repaired in time for the next productioncycle.

42

Damages affecting other crops involvedinfrastructure and processing centers, indirectlyimpacting production. The crops affected includeornamental plants, fruits, flowers, vegetables, etc.

With respect to the agricultural industry, itshould be noted that lesser damages were alsooccasioned upon the poultry, bee-keeping, and dairyindustries. In addition, four rice-processing plants andcertain sugar-processing plants suffered minor damage,although this did not have a significant effect onproduction.

The poultry industry has reported the deaths of approximately 250,000 egg-laying birds,the loss of approximately one half million eggs, and damages to installations. The bee-keepingindustry has reported damages to 3,000 beehives, losses to the productive infrastructure, and theloss of products ready for the market. In the dairy industry, damages to barns and milkingequipment were reported. Yet the principal damage was a decrease in milk production due to thestress that the animals experienced.

Finally, some grain-storage silos were damaged. However, the stored products wererecovered.

Damages to the agricultural infrastructure are defined as damages to roads on theplantations, to irrigation and drainage systems, and to production lands.

In total, some 60 kilometers of plantation and plantation-related roads , that is, both onthe plantations themselves and between the plantations and the nearest towns, were significantlydamaged. Their reconstruction is indispensable for transporting products to demand centers.

The irrigation and drainage systems of Lempa-Acahuapa, Zapotitán, Atiocoyo, andother lesser systems suffered damages to deep wells, intake works, conveyance channels, andrelated structures. Their restoration is estimated to take approximately three months, which wouldmake it possible to use them during the next dry season.

In addition to the above, some agricultural lands were affected by landslides, cracking,and other problems, including the deposition of salt in areas near the coast, all of which willlower future productivity.

As for livestock raising, damages were much lesssevere, with a very limited number of losses reported forcattle and pigs.

Fishing, however, was affected by a significantlylower catch. Experts estimate that such a situation willcontinue for at least three months, assuming that seismicactivity in the coastal area diminishes rapidly. Lesser

43

damages were also occasioned upon the docking infrastructure of at least two sites. Some vesselswere lost or damaged, and equipment losses also occurred. In addition, shrimp tanks in thecoastal zone of Bajo Lempa suffered infrastructure damages and production losses.

All this translates into a depression in the activity of the fishing industry, which actuallydates back to the recent Hurricane Mitch disaster. It is estimated that only one out of every sixfishermen is still operating. The rest are working to rebuild their homes, or see few incentives tofish, since the catch is too small. Furthermore, in rebuilding their homes, some of these personsare cutting down mangroves. Such a practice further compromises the area’s already deterioratedenvironment.

It should be noted that gender is a highly important issue in this industry. There are twocooperatives of women fishermen operating in the Jiquilisco area. Moreover, nearly 95% of themarketing in the fishing industry is in the hands of women.

To summarize, the agricultural and fishing industries suffered direct damages in anestimated amount of US$34.6 million and indirect damages in an additional amount of US$50.9million. This means that the total damages to this sector were US$85.6 million. 16% (US$13.4million) of the total damage was to the public sector, while 84% (72.2 million) was to the privatesector, as was to be expected. Although there was some insurance covering the sector’sinfrastructure, insurance deductibles exceeded the amount of damages suffered by the respectiveindividuals. It is estimated that the damages will have a negative effect of US$27.8 million on thecountry’s balance of payments, given that exports of coffee and other products will be foregone,while machinery and materials required for reconstruction will be imported. (See Table 8).

b) Industry, Trade, Services, and Tourism

This section will address damages occasioned by the earthquake on industry, trade, andservices, including tourism.

The analysis of the industrial sector provides estimated damages and losses for mediumand large-scale industry and the maquila* industry, on the one hand, and, on the other hand, forsmall and micro-enterprise.

With regard to medium and large-scale industries and the maquila industry, nearly6% of the industrial establishments suffered severe damages. Approximately half of the overalldamage, however, was slight. There was practically no damage to machinery and equipment.Rather, the damage was mostly limited to buildings and in general was not structural damage.Those most affected in this category included one juice-manufacturing plant, which reportedconsiderable direct damages. The great majority of establishments polled indicated that theywould be operating normally within 30 days of the earthquake.

* Translator’s Note: The term “maquila” or “maquiladora ” refers to light assembly factories producing goods forexport.

44

Table 8

DAMAGES AND LOSSES TO THE AGRICULTURAL AND FISHING SECTOR(in thousands of dollars)


Effect on thebalance ofpayments

Total 85,616.9 34,570.9 50,884.0 13,408.9 72,208.0 27,800.1CoffeeProduction lossesProcessing plantsLand

35,545.311,625.314,224.0

9,159.0

20,321.88,613.02,174.89,159.0

15,223.53,012.3

12,049.2--

-- 35,545.311,625.314,224.0

9,159.0

11,625.4

Other products 537.0 375.0 162.0 -- 537.0 …AgroindustryPoultry farmingBee keepingRice-processing plantsSugar-processing plantsSilosDairy industryOthers

10,500.46,848.4

366.136.5

342.4250.0

2,610.047.0

6,184.44,098.4

137.136.5

342.4250.0

1,285.035.0

4,316.02,750.0

229.0------

1,325.012.0

40.0----------

40.0--

10,460.46,848.4

366.136.5

342.4250.0

2,570.047.0

1,734.7

InfrastructureRoadsIrrigation and drainageSoil Stabilization

15,131.54,312.6

818.910,000,0

5,131.54,312.6

818.9--

10,000.0----

10,000.0

12,968.92,150.0

818.910,000,0

2,162.62,162.6

----

6,900.0

Livestock … … … -- … …Fishing 24,439.7 2,933.2 21,506.5 400.0 24,039.7 7,540.0

Source: ECLAC, based on official and private-sector figures, as well as our own estimates.

Activities in the maquiladora industry were only slightly affected. Some 240 companiescomprise this industry, with close to 70,000 employees, whose principle activities are theproduction of clothing, along with foodstuffs and toys. More than two-thirds of the capital ofthese enterprises is Salvadoran. It is estimated that the affected maquiladoras employ a total of8,109 persons, of whom 79% (6,409) are women. As a result of the earthquake, 221 jobs werereportedly lost. 32

Medium and large-scale industry, including the maquiladora industry, was insured in theevent of earthquakes and volcanic eruptions in the amount of the 18 billion colones (US$2.1billion), covering 2027 companies. 33 This insurance covers structures, inventories, and loss of

32 This figure refers to nine companies operating in free-trade zones and 7 located in “depósitos

de perfeccionamiento activo” [Preferential tax-treatment and investment zones for finishing plants].33 Data provided by the Salvadoran Association of Insurance Companies.

45

earnings. 34 The companies with such coverage are just now preparing their claims for submissionto the insurance companies.

With regard to micro, small, and medium enterprise, it should be noted that more than10,000 small and subsistence enterprises were affected, of which 3,900 are reported as totallydestroyed. The geographic distribution of the damage suffered by these companies is shown inTable 9, an analysis of which shows that Usulután was the Department with the greatest losses,followed by La Paz and La Libertad.

It is important to point out with regard to the impact on the informal sector or micro andsmall enterprise that a significant number of women lost their jobs. Furthermore, in the case ofSanta Tecla, in addition to damages suffered directly by the population and to their homes, theloss of jobs among those who work at home in the area should be taken into account (91% ofthose who work at home for pay are women).

Table 9

NUMBER OF MICRO, SMALL, AND MEDIUM ENTERPRISES AFFECTED, BY DEPARTMENT

Department Damaged Destroyed Total

Ahuachapán 124 24 148

Santa Ana 34 28 62

Sonsonate 760 477 1,237

Chalatenango 7 1 8

La Libertad 463 564 1,027

San Salvador 236 50 286

Cuscatlán 461 84 545

La Paz 1,341 1,043 2,384

San Vicente 1,073 135 1,208

Cabañas 6 0 6

Usulután 1,179 1,349 2,528

San Miguel 657 152 809

Morazán 2 0 2

La Unión 56 6 62

Total 6,399 3,913 10,302

34 As an example, it could be noted that the industrial sector was insured for the amount of 4.5

billion colones during the 1986 earthquake. Yet net payments made by the insurance companies onearthquake-related claims between October 1986 and the close of 1987 for all insured parties, not only theindustrial sector, were only 321 million colones (3.5% of the insured sum). This low level of recovery wasattributable to the high deductibles (more than 20% of the insured sum) that the companies suffering thedamages had to pay.

46

The losses in the industrial sector will have a macroeconomic impact. Notable amongthese effects will be a reduction in nontraditional exports, including those of the maquiladoraindustry, projected to occur during the first two months of the year. 33% of exporting companiesreported damages, above all to inventories and furnishings. The majority of such companies,however, reinitiated exporting activities ten days after the earthquake. Those exports, amongwhich clothing, cotton textiles, chemicals, and foodstuffs were predominant, reportedly grew by14.6% between 1999 and 2000, when they surpassed one billion dollars. As a part of the five-yearCOEXPORT program, a 10% growth rate was projected for 2001 in this area. As a consequenceof the earthquake, it is not expected that this goal will be attained. Rather, it is projected thatfigures on sales abroad of these products for 2001 will be similar to those of last year.

In the trade sector, the greatest damages occurred in thesmall trade sector. Particularly hard hit were trade enterprises locatedin affected housing and in small facilities, which, apart fromdamages to installations, also suffered considerable inventory losses.Close to 17,000 establishments were affected, and more than 6,000were completely destroyed. The geographic distribution of the lossesin the trade sector is shown that in Table 10. It can be seen that theDepartments that suffered the most damage, in descending order,were Usulután, La Paz, San Vicente, and La Libertad.

Table 10

NUMBER OF SMALL AND SUBSISTENCE TRADE ESTABLISHMENTSAFFECTED BY THE EARTHQUAKE

Department Total Damaged Destroyed

Total 16,908 10,740 6,168

Ahuachapán 328 274 54Santa Ana 173 95 78Sonsonate 1,901 1,168 733Chalatenango 17 14 3La Libertad 2,038 919 1,119San Salvador 532 439 93Cuscatlán 806 682 124La Paz 3,364 1,892 1,472San Vicente 2,306 2,049 257Cabañas 10 10 0Usulután 3,550 1,656 1,894San Miguel 1,736 1,409 327Morazán 2 2 0La Unión 143 129 14

47

The service sector includes transportation, storage,and communications activities, financial assistance,restaurants, and community, social, and health services. 71%of these enterprises are headed by women.

A total of 4,584 service establishments were reportedas affected, of which 1,663 were totally destroyed. Theirgeographic distribution appears in Table 11, which shows thatin this sector as well, the Department of Usulután reported theworst damage, followed by San Vicente and La Paz.

Table 11

NUMBER OF SMALL AND SUBSISTENCE SERVICE ESTABLISHMENTSAFFECTED BY THE EARTHQUAKE

Department Total Damaged Destroyed

Total 4,584 2,921 1,663

Ahuachapán 48 40 8

Santa Ana 46 25 21Sonsonate 488 300 188Chalatenango 2 2 0

La Libertad 495 223 272San Salvador 176 145 31Cuscatlán 141 119 22

La Paz 736 414 322San Vicente 756 672 84Cabañas 1 1 0

Usulután 1,156 539 617San Miguel 505 410 95Morazán 0 0

La Unión 35 32 3

In the tourism sector, hotels and resorts suffered losses to their assets and income.Damages to restaurants are included under the section on “Services.”

According to information provided by the Corporación Salvadoreña de Turismo, theaggregate number of hotel rooms in the country is 2,300, of which 1,800 are located in SanSalvador. The average occupation rate during normal periods ranges between 50 and 60%, thegreat majority of which is for business trips. This occupation rate reportedly went down to half ofnormal, on an average, during the 60 days following the earthquake. Nonetheless, at someestablishments, such as those located on the beach, the decline has been much more drastic, dueto the drop in the number of Guatemalan tourists, owing to problems with communication routes.

48

The earthquake caused direct minor damage to two hotels in San Salvador, which wereforced to suspend activities for a period of between two weeks and one month. The rest of theestablishments reported that they did not suffer damages, or, in certain cases, that the damage wasvery slight and had already been repaired.

Resort complexes and centers (tourism centers) suffered damages and loss of income foran average of 30 days after the earthquake. In addition, two hotels located in the country’sinterior suffered significant damage: a small eco-tourism hotel in Comasagua, and Cerro Verde’sHotel de Montaña.

It is estimated that damages in the tourism industry will have amacroeconomic impact, linked to lower fiscal revenues. This includesreduced Value Added Tax (VAT) revenues, resulting from lost wagesand business earnings. The income tax on business profits is alsoexpected to go down, as well as levies on non-traditional exports.

In summary, it could be stated that given the nature of thephenomenon and the large geographic region affected, which includesmany small cities and populated areas, it was the small establishmentsof these industries that suffered the greatest damage to their assets and production. This patternwas seen both among establishments that operate or are incorporated into the owner’s domicileand independent establishments. Damages to medium and large-scale industry and to themaquiladora sector were proportionately lower. In the tourism industry, direct damages wereslight. Nonetheless, the indirect effects of the phenomenon were appreciable, due to theextraordinarily low rate of hotel occupancy, which is expected to continue for approximatelythree months subsequent to the earthquake.

According to data from the National Commission on Micro and Small Enterprise(CONAMYPE), which covers a universe of more than 470,000 locales, including industry, trade,and service enterprises, some 12,000 establishments were destroyed and more than 20,000damaged. Altogether, the damages affected nearly 7% of all of the enterprises of this type in thecountry as a whole. CONAMYPE estimated that the earthquake left some 31,000 peopletemporarily unemployed, and it is projected that they will remain so for an average ofapproximately one month.

The principal locations of the destroyed establishments, in order of significance, were theDepartments of Usulután, La Paz, and La Libertad. There were many locales with major damagein the Department of San Vicente, as well as in La Paz and Usulután. The municipalities thatwere impacted the harshest in this regard were Nueva San Salvador, Ciudad Arce, Cojutepeque,Zacatecoluca, San Sebastián, Usulután, Santiago de María, and San Miguel.

It is worth noting that women head up 65% of all micro and small enterprises. Thisproportion is even greater in the smallest enterprises, also known as subsistence enterprises(which have an average of 1.5 employees per company and represent 88% of the establishmentstaken into consideration by CONAMYPE). This proportion is markedly lower among enterprises

49

considered to be small (with an average of 25 employees per company), approximately 40% ofwhich are headed up by women. 35

The amount of direct damage to these sectors is estimated at US$169.2 million. Indirectlosses are also projected to have occurred, basically in the form of lost income, in an additionalestimated amount of US$20.5 million. As such, total damages amounted to US$189.7 million,which were suffered almost exclusively by the private sector. All of this is expected to have anegative effect on the country’s balance of payments in an estimated amount of US$29.8 million.(See Table 12).

Table 12

ESTIMATED LOSSES AND DAMAGES TO THE INDUSTRIAL, TRADE, AND SERVICE SECTORS,DUE TO THE EARTHQUAKE




Total 189,694.6 169,219.6 20,475.0 1,800.0 187,894.6 29,832.0

Industry

Medium and Large 36

Maquila

Small and micro

45,205.6

7,505.0

3,026.6

34,674.0

36,355.6

5,050.0

2,469.6

28,836.0

8,850.0

2,455.0

557.0

5,838.0

-- 45,205.6

7,505.0

3,026.6

34,674.0

Trade 75,946.0 69,914.0 6,032.0 -- 75,946.0

Services 37 61,605.0 58,976.0 2,809.0

Tourism 6,758.0 3,974.0 2,784.0 1,800.0 4,958.0


35 The contribution of microenterprise to the GDP is estimated to range between 25 and 35%

(Libro Blanco de la Microempresa, El Salvador, 1997).36 The data was provided by the Chamber of Commerce and Industry of El Salvador, and only

reports on approximately 90 medium and large-scale enterprises that responded to the poll, including somecommercial and financial establishments for which it was not possible to obtain separate information.

This data is similar to data from a poll conducted by the Trade and Investment Service of theMinistry of the Economy, which gave figures of US$3.6 million.

37 Includes restaurant activities.

50

3. Infrastructure

Included under this heading are three principal sectors that were affected by the earthquake:electricity and hydrocarbons, potable water and sanitation, and transportation andtelecommunications. Each of them was affected in a different manner and to a different degree.The geographic distribution of the effects was also dissimilar.

a) Electricity and Hydrocarbons

The electricity subsector grew vigorously throughout the past decade in response to thedemands of the economy. The average annual growth in demand for electricity was 6.9%,increasing from 2,321 to 3,940 million kilowatt-hours. For the year 2001 a growth in demand of4.2% had been predicted before the earthquake occurred, corresponding to a growth in the GDPof nearly 3.5%. 38

Electrical energy is produced at a combination of plants that use hydroelectric andgeothermal resources, as well as thermoelectric generating. In addition, some electricity isimported from the neighboring country of Guatemala, thanks to an interconnection line betweenthe two countries. Electricity production and the composition of inputs onto the grid per resourcefor the year 2000 were as follows: 39

Resource Input: GW-h Percentage

Hydroelectric 1,170.5 28.0Geothermal 740.1 17.7Thermal 1,467.8 35.1Imports 807.8 19.2

Total 4,186.2 40 100.0

The above is evidence of the efforts made by El Salvador over the course of several yearsto increase the exploitation of its natural resources for purposes of generating electricity.

As a result of the earthquake, the supply of electricity in the most heavily affected areaswas cut. The infrastructure and equipment of the generating plants was not affected, with theexception of minor damages that did not compromise their production capacity. High-voltage

38 Market Division, Proyección de la demanda de energía, período 2001-2005, Transactions

Unit, Nuevo Cuscatlán, 2000.39 Transactions Unit, Informe estadístico de la operación del mercado mayorista y del sistema

eléctrico de potencia, enero a diciembre de 2000, Nuevo Cuscatlán, January 2001.40 The difference between the figures for inputs and for demand is explained by exports to

Guatemala and some transmission losses.

51

transmission lines suffered some damages, as some connections were cut. Those connectionswere promptly repaired, however. The substations had reportedly been remodeled, after theexperience of Hurricane Mitch in 1998, precisely to prevent damages in the event of varioustypes of disasters. Despite this, some damages occurred, which were also promptly repaired.

The distribution grids, which are in the hands of the privatesector, were damaged in a pattern that parallels the effects on urbanzones. Damage occurred to overhead lines and to the posts sustainingthem, as well as to residential connections and connections to otheraffected structures, both in urban and rural zones.

The interruption to the supply of electricity was brief. The flowof electricity was restored a few hours after the earthquake, initiallythrough the use of energy from Guatemala. This was possible thanks toan interconnection line between the two countries. The Guatemalanelectricity was used pending assessments of the damage to the generatingsystem.

Apart from the direct damage noted above, indirectdamages are anticipated for the near future. In the first place,the companies, principally the distribution companies, havehad to cover unforeseen expenses to restore the distributiongrids. Furthermore, lower income is expected in the future,due to a decrease in billings in the devastated zones. All thiswill impact negatively, in varying degrees, on thedistributors’ financial profits. In this regard it should bepointed out that the demand for electricity was almostcompletely regained three weeks after the earthquake. Infact, the Transactions Unit for the national grid reports that as of February 2, demand was 0.5%lower than before the earthquake. This situation is explained by the fact that consumption in theaffected zones represents a very low percentage of national demand, and the affected parties aresomehow making partial use of the flow of electricity. 41 In addition to the above, it has beennecessary to reroute a transmission line that was under construction in order to avoid areasidentified after the earthquake as high-risk.

Polls conducted by the government, which provide partial information on direct damages,supplemented by data from private distributing companies and the mission’s own estimates, havemade it possible to quantify direct total damages for the electricity sector and to estimate indirectdamages expected to occur during the rehabilitation and reconstruction period.

41 Transactions Unit, Comunicación del 6 de febrero de 2001, Nueva San Salvador.

52

In regard to the hydrocarbons sector, it should be pointed out that the supply of fuels hasnot experienced problems. This is due to the fact that no major damage to port facilities or tostorage facilities was reported.

Total direct damages in this sector amounted to 2.3 million dollars, while indirect losseswere estimated at an additional 4.1 million dollars. Thus, the total damages to this sector wouldamount to 6.5 million dollars. Of this amount 51% (3.3 million) correspond to damages to thepublic sector, while the remaining 49% are losses to the sector’s private companies. The privatecompanies were insured against infrastructure damages and in some cases against loss ofearnings. Thus, net total losses, after discounting the estimated amount of deductibles, should bereduced substantially, to an estimated level of 5.1 million dollars. On the other hand, it isassumed that the damages involve the use of equipment and materials that are not manufacturedin the country. As such, a negative effect on the balance of payments is expected in an estimatedamount of 3.6 million dollars. (See Table 13).

Table 13

DAMAGES AND LOSSES IN THE ELECTRICITY SECTOR


Damages SectorComponentTotal Direct Indirect Public Private


Total 6,457.9 2,315.0 4,142.9 3,261.0 3,196.9 3,607.8GenerationCELGESALDuke EnergyNejapa Power

3,261.93,180.0

81.00.9

-

261.9180.0

81.00.9

-

3,000.03,000.0

---

3,261.03,180.0

81.0--

0.9--

0.9-

2,448.02,436.0

12.0--

TransmissionUTETESAL

1,235.5230.0

1,005.5

1,235.5230.0

1,005.5--

- 1,235.5230.0

1,005.5

1,159.8496.2663.6

DistributionDELSURCAESSEEODEUSEM

1,960.5…………

817.6415.0 42

290.586.425.7

1,142.9 43

…………

- 1,960.5…………

-


42 Figure estimated on the basis of partial information provided by the company.43 Composite estimate based on a reduction in overall demand.

53

b) Potable Water and Sanitation

Before the earthquake occurred, the sector providing potable water and sewage systemsserviced 86.8% of the urban population (2,951,565 inhabitants) and 25.3% of the population inthe rural zones (830,130 inhabitants) with potable water. As for sewage services, the coveragewas 85.9% (2,727,160 inhabitants) in the urban areas and 50.3% (1,650,416 inhabitants) in therural zones. 44 45

The statistics given above, expressed as overall coverage levels (combining both urbanand rural populations), reflect a 60.4% coverage rate for potable water service, and a 68.3%coverage rate for sewage services. These services are provided by the National Administration ofAqueducts and Sewage (ANDA), by some municipalities, the Ministry of Health, and some localand international non-governmental organizations (NGOs). The NGOs cover demand principallyin certain rural areas.

Rural water and sewage systems are designed and constructed under the supervision ofANDA. Their operation and administration, however, are headed up by administrative councilson potable water, which are comprised by members of the communities to which the services areprovided. This accentuates the systems’ vulnerability in the event of a disaster, owing to ashortage of economic and technical resources for operations and maintenance tasks, as well as theincreased service coverage that these entities are reporting.

According to assessments made by the institutions working in the water and sanitationsector, services in the rural zones have been those most severely impacted by this disaster.

As for the supply of potable water, according to damagereports prepared by ANDA, the components most severelyimpacted by the earthquake in the urban system were thestorage and distribution tanks or repositories, whichsuffered various degrees of damages. Some of the damagesthat could be mentioned include the cracking of their wallsand of support elements (beams, columns), as well as thesinking of some units constructed at ground level. 46 Therewere also at least three cases where it was necessary to

move the tanks to a safe site to prevent them from toppling over. In the metropolitan area of SanSalvador and other zones covered by ANDA, several types of damage occurred to deep-wellwater supplies and pumping plants. In addition, the instability of embankments and localizedlandslides caused breakage to supply lines, especially to those located in ravine passes. Thisresulted in a suspension in water supplies that lasted for days and even weeks in some places,

44 Planning Service, Boletín estadístico Nº21, ANDA, San Salvador, 199945 Pan-American Health Organization / World Health Organization – UNICEF, Evaluación

global de los servicios de agua y saneamiento. Informe analítico, San Salvador, July 2000.46 Información preliminar de agua potable y alcantarillado sanitario a nivel nacional

ocasionado por el sismo del 13/01/2001, ANDA, San Salvador, January 2001.

54

until the lines could be fixed. Damages to electrical systems and treatment plants were alsoreported, though they were quickly repaired, and services were rapidly restored.

As for rural potable water systems, varyingdegrees of damages were reported on 32 out ofapproximately 400 rural systems (only 8% of total).The principal type of damage was an uncoupling orrupture of pipelines located in unstable soil, onembankments or over ravines. In addition, thedestruction of the walls of some wells made itnecessary to proceed with their cleanup or to identifynew supply sources. It is estimated that approximately10,400 family wells previously dug will have to berepaired or rebuilt. These wells, damaged by the earthquake, were in their great majority locatedin rural zones or marginal urban areas. Although a lack of potable water affects the community asa whole, it has special repercussions on the women, as the supplying of water is a task that issocially delegated to females. The extra time it takes women to haul water under theseextraordinary situations is taken away from the time they could devote to productive activities,thereby resulting in a loss of income.

According to information provided by ANDA and other institutions involved with theseservices, the earthquake temporarily left an urban population of approximately 500,000inhabitants without a supply of water. This represents 15% of the population that was receivingsaid service. In the rural sector, on the other hand, the earthquake affected 75,626 inhabitants, 47

representing 9.1% of the rural population that had been receiving said service.

During the emergency period, duly chlorinated water wasdistributed to the affected population using tanker trucks. Inaddition, water treatment plants were installed to service thoselacking a supply of drinking water. Tanker trucks as ofFebruary 8 had distributed 18,968 cubic meters of water.ANDA, the municipalities, and the administrative watercouncils worked from the very moment that the earthquake

struck to restore the damaged systems, prioritizing those that supplied urban populations, as wellas rural systems whose repair costs could be covered by the administrative water councilsthemselves or with ANDA resources. The restoration works have only sought to restore serviceas soon as possible. Thus, some of the repairs have accentuated the system’s vulnerability. This isespecially true in the case of damages reported for ravine overpasses where landslides had takenplace. There are still unstable embankments, susceptible to seismic movement, actions of humanbeings, or future rains. Such actions could provoke damages of a similar or worse degree thanthose of this disaster. In addition, the systems might have incurred hidden damages, whose effectswill only be evident at a later date, when they bear water pressure.

47 Rural Systems Administration, Informe de daños a sistemas rurales de agua potable hasta el

29/01/2001, ANDA, San Salvador, January 2001.

55

As for drainage systems, ANDA has yet to identify damages in the sewer systems.Furthermore, information in this regard is not yet available from the municipalities. It is believed,however, that damage may become apparent in the future. Depending on the layout of the sewerlines vis-à-vis the potable water service system and on the pressure those lines may be under,there is a possibility, albeit remote, that some contamination of the potable water could occur.

Latrines are the predominant sanitation system in the rural and marginal urban sectors.Considerable damages have occurred to those latrines, and many have been completelydestroyed, especially in the areas most affected by the earthquake. According to estimates madeusing available information on the number of housing units destroyed in the rural zones and thedegree of sanitation-service coverage in those zones, it is calculated that approximately 63,000latrines were damaged.

As for trash collection, this service is carried out by the municipalities, and it was notpossible to obtain information on said operations. The Council of Municipalities of the Republicof El Salvador (COMURES) will be gathering this information in the near future.

Estimates indicate that the direct damage to water and sanitation systems throughout thecountry amounts to 13.1 million dollars, while indirect damages, which include unforeseenexpenses and a reduction in revenues for the companies that provide these services, are expectedto amount to an additional 3.3 million dollars worth of damages. As such, the total amount ofdamages would be 16.3 million dollars. 51% of that figure corresponds to public sector losses(8.4 million dollars), and the remaining 49% corresponds to private-sector damages. It should benoted, however, that the international community donated one million dollars for emergencyattention to these tasks. (See Table 14). Based on the figures for direct damages, it is estimatedthat the cost of reconstruction of the affected systems will be 20.4 million dollars. Nonetheless,existing insurance could cover up to 13 million dollars. Reconstruction, just as in the otheraffected sectors, will have a negative effect on the balance of payments in an estimated amount of8.5 million dollars, since it will be necessary to import equipment and materials that domesticproduction does not provide. On the other hand, a reduction in supply, resulting from the damageto the systems, will produce a savings in government subsidies provided to ANDA in anestimated amount of 525,000 dollars.

56

Table 14

DAMAGES AND LOSSES IN THE WATER AND SANITATION SECTOR


Damages Sector

Component Total Direct Indirect Public Private


Total 16,340.0 13,062.0 3,278.0 8,363.0 7,977.0 8,500.0Urban SystemsInfrastructureEmergency expenses 48

Reduced revenues

8,363.0………

6,200.0………

2,163.0-

663.01,500.0

8,363.0 - 5,000.0

Rural SystemsInfrastructureEmergency expenses 49

Wells and latrines

7,977.0………

6,862.0362.0

-6,500.0

1,215.0-

1,215.0-

- 7,977.0 3,500.0


c) Transportation and Telecommunications 50

Under this heading, estimates are given for direct damages inflicted by the earthquake onthe sector’s infrastructure, as well as for indirect costs. Such indirect costs include higher costs tousers and to the sector’s companies due to unavailable assets that were damaged or taken out ofuse in whole or in part. It should be pointed out that these higher costs will be present during theentire period that the affected assets are out of service, and until such time as they are efficientlyreplaced. As such, the assessment horizon for the indirect costs could, in some cases, last foryears.

Estimates of direct and indirect damages are broken down for each subsector.Differentiations are also made within each subsector on a functional or institutional basis.

The roads subsector has suffered damages of several types. El Salvador’s highways wereheavily damaged as a result of the earthquake. Noteworthy among the damage was the collapseof several sectors of the Pan-American Highway, which is the main highway artery across thenation and region, along with similar damage to several other highways. The Pan-AmericanHighway allows for the flow of a major portion of the country’s interurban transit, and for tradeon the Central American level, whether in-transit through the country or for trade to and from ElSalvador.

48 Includes 100,000 dollars in international aid.49 Includes 900,000 dollars in international aid.50 The basic information on this subsector was provided by the Assistant Ministry of Public

Works (VMOP), an agency of the Ministry of Public Works, Transportation, Housing, and UrbanDevelopment.

57

Damages were also suffered by bridges and hydraulic works in general. There was alsosettling, collapses, landslides, and damages to pavements. In addition, several secondary andtertiary routes were affected, as were urban roads, although the costs of these damages are oflesser magnitude than the cost of damages occasioned to the main thoroughfares.

i) Primary or Principal Inter-Urban Roads. In this sector, direct damages inflictedtotal or partial destruction upon roadway components. This has already resulted in an insufficientcapacity of the roads system, and will result in additional insufficiency once the direct physicalconsequences of the earthquake are overcome. A description is given below of the damages foreach principal span affected.

1) Los Chorros Sector of the Pan-American Highway. One of the worst casesof damage occurred along this sector, where landslides and rock falls took place in a volumeexceeding 100,000 cubic meters, covering a span of 5.5 kilometers in length at the western accesspoint to San Salvador.

Removal of the debris, repairs to the road surface, therestoration of hydraulic works, and protection to stabilize andrestore embankments will take more than one year to complete.Nonetheless, this restoration work will not restore the roads systemto pre-earthquake standards, given that the instability of theembankments will leave this span in a highly vulnerable situation.Moreover, it will only be possible to restore three out of the four

58

lanes, rather than the entire width of the roadway. The fourth lane and its respective shoulder areirreparable.

In addition, the reduced road capacity, high vulnerability,and ongoing maintenance costs for stabilizing theembankments along this span will lead to an acceleratedobsolescence, extending to the Cuchilla–Nueva San Salvadorspan on the same Pan-American Highway. It is thusnecessary to anticipate and accelerate the development ofalternative highway access from the west and northwest toSan Salvador in order to prevent congestion, as well as toexpedite the construction of the northern part of the highway

ring around the city. This, in synthesis, represents an indirect cost of the earthquake that is noteasily quantified, since the new works are also justified by a need to absorb the direct demanditself. As such, the indirect effect of the earthquake has two significant cost implications: Firstly,there is a need to accelerate construction works for the urban highway and a new access highwaythat will connect to it. Secondly, high geometric and structural design standards must be applied.Additional indirect costs that should be taken into consideration include road widening, improvedroad markings, paving, and other works on the Nueva San Salvador–Boquerón–Quezaltepequeroute, currently a tertiary roadway, which is 25 kilometers long and whose road surface is sixmeters wide.

For the same reasons as described above, it is indispensable to complete the connectionworks between the Nejapa–Apopa Highway and the Troncal del Norte Highway, so as to improveaccessibility to the capital and alleviate congestion from the considerable volume of traffic thatnow saturates the access routes to San Salvador for a great part of the day. The project foresees a15-kilometer connector route with four paved lanes, which will feed into Bulevar Constitución inthe northern part of the city. This also reflects an indirect cost of the earthquake.

2) La Leona Curve Sector of the Pan-American Highway. The situation ofthis span of highway is similar to that of the Los Chorros span described above. This sector ofhighway was buried under more than one million cubic meters of earth. It provides access to SanSalvador from the eastern part of the country at its kilometer 55. Damage to this span seriouslyrestricts international and interurban traffic. Such consequences are similar to those described inthe case of the Los Chorros span.

Material-removal work has proceeded at an accelerated paceso as to restore cargo and commuter traffic along the road.Significant progress has been made in this regard.Nonetheless, it is not yet possible to predict the condition ofthe road surface and connecting works. It is anticipated thatonce this span is restored, contrary to the case of LosChorros, vulnerability to landslides will be overcome, sincethe entirety of the unstable hillside has already collapsed.

59

Along this same order of ideas, it should be mentioned that there is a need to quicklyimprove alternative routes, which are currently low-standard rural routes, specifically the LasÁnimas Bypass– San Lorenzo–San Esteban–San Vicente Bypass route.

3) The Coastal Highway (RouteCA-2). Serious structural damage was inflicted uponseveral bridges located along the Acajutla–La Libertadspan and the Zacatecoluca–Usulután–El Delirio span.As a result, several bridges need to be rebuilt andothers need to be refitted. Moreover, even before theearthquake many of these bridges were already unableto efficiently absorb demand, a problem that becamemore acute after the earthquake. It must be pointed outthat this highway is an alternative to the Pan-AmericanHighway, especially during times of disaster. As such, the refitting and rebuilding of the bridgesalso contributes to reducing the vulnerability of the country’s roads.

4) The San Salvador–ComalapaHighway. This important roadway suffered numerous casesof earthwork settling and embankment landslides, along atotal of slightly more than 5 kilometers. The roadwayrequires filling, compacting, and re-paving work, as well asan improvement of embankments in order to reducevulnerability.

5) Poliedro–Centa Span of the SanSalvador–Santa Ana Highway. This sector has sufferedserious damage to the slabs, drainage works, and shoulders, provoked by collapses and lateralearth movements.

6) Mercedes Umaña–Berlín Span of the CA-1 Highway. This case is similarto the one presented above, with damage to pavements, structures, drainage, and shoulders,provoked by collapses and settling.

7) Other Spans. There was damage to the San Marcos Bridge over the LempaRiver and to the El Amatillo Bridge over the Goascorán River. Cracking and structural damagewas suffered by the Ilobasco–Sensuntepeque span and along the Costa del Sol Highway.Structural damage was likewise suffered by the bridge and tubing of the Usulután–El Deliriospan along the CA-2 Highway, by the La Cuchilla–Sonsonate–Acajutla span of the CA-8highway, by the Zacatecoluca–San Marcos Bridge span of the CA–2 highway; and along the SanJosé Las Flores–Quitasol span.

ii) Secondary Interurban Roads. In the inventory of Salvadoran roads, thisdesignation applies to roads whose surface is made of earth or gravel, and which link citiestogether. The damages suffered by these roads were similar to those described for the principalroads, which can be summed up as landslides, collapsing, and destabilization of embankments;

60

sinking, settling, and cracks in the road surface, as well as damages to bridges and works ingeneral.

As such, damage of moderate magnitude was suffered by 14 secondary roads, outstandingamong which, based on their large number of affected areas, were the Santa Tecla–Comasaguaspan, as well as those of Playa El Espino, San Agustín–Berlín, Santiago de María–Alegría–Berlín, and Ahuachapán–Tacuba.

iii) Transportation Issues Affecting Agriculture and Trade. It is indispensable to bearin mind the impact on or damage to roads used by the agricultural sector, and the increasedtransportation costs entailed in using alternate routes rather than those affected by the earthquake.

1) Plantation and Plantation-Related Roads. The subject of damage to tertiaryroads is covered under the heading of agriculture in the chapter on productive sectors, since mostof these roads have an institutional nature distinct from that of principal or secondary roads. Mostof the plantation and plantation-related roads are private property, situated on the plantationsthemselves. Furthermore, jurisdiction over them is municipal.

2) Diverted Flows. This concept corresponds to traffic flows that areundergoing substantial changes as a consequence of the disaster, whether because of a change inthe point-of-origin of the trips or because of a change in the destination. In both cases, theimplications of these diverted flows for transportation are of little importance to thetransportation sector. The costs arising therefrom, and eventually the benefits as well, are notassignable to the transportation sector, but to the corresponding productive sector (agriculture,industry, fishing, etc.) as well as to the trade sector.

iv) Urban Roads. The damages to and impact on urban roads have been relativelyminor, and their repair requires relatively low sums. Nonetheless, as will be seen below, theunavailability of these roads is increasing vehicle operating costs and travel times, with a majoreconomic impact on the users. For this reason the authorities are giving top priority to restoringthese roads, and a great part of them are already repaired.

With respect to automobile transportation, our evaluation focuses on increasedtransportation costs resulting from a need to use alternative routes in cases where damages to theroads infrastructure, as covered under the previous heading, has interfered with the flow of trafficalong the usual routes.

v) Indirect Costs on a National Level. In this regard there are several cases bestaddressed separately. Among them are the detours necessitated by the damages to the La Leonaand Los Chorros spans, and to access roads that connect to the capital, especially the Apopa–SanSalvador span. The rest of the cases of detours to alternate routes have a lesser economic impact,and are presented in a combined, summary form.

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Calculation of these indirect costs is complex and requires the application ofmathematical models 51 allowing for a simulation of traffic behavior, with a determination ofspeeds, travel times, and unit operation costs for the various flows, for each span. 52 It should alsobe pointed out that there is a need to evaluate the costs in an integrated manner. For example,along the Apopa–San Salvador span, flows are considered that correspond to the Sonsonate/SanSalvador, and the Santa Ana/San Salvador origin/destination pairs, as well as other minor pairs,in order to determine speeds, times, and costs that can be assigned to each span. For thesereasons, the flows were evaluated using destination/origin points within San Salvador. 53 Thismeans that the costs in the aggregate include the increased costs along both interurban and urbanroutes, considered together.

It should also be clarified that in determining alternate routes, consideration was given, inthe first place, to restrictions imposed by the authorities upon use of certain routes. 54 Likewise, itwas assumed as a premise that the great majority of users select the alternate route that minimizesoverall transportation costs. This assumption was made to keep from overestimating those costs,as would occur if personal preferences were taken into account.

As for the length of time during which alternate routes will be in use, two criteria wereassumed, both of which were conservative. In the first place, it was assumed that projectedinterurban routes providing an alternate to the La Leona span will be available within one year.On the other hand, it was assumed as a working hypothesis that the restrictions on transit in theLos Chorros sector, especially for heavy vehicles, will be gradually lifted over the following timeintervals: 1) they will remain in place for three months; 2) during the following quarter they willbe reduced to one-half, thanks to the availability of alternative routes, and 3) during the twosubsequent quarters they will be reduced to one-fourth of what they were in the first quarter.

It should be pointed out that the assumptions made above are relatively optimistic. Thisgives a conservative character to the figures derived using the above-mentioned workinghypotheses. 55

Indirect costs were determined through an analysis that compared the costs of the“situation without the earthquake” to those of the “situation with the earthquake.” Furthermore,the working hypotheses include an implicit assumption that financial resources will be availablevery soon to complete the engineering projects and begin construction work.

51 Principally HDM-III, Transyt, and Saturn, among others.52 These operating costs include fuel and lubricants, tires, depreciation, maintenance, and the

value of the commuters’ time.53 The area in question is the Metropolitan area of San Salvador, known by the initials AMSS.54 A typical case of restrictions imposed by the authorities is that of passage over the Los

Chorros span, which is authorized for light-vehicle traffic only, in accordance with the followingschedules: From east to west, traffic is only authorized from 12:01 p.m. to midnight. Traffic is authorizedin the opposite direction during the remaining hours. Moreover, it is feared that the route could eventuallybe cut off as a result of new landslides or intense rains.

55 This issue will be addressed again below.

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Damage to the transportation sector causes other types of indirect costs that cannot bequantified due to a lack of data, such as the extra costs incurred by the user population whenalternate means of transportation or routes are used. Another example is the loss of earningsoccasioned upon micro-businessmen o micro-businesswomen, whose small establishments ortrade activity have them “making their living on the road.”

vi) Indirect Costs of International Transportation. Increased indirect costs for heavytransportation were calculated on the basis of interurban flows. Nonetheless, some of these trucksare used for international transportation, specifically for transportation in the Central Americanregion. This category could not be segregated, due into a lack of information on the situation afterthe earthquake. 56

For this reason it has not been possible to determine the effect of this damage toSalvadoran roads on regional trade. It is worth noting that in qualitative terms this impact issignificant, since marginal profits are very closely linked to transportation costs in internationaltrade. In addition, the efficiency of international trade depends in large measure on timely arrivalsof the products at their destinations.

vii) Damage to Automobiles. It was not possible toobtain detailed information on the number and type of vehiclesdestroyed or damaged by landslides and other phenomenonattributable to the earthquake. Nonetheless, a gross estimate wasmade of direct losses occasioned upon motor vehicles.

In the port and maritime subsectors , the nature of the earthquake was such that it didnot cause any significant damage to those sectors. This means that piers, terminals, docks, etc.were not threatened by phenomena such as high or strong waves, high tides, etc. It is estimatedthat the minor damages reported at the port of Acajutla will be absorbed under routinemaintenance activities.

In the railway subsector, it should be noted that there are three railway systems inexistence in El Salvador: the San Salvador–La Unión span in the Gulf of Fonseca (District 1); thesystem linking San Salvador to Metapán on the Guatemalan border, connecting to theGuatemalan rail system (District 2); and the span joining San Salvador to the Acajutla Port(District 3). 57

56 This figure should have been derived from origin/destination polls, which were to be

conducted after the earthquake at various counting stations, but weren’t. Moreover, the taking of suchpolls and the subsequent analysis of the statistical data would take a long time to perform.

57 The information on the railway system was provided by the Autonomous Executive PortCommission (CEPA), which is in charge of the country’s railway system.

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District 1. This district has been in disusesince 1995, as the service unprofitable. The tracks,right-of-way, and structures are in very poorcondition. This span is a narrow gage railway, andmotor vehicle transportation along the sameorigin/destination pair has a competitive advantage.

Damage was suffered by the right-of-way andthe railway structures, whose repair has beenforegone, since their opportunity cost would be null.On the other hand, there is an interesting study, which recommends upgrading District 1,replacing the current 1-meter gage with a 1.8-meter gage. Such an upgrade would make the spancompetitive for international transportation, as well as for traffic to the port being planned for theGulf of Fonseca. The above-mentioned study also recommends joint participation by thegovernment and private operators in the operations and investments. This initiative is alreadybeing well received by international railroad operators, who consider it to be a sufficientlyattractive investment. In contrast, the bridge over the Lempa River in San Marcos, which sufferedheavy damages, is being used as an alternative route for motor-vehicle transportation, and is thusused relatively frequently. Therefore, its repair is clearly necessary.

In this context the costs occasioned by the earthquake are considered to have an economicvalue. The collapses of natural and man-made structures would have to be remedied in order toaccomplish a refitting of the bridge. They would also have to be remedied in the event that theabove-described initiative is implemented, which would require a modernization of the bridge,making use of a good part of the current right-of-way.

District 2. This district did not suffer significant damages as a result of the earthquake.Nonetheless, the earthquake did precipitate a decision to eliminate the Apopa–San Salvador span.Indeed, the elimination of this span was under study just prior to earthquake’s occurrence, giventhat long before the earthquake the Apopa–San Salvador span was facing serious underminingproblems. The resulting settling and sinking constituted a threat for the safety of the railoperations and also slowed down the speed of the trains considerably. As such, the rail linecontinues to operate, but only from Metapán to Apopa. Operations along the above-mentionedApopa–San Salvador span have been suspended.

This situation has not resulted in greater costs for the railroad company nor for its users. In thefirst place, the principal user of District 2 was a cement concern, which only used the rail line totransport 32,000 bags of cement per month, and only when its truck transport capacity had beensaturated. In this regard it is worth noting that this small quantity constitutes a mere 1% of thetotal production transported from the factory to market by truck. After the earthquake, 100% ofthe production is being taken to market using the highways, at a cost similar to that of the past.Thus, the elimination of this railway line has not caused the cement company to expand its fleet.Secondly, suspension of the use of the Apopa–San Salvador line has allowed the railroadcompany to eliminate the maintenance costs of the deteriorated span. This provides savings thatexceed the loss of income occasioned thereby. It has also eliminated the risk of accidents. Finally,it should be pointed out that this district was generating a financial loss.

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District 3. This district did not suffer significant damage and has maintained its normaloperations.

With regards to the airport-infrastructuresubsector, it should be pointed out that the Comalapainternational airport suffered various damages to theterminal building, to false ceilings, brick walls, stands,etc. In addition, there was some damage to the pavementstructures of the runways, but only at the runwaythresholds, which did not prevent their subsequent use,given that the runways are very long. There was alsodamage to the hangers, rollout and parking slabs, and tosome equipment.

On the other hand, two aspects involving operating issues need to be pointed out, whichwill be addressed under the following heading. One of them is that as soon as the earthquakeoccurred, air operations were suspended, as a precaution, and due to a lack of electricity, pendingverification of the installations, equipment, and pavements. The other aspect worth noting is thatthe current location of the communications tower used for air traffic control in the CentralAmerican region is highly vulnerable.

As for the aeronautical operations subsector, it is important to note certain aspects.Immediately after the earthquake, as has been previously indicated, the authorities suspended airoperations, pending an assessment of damages to the infrastructure and installations, if any. Thatsuspension lasted for 26 hours, from January 13 at 11:30 a.m. to 1:30 p.m. on the following day.The next day, however, flights were fully restored. During the lapse in question, flights bound forSan Salvador used other established aeronautical alternatives, in this case the internationalairports of Guatemala City and San Pedro Sula. Passengers were transported thereafter, eitherusing ground transportation or on the flights that were renewed the following day.

This suspension occasioned several indirect costs as listed below:

§ A decrease in airport revenues, in the form a loss of boarding fees and aeronauticalfees that were not perceived on the day of the earthquake;

§ The cost of ground transportation to San Salvador for some passengers and the cost ofstay-overs at other destinations;

§ Changes in airline flight schedules, which principally translate into a loss of earningsfor aircraft held up at the Comalapa airport, and;

§ Costs personally incurred by passengers who were unable to board or whose arrival toSan Salvador was delayed.

In the air traffic control subsector, certain situations have created indirect losses. In thevicinity of the San Salvador Volcano, the Corporación Centroamericana de Servicios deNavegación Aérea (COCESNA) has air traffic control antennas servicing the Central American

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region as a whole. They are located in a tower, which as aresult of landslides in the crater of the volcano was placedin an extremely vulnerable position. As a result, theCOCESNA authorities ordered an immediate relocationof the tower and antennas to a nearby, safer, thoughtemporary location. Various alternative sites are understudy, where soil analyses are being conducted, with anaim to move the tower from its current vulnerableposition.

The new installation would entail costs due to the need to build retaining walls, toimprove security at the site, cut away small hills and remove land, improve the soils, waterproofthe site, drive the pilings, and install the tower, antennas, and equipment. It goes without sayingthat the costs would be significant should such a fundamental element for air traffic controleventually become unavailable. Indeed, that would make it necessary to suspend all internationalflights to the Central American region.

Temporary problems were also occasioned upon the telephony subsector. Due to a lackof energy, services were interrupted on some networks, which kept many telephone calls fromgoing through. In addition, due to the huge increase in demand, the cellular telephone systembecame overloaded. These situations were resolved in a relatively short period of time. Inaddition, in response to the emergency, some private carriers temporarily authorized telephonecalls at no cost for the users.

This resulted in a limited loss of earnings for the telephone companies, given that it wasnot possible to make temporary use of their existing assets, and many conference calls were notcharged.

In summary, the transportation and telecommunications sector reported direct damagesestimated at 71 million dollars, involving damages to the sector’s infrastructure and to motorvehicles. Furthermore, it is estimated that the sector will experience indirect losses. Theseindirect losses result from increased operating costs, from a need to adopt or construct alternatemeans of communication, and losses of earnings for the sector’s companies. The amount of suchindirect losses is estimated at an additional 304 million dollars. As such, total damages for thesector will amount to 375 million dollars. 60% of these losses corresponds to the private sector(224 million dollars), with the remaining 40% corresponding to the public sector. In addition,there will be a negative effect on the balance of payments in an approximate amount of nearly149 million dollars, resulting from an increase in imports. (See Table 15).

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Table 15

DAMAGES AND LOSSES IN THETRANSPORTATION AND TELECOMMUNICATIONS SECTOR

(in millions of dollars)

Damages Sector

Component Total Direct Indirect Public Private

Effect onthe Balanceof Payments

Total 375.3 71.3 304.0 151.1 224.2 148.7Roads infrastructurePrimary roadsSecondary roadsUrban roadsEmergency roads

145.9121.7

20.00.24.0

63.443.220.00.2

-

82.578.5

……

4.0

145.9 - 55.2

Automobile transportationIncreased costsVehicles

220.3220.0

0.3

0.3-

0.3

220.0220.0

-

- 220.0 90.0

Ports and Maritime … - … - … …Rail 2.5 2.3 0.2 0.2 - 0.9Airport infrastructure 5.3 5.3 - 5.3 - 2.0Aeronautical operations 0.6 - 0.6 - 0.6 0.3Air traffic control 0.2 - 0.2 - 0.2 …Telephony 0.5 - 0.5 - 0.5 0.1Source: ECLAC, based on official and private-sector figures, as well as our own estimates.

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4. Environment

a) Introduction

In recent years the Central American and Caribbean region have experienced a series ofnatural disasters, which have been increasing in frequency and severity, aggravating theecological vulnerability of these countries. The two principal sources of natural disasters in theregion are tectonic activity (earthquakes, tidal waves, and volcanic eruptions) and climaticactivity (hurricanes, floods, drought, and fires). Nonetheless there are important anthropogenicfactors that aggravate both the environmental and social impact of these disasters, the mostfundamental of which are land use patterns, human influences on climatic change, andinstitutional responses that amplify the impact of these factors. 58

The tectonic activity above all affects the western coast of the region, but affects all ofMeso-America and the Caribbean, due to pressure between the Pacific and North Americanplates, the Cocos and Caribbean plates, and the Nazca and South American plates. Theenvironmental effect of all of this seismic activity is to create a relatively high risk of earthquakesand volcanic eruptions, which in some areas is in addition to an extremely high risk of hurricanesand floods. The earthquakes frequently occur along the volcanic axis, quite close to urbancenters. In fact, two out of every three persons in Central America is at risk of being affected by amajor earthquake. (See the following map).

In the chain of disasters that have affected Central America, Hurricane Mitch was themost recent. Its cost was high in human life (more than 9,000 persons perished), and it inflictedmore than six billion dollars in material damages. The great number of earthquakes, volcanic

58 Regional Office for Latin America and the Caribbean, The GEO Report for Latin Americaand the Caribbean - Environment Outlook 2000, United Nations Environment Programme, Mexico City,2000.

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eruptions, hurricanes, floods, droughts, landslides, and other extreme natural events, beyond theloss in human life, has inflicted damages to the physical and productive infrastructure of theregion’s countries, and has seriously setback their development.

Likewise, the effect on the environment of certain anthropogenic activities, such asindiscriminate deforestation and unplanned urban development, along with the opening of roadsor the construction of infrastructure without consideration for the biophysical conditions of theenvironment, magnify the impact of the natural disasters.

Actions aimed at mitigating environmental vulnerability, especially with regard to humansettlements and risk prevention, are considered by Central American governments to be at thecore of their development agendas, both on a national and regional scale.

b) The Environmental Situation of El Salvador

There are various ecological zones, ranging from savanna vegetation in the central area ofthe country, to cloud forests at high elevations, to flood-prone lands, to mangroves along thecoast. The country’s geography, its’ small surface area, and the high density of its populationplace increasing pressure on its natural resources.

According to the Ministry of the Environment and Natural Resources, use of land in amanner inconsistent with its character or usage capacity, a rapid growth in the population, andvarious socioeconomic factors are among the principal causes of the intense deforestation takingplace over large land areas, which have now been converted for agricultural use or into urbandevelopment zones, often in an unsuitable manner.

It is estimated that the current forest cover is 11.6% of El Salvador’s territory (240,480hectares), which represents the smallest forest area, coupled with the highest deforestation rate inthe entire Central American region (3.3% for the period of 1990 - 1995). The forest cover isdistributed in the areas identified as having a potential to be integrated into the National Systemof Protected Natural Areas (37,208 hectares or 1.8%), as well as mangrove forests (26,277hectares or 1.29%), and shade coffee cover (176,500 hectares or 8.5%).

75% of El Salvador’s territory is at a slope greater than 12%. This factor contributes to thedeterioration of soil resources, unless adequate conservation methods are implemented. Improperland usage, which does not take into account its natural character and productive capacity forexploitation, are accelerating the deterioration of the soil. More than 50% of El Salvador’sterritory is being used inappropriately, causing a negative impact on the environment.

The majority of agricultural production takes place on hillsides that are susceptible toerosion. A large percentage of these lands should not be used for agriculture. According to recentstudies prepared by the World Bank, based on polls conducted by Salvadoran Foundation forEconomic and Social Development (FUSADES), 22% of the lands on slopes that are not verypronounced, 54% of the land on moderate slopes, and 83% of the fields on pronounced slopes,are suffering some degree of soil erosion.

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The small size and intense population density of the country have provoked and continueto cause a constant advance of the agricultural frontier, with its resulting impact on the forestcover and biological diversity. Deforestation has caused fragmentation of natural habitats and theextinction of many plant and animal species, a deterioration of soils, and changes in rain patterns,and has contributed to the exhaustion of water sources. This, added to the overuse of naturalresources, has markedly increased the country’s vulnerability to environmental risks and threats.

Despite the fact that El Salvador receives 1,823 millimeters per year of rainfall, thecountry is facing a water shortage due to an inadequate administration of its hydro resources.According to the Ministry of the Environment and Natural Resources, the country’s mostimportant hydrographic basins are deforested or severely degraded. Its reservoirs have high levelsof sedimentation, originating both in agricultural zones and in zones at high elevations. The mostimportant recharge areas for the basins are affected by decreasing infiltration rates, due tochanges in land usage, especially unplanned urbanization. Furthermore, surface water bodies arebeing contaminated by an untreated discharge of agrochemicals, industrial waste, and municipalsewage water. This situation directly affects the country’s hydroelectric infrastructure and itssources of potable water. On a national level potable water is supplied to 56% of the population(85.6% in urban areas and 25.3% in rural areas). Leaks in the supply system are estimated to bealong the order of 39%.

Another significant environmental problem is the absence of wastewater treatment and themanner of disposing and eliminating solid wastes in urban and rural areas. The rapid, unplannedgrowth of human settlements in recent years is resulting in a permanent, harmful change to theenvironment, especially in San Salvador, where green areas and aquifer recharge areas are beingreplaced by urban developments. An ever-increasing demand for basic services is being placedon the country’s already overloaded urban infrastructure, which cannot be satisfied at rate thatkeeps up with growth. In this regard, the coverage of disposal systems for excretions on anationwide level is 66.7% (corresponding to 84% in urban areas and 52% in rural areas). Lessthan 5% of industrial wastewater is treated, and on a national level this figure is less than twopercent. 50% of solid wastes (equivalent to 1,500 tons per day) generated in the metropolitan areaof San Salvador go uncollected. In municipalities such as San Martín and Ciudad Delgado, thepercentages go up to 90%.

According to estimates made by FUSADES, 59 the costs of environmental degradation forthe economy and for Salvadoran society are along the order of 300 – 400 million dollars per year,equivalent to 3% – 4% of the country’s GDP. This estimation only includes losses in terms ofhealth due to water and air pollution and decreased productivity on account of soil erosion andsedimentation in reservoirs and other bodies of water. This figure does not include materialdamages due to air pollution, nor does it include losses in fishing zones resulting from waterpollution or from an over-exploitation of fishing resources. Neither does this figure include lossesto forest cover or to the biodiversity of the forests, nor losses in tourism or in potentialrecreational profits.

59 Panayotou, T. et. al. (1997); El desafío salvadoreño: de la paz al desarrollo sostenible ;

FUSADES; San Salvador.

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Despite this situation, there are positive elements vis-à-vis decreasing environmentalvulnerability. On the one hand, efforts are being made to correct existing problems, such as ditch-restoration projects, hillside agriculture, conservation of biodiversity, and basin-recovery efforts(especially along the Lempa River), among other such work. In addition, changes are being madein legislation and environmental management. In this regard, given the importance ofenvironmental management as a primary public-policy instrument for reducing environmentalvulnerability, even before the earthquake in El Salvador, steps had been taken towards designingand implementing a Plan for Territorial Zoning and Development.

c) The Earthquake’s Impact on the Environment

In analyzing the impact of natural disasters, it is important to bear in mind thatanthropogenic factors (deforestation, urbanization in vulnerable areas, climate change manifestedin weather phenomena, the degradation of basins, etc.) and the accumulated impact of previousnatural events, all of which intensify environmental vulnerability, can aggravate the disaster’senvironmental, social, and economic consequences. Some of the effects of the January 13, 2001earthquake are due to such factors. At the same time, the disaster has further increased thecountry’s environmental vulnerability. Thus, even greater damage could be caused by futureextreme natural events (hurricanes and earthquakes, for example) or non-extreme events (rainduring the rainy season or low-intensity seismic movement).

Environmental degradation is a continual process, resulting from a gradual accumulationof small damages and transformations that increasingly compromise the capacity of naturalsystems to adapt, but that do not provoke an immediate deterioration in a system’s operability,until the system is impacted by an event of greater magnitude. When this happens, the systemsare unable to recover, and the pre-existing condition is rapidly replaced by a new regimen or aless resistant ecosystem, with lesser diversity and a diminished capacity to provide environmentalservices, such as protection against natural disasters.

As an immediate consequence of the earthquake, movements of land masses occurred in agreat part of the affected zone, principally in the form of landslides. According to some experts,in certain places, such movement was accompanied by mudflows. These mass movementsaffected the environment, human settlements, infrastructure, and productive sectors, resulting inan increased environmental vulnerability for the country.

The Ministry of the Environment and Natural Resources has worked to identify andcategorize the principal collapses and landslides in the affected zones throughout the nation’sterritory (See the following map). 60 Likewise, it has classified the zones in accordance withpotential risk for the occurrence of new mass movements, which could affect populations,infrastructures, and cultivation zones. Using this classification, with the principal objective ofpreventing new loss of human life, priority has been given to actions aimed at stabilizing theareas of greatest risk.

60 The National Emergency Committee (COEN) reported 564 landslides as of February 9, 2001.

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Map of Landslides and Collapses Occasioned by the Earthquake 61

The steep slopes and instability of the hillsides, the degree of degradation of the soil, thegeological structure 62 (quaternary volcanic deposits with low levels of consolidation andstability), the tectonic structure, and an environment affected by anthropogenic actions, are someof the factors that contributed to the earthquake’s environmental and social impact. A model ofthe above appears on the following page.

61 Map provided by the Ministry of the Environment and Natural Resources.62 In Issue Number 18 of the Revista del Programa Salvadoreño de Investigación sobre

Desarrollo y Medio Ambiente (PRISMA), Bommer J. (1996) notes that deposits of white soil have anamplifying effect on seismic movement, due to their low degree of compacting. The presence of suchmaterial could be observed in many of the cases of collapsing and landslides that took place in El Salvadorin January 2001.

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Figure 2

Model of the Natural Disaster

Earthquake01/13/2001 • Seismic activity

• Unstable soil• Steep inclines• Geological structure• Intervened environment• Changes in soil usage• Improper management of water resources

§ Collapsing§ Landslides§ (Mudflows)

Coastal ImpactZone

Salinization of soilsand aquifers, andsmaller catches in

the fishing industry

§ Loss of vegetation and forest cover§ Soil loss§ Dragging away of sedimentation to bodies of water§ Changes in infiltration and run-off patterns

Obstructionof highwaysand roads

§ Loss of human life§ Destruction of housing

§ Instability of hillsides and embankments§ Exposed soil§ Erosion processes

Generation andinadequatedisposal of

debris

Use of wood(mangroves)

forreconstruction

Increasedenvironmentalvulnerability tonatural disasters

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Concretely, the direct and indirect impact of the earthquake on the environment wasmanifested as follows:

§ The loss of vegetation and forest cover, with an eventual impact on the abundance, but not onthe diversity of species of terrestrial flora and fauna;

§ The loss and degradation of the soil, and the formation of ditches due to the displacement oflarge volumes of earth resulting from collapses and landslides;

§ Eventual damages to basins and ravines due to the accumulation and disposal of debris, ifsuch disposal is carried out without adequate planning (an impact is to be expected on humansettlements downstream, due to the dispersion of these materials during the next rainyseason);

§ An impact on agricultural activities, due to an accumulation of sediments and a loss of soils;§ Salinization of soils and water tables, as well as a rapid decrease of fishing catches in coastal

zones;§ An increase in environmental vulnerability in the event of new seismic movements and

during the next rainy season, that could provoke new movements of land masses;§ Increased sedimentation in bodies of water during the rainy season, and;§ Changes in infiltration and run-off patterns.

It is important to note that new landslides or detachments of hillsides could occur duringthe next rainy season (as of May), given that the precipitation would erode part of the materialthat is currently exposed on the surface of the hillsides.

d) Economic Assessment of Environmental Damages 63

An evaluation of the impact on environmental value can be divided into the impact onusage values and the impact on non-usage values. In economic literature, natural resources aredescribed as assets (natural capital), from which goods and services are derived that contribute toimproving the welfare of persons. From this point of view, natural resources have a usagevalue. 64 In addition to its usage value, a natural asset could generate value unrelated to any director indirect use. These non-usage values arise from the psychological benefits derived, amongother things, from a mere awareness that the resource exists (existence value) or from a desire topreserve the natural capital so that future generations may enjoy it (legacy value).

63 The methodology presented under this heading has been extracted from Dosi, C. (2000)

Environmental Values, Valuation Methods, and Natural Disaster Damage Assessment, a documentprepared on the basis of a contracted consultation within the framework of the review process using theECLAC methodology for evaluating socio-economic damages caused by natural disasters.

64 Direct usage value can be derived from consumptive use (for example, firewood usage) orfrom non-consumptive use (such as ecotourism activities). Indirect usage value, also known as functionalvalue, can be described as the benefits indirectly enjoyed by persons as a consequence of the primaryecological function of a given resource (Torras, 2000). For example, the indirect usage value of a wetlandcould come from its contribution to the filtration of water that is subsequently used downstream.

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The impact on usage value arises from alterations of the benefits derived from utilizingenvironmental attributes. Natural events can alter these benefits in two different ways:

§ Through temporary or permanent environmental changes (quantitative or qualitative) thataffect the intrinsic productivity 65 of the natural asset. Examples of these changes are soilerosion caused by floods, losses of natural habitats such as forests or wetlands on account oflandslides, volcanic eruptions, or fires. In accordance with ECLAC methodology, these typesof damages, which directly affect natural capital, are direct environmental damages.

§ By altering the capacity to utilize the environment. This occurs when a total or partialdestruction of constructed capital prevents or makes it more costly to utilize theenvironmental attributes that form a part of the productive functions of companies andhouseholds. These types of damages are known as indirect environmental damages. Theyinclude, among other things, a breakage in water distribution lines on account of anearthquake, affecting usage values involving water (loss of agricultural and industrialproduction, negative effects on health or increased public and or private expenses). In order toincorporate environmental assessment methodology into ECLAC’s general assessmentmethodology, the loss in the flow of goods and services caused by direct damages during theperiod of recovery of the environmental asset is included under indirect environmentaldamages.

Non-usage values can only be affected by a natural disaster if environmental changes areproduced (direct environmental damages).

The physical effects result in changes in the flow of services from the natural capital, andthus affect the welfare of persons. In principle, the impacts on the welfare of persons should beevaluated using the present value of the change in the flow of benefits generated by the affectednatural asset. Alternatively, as an approximation of the true loss of welfare to persons, the costsof restoring the natural capital 66 could be used as a measure of the damage, so long as the asset’srestoration is possible and the economic costs of its restoration do not exceed the benefitsprovided by the damaged assets. Although this assessment methodology is similar to the one usedfor constructed capital, the following should also be borne in mind when assessing environmentalchanges: i) restoration of the original productivity of the natural asset may be technicallyimpossible; ii) when it is technically possible, the restoration phase may last longer than in thecase of constructed capital.

65 The term productivity is used in its broadest sense, as a reference to the “production” of the

welfare of persons.66 The United Nations Environment Programme (UNEP) and the Statistics Division of the UN

Department of Economic and Social Affairs (DESA) published a System of Integrated Environmental andEconomic Accounting during the year 2000. Under this system, damages caused by natural disasters areincluded among the variations in the stocks of environmental assets. One of the methodologiesrecommended for assessing environmental impacts is that of the cost of restoration.

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In the case of indirect environmental damages, which include changes in the ability ofpersons to use potentially available goods and services, many of these changes will now beaccounted for as direct and indirect damages to other sectors. For example, indirectenvironmental damage from a break in the road that prevents tourists from visiting a natural areawould be included as direct infrastructure damages, together with the indirect damages to thetourism industry for the time it takes to repair the road.

In Figure 3, which appears below, the calculation process followed can be observed. Thevarious circumstances subsequent to a natural disaster should be borne in mind: restoration ornon-restoration of the natural and constructed capital, the duration of the recovery period and anaccounting or non-accounting of the environmental damages as direct and indirect damages toother sectors.

In the January 13, 2001 earthquake, the direct environmental damage resulted from thechanges in the environment caused by collapses, landslides, and mudflows, which occurred inseveral parts of the country. As for the natural environment, the movements of land masses haveoccasioned the loss of agricultural and forest soils, a loss of tree vegetation, the dragging ofsediments and debris into bodies of water, alterations to natural drainage systems, and changes tothe landscape. Other effects noted in coastal zones are an increase in the salinity of agriculturallands and aquifers, as well as an abrupt drop in the fish catch. The situation of instability in manyzones that experienced collapses has increased the risk that the erosion processes will becomeaccentuated during the rainy season, and that new mass movements will occur. An inadequatedisposal of debris resulting from breakage in communications routes and buildings could have anegative impact on these processes. Another effect arising from the natural environment is relatedto the use of mangrove wood to build housing in coastal zones, which could increase the pressureon the mangroves.

With respect to indirect environmental damages, the effect on infrastructures, such ascommunications routes, has made it impossible or at least more costly to exploit environmentalgoods and services such as agricultural products and tourism activities. Damages have also beeninflicted on the tourism infrastructure in some cases, such as hotels at Cerro Verde and Comasguahotels, in areas directly participating in recreational activities involving nature. 67 Ruptured waterdistribution systems have also occasioned problems with the water supply for the population andfor irrigated crops. These problems for exploiting environmental goods and services, caused bydamage to the physical infrastructure (indirect environmental damage) have already beenaccounted for as direct and indirect damages in the assessment of the sectors classified asinfrastructure, agriculture, potable water and sanitation. Therefore, they will not be considered atthis time, in order to avoid a double accounting.

67 Damages in other protected areas such as the El Imposible national park were not reported.

76

Figure 3

PROCESS FOR CALCULATING ENVIRONMENTAL DAMAGES

NATURAL DISASTER

DirectEnvironmental

Damages

IndirectEnvironmental

Damages

Is the restoration of thenatural capital possible (and

is it going to take place)?

Is the restoration of thenatural capital possible (and

is it going to take place)?

NO YES N0YES

Does the restoration of the capital (that is, either natural or man-madecapital) allow for an immediate recovery of the environmental damages?

NO YES

Are the environmental damages (during therestoration phase) already accounted for

under other indirect damages?

NO YES

Total Damages =(present) value of

directenvironmental damages

Total Damages =Cost of Restoration (direct damages)

+(present) value of direct/indirect environmental damages

during the restoration phase

Total Damages =Cost of Restoration(direct damages)

Total Damages =(present) value of

indirectenvironmental damages

Total Damages =Cost of Restoration (direct damages)

+indirect damages

77

The loss of tree vegetation, both wild and planted, represents a reduction or loss ofenvironmental goods and services, such as firewood, protection of lands, flood control,maintenance of biodiversity, the supplying of water, etc. In the case of El Salvador, shade coffeeplantations are especially important, since they are forest systems that combine agriculturalproduction with a maintenance of the ability to provide environmental services. Although no datais available on the loss of the natural vegetative cover attributable to mass movement,information is available in the case of shade coffee and will be used to calculate direct andindirect environmental damages.

As indicated above, it has been accepted that the assessment methodology to be employedwill estimate direct damages on the basis of calculated restoration costs for earthquake-relatedenvironmental projects that are considered a priority by the Ministry of the Environment andNatural Resources. 68 Other projects, principally aimed at stabilizing highway embankments, forwhich the Ministry of Public Works is responsible, are considered together with the infrastructuresector.

The principal activities of these projects include:

§ A review and update of the biophysical and economic diagnostic on the basin;§ Removal of petrous material and debris, and their disposal in a suitable place;§ Recovery of natural drainage and water sources;§ Recovery of natural forests, reforestation of deforested land, and management of the

productive forest;§ Stabilization of embankments and hillsides through engineering works, and;§ Treatment of cracks.

68 Strictly speaking, these are not restoration projects. Rather, they are projects for the recovery

of lost environmental services, with an emphasis on disaster prevention. On the other hand, a significantpart of the costs correspond to restoration work for damages caused in the past, both by naturalphenomena and by anthropogenic actions.

78

Table 16

DIRECT ENVIRONMENTAL DAMAGES, ESTIMATED USING RESTORATION COSTS

Environmental Restoration Projects Thousands of Dollars

Total 67,000§ Stabilization to prevent landslides and collapses, and the recovery of the Lake

Ilopango basin§ Stabilization to prevent landslides and collapses, and the recovery of the Lake

Coatepeque basin§ Stabilization and recovery of affected areas at the San Salvador Volcano§ Stabilization and recovery of the Berlín–Tecapa Volcanic Complex§ Stabilization and recovery of the El Bálsamo Cordillera§ Stabilization and recovery of the natural drainage in the area surrounding San

Pedro Masahuat§ Recovery and stabilization of affected areas in the zone of the Santa Ana

Llamatepec, Cerro Verde, and Izalco Volcanoes§ Stabilization and recovery of areas affected by the earthquake in the coastal

zones

6,000

4,0003,500

10,00025,000

3,500

5,000

10,000Source: Ministry of the Environment and Natural Resources

With respect to the loss of shade coffee plantations , the assessment of the agriculturalsector already includes the loss of coffee lands and of the corresponding coffee production. Inaddition, the Ministry of Agriculture and Livestock Raising has estimated the value of the loss offirewood and environmental services. The surface area affected by the earthquake represents 970hectares of coffee groves. It is estimated that 194 of these hectares are irrecoverable and that 776are recoverable. With respect to the recoverable surface area, new plantations start producingafter a four-year period. For calculation purposes, the recovery of firewood production and ofenvironmental services are considered as a straight-line function over a four-year period.

The estimate made by the Ministry of Agriculture is based on a wood production/hectarerate of 14.1 m3 /hectare/year, with a value per hectare of US$6.87 dollars. As for environmentalservices, the values used by the Ministry of Agriculture are based on the primary forests of CostaRica, with a reduction factor of 70%, 69 which represents a value of US$19.6 per hectare per year.Based on these annual values for firewood production and environmental services, the presentvalue is calculated for the flow of environmental goods and services whose provision will be lostduring a four-year period (for the recoverable plantations) and during a twenty-year period (fornon recoverable plantations), utilizing a discount rate of 4% per year. 70 These estimates appear inthe following table.

69 Three environmental services are considered: supplying of water, protection of lands, andflood control. Carbon-fixation services are not included, given the utilization of cut firewood for fuel.Maintenance of biodiversity is not considered either, despite the fact that this type of agro-forest systemallows for a greater degree of biodiversity conservation that other agro-ecosystems.

70 A study by Kunte et al (January 1998) Estimating National Wealth: Methodology andResults; World Bank (a discussion paper) utilizes this same rate for estimates of the natural capital ofcountries. In all events, the utilization of discount rates in environmental assessment studies is hotlydebated.

79

Table 17

ESTIMATED LOSS OF FIREWOOD AND ENVIRONMENTAL SERVICESFROM THE SHADE COFFEE PLANTATIONS


Direct Damages Indirect DamagesTotal 265.6 109.9Loss of firewood production 53.7 22.8Loss of environmental services 319.3 132.7

Source: ECLAC estimates based on data provided by the Ministry of Agriculture andLivestock Raising.

A summary of direct and indirect environmental damages can be seen in Table 18.

Table 18

SUMMARY OF ENVIRONMENTAL DAMAGESOCCASIONED BY THE EARTHQUAKE

Thousands of Dollars

Total 67,4521. Direct damages

i) Environmental recovery projects 67,000

ii)Loss of environmental goods and services on non-recoverable shadecoffee plantations 319

2. Indirect damages

i) Loss of environmental goods and services on recoverable shade coffeeplantations 133

Source: ECLAC estimates using data provided by the Ministry of the Environment and NaturalResources and the Ministry of Agriculture and Livestock Raising.

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5. Recapitulation of the Damages

The sum total of the damages and losses occasioned by the January 13, 2001 earthquake in ElSalvador has been estimated at US$1.255 billion.

Out of this quantity, 60% (753 million) corresponds to direct damages, while theremaining 40% (502 million) refers to indirect damages or losses. Stated in other terms, themajority of the damage was inflicted on the country’s physical assets, while the rest of thedamage was to future economic flows, principally corresponding to the year 2001, but also tosubsequent years. (See Table 19.)

Table 19

SUMMARY OF THE DAMAGES CAUSED BY THE JANUARY 13 EARTHQUAKEIN EL SALVADOR


Damage Type of PropertyTotal Direct Indirect Public Private

Total 1,255.5 753.4 501.9 438.4 823.2Social services Education Health Housing and settlements

471.7153.2

61.3257.2

395.9149.5

49.4197.0

75.83.7

11.960.2

173.039.261.372.5

298.7114.0

…184.7

Infrastructure Electricity Water and sanitation Transportation

398.16.5

16.3375.3

86.72.3

13.171.3

311.34.13.2

304.0

162.73.38.3

151.1

235.43.28.0

224.2Production Agriculture and fishing Industry, trade, and tourism

275.385.6

189.7

203.834.6

169.2

71.450.920.5

15.213.41.8

260.172.2

187.9Environmental damages 67.5 67.0 0.5 67.5 --Other damages and expenses 42.9 -- 42.9 20.0 22.9

Source: ECLAC estimates.

The total amount of the damages are broken down as follows, in accordance with the typeof damage or loss:

Type of damage Millions of dollars

Losses to physical assets 840Production losses 61Increased expenses and diminished income 354

81

The preceding figures indicate that the greatest damage was concentrated in the form ofdamages to physical infrastructure and equipment (67%), followed by increased costs anddiminished income for some services (28%), and —to a lesser degree— for production (5%). 71

(See the following figure.)

67%5%

28%

Physical Assets

Production

Increased Expenses / Diminished Income

Of particular interest is the fact that the damages have been greater in the private sector(823 million, representing 66%) than in the public sector (438 million, representing 34%). Thiscircumstance will have implications for the reconstruction work.

The distribution of the total damage among the affected sectors is of interest for purposesof drawing certain relevant conclusions:

Sectors Millions of dollars

Social services 472Infrastructure 398Production 275Environmental damages 68Other damages and costs 43

Based on the preceding table, it can be concluded that the principal sectors affected weresocial services (40% of the total damage), closely followed by infrastructure (32%), productivesectors (20%), and the environment (5%). (See the following figure.)

71 The structure of the damage is as would be anticipated in the case of a disaster caused by

natural phenomena of geological origin.

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40%

32%

20%

5% 3%

Social Services Infrastructure Production Environment Other

A breakdown by type of activity shows that the worst damage was incurred bytransportation (375 million), housing and human settlements (257 million), industry and trade(190 million), and education (153 million).

Indeed, the total amount of the damage occasioned by the earthquake (1.255 billiondollars) is a high sum. Yet this figure must be viewed in comparative terms to better understandits economic and social impact. Said figure is equivalent to 9.5% of the country’s GDP for lastyear, which could be considered a relatively moderate magnitude. 72 Nonetheless, an assessmentof the damages in such terms fails to capture the dimension of the tragedy for El Salvador.

In this sense, it should be borne in mind that most of the damages affected social servicesectors, that is, housing, education and health, while simultaneously affecting the productivesectors, with a clear concentration of the victims among the lower-income strata.

An analysis of the damage’s spatial distribution can also help to demonstrate themagnitude of the impact on the population. Table 20 presents such a breakdown, showing thetotal damage for each Department in the country and expressing such figures on a per capitabasis. The table also expresses the total damage in each Department as a percent of its GDP.

72 In this regard, it should be borne in mind that Hurricane Mitch inflicted damages equivalent

to 80% of the GDP of Honduras and to 49% of the GDP of Nicaragua in 1998.

83

Table 20

SPATIAL DISTRIBUTION OF THE DAMAGE OCCASIONED BY THE EARTHQUAKE

DepartmentTotal damages, inmillions of dollars

Damage per capita,dollars/inhabitant

GDPper capita 73

dollars/inhabitant

Damage/GDP%

Ahuachapán 20.3 64.54 2,242 2.9Cabañas 1.1 7.21 2,191 0.3Chalatenango 0.2 1.02 2,578 …Cuscatlán 24.9 124.63 3,335 3.7La Libertad 262.6 397.60 5,121 7.8La Paz 185.4 645.06 3,020 21.4La Unión 4.1 14.32 2,803 0.5Morazán 0.8 4.65 2,475 0.2San Miguel 46.9 99.68 3,526 2.8San Salvador 165.7 85.61 4,142 2.1San Vicente 149.3 937.57 2,671 35.1Santa Ana 92.9 171.25 3,356 5.1Sonsonate 126.3 287.29 3,252 8.8Usulután 175.0 517.54 2,789 18.6

Source: ECLAC estimates.

Based on the preceding figures, it could be stated, on the one hand, that the inhabitants ofthe Departments of San Vicente, La Paz, and Usulután suffered the greatest per capita losses(ranging from 500 to 940 dollars per inhabitant), followed by the residents of La Libertad andSonsonate. It could also be stated that the magnitude of the damage, expressed in terms of totaldamages as a percent of GDP for each Department, was greatest in San Vicente (35%), La Paz(21%), and Usulután (19%), while Sonsonate and La Libertad reported rates exceeding thenational average. The magnitude of the damage in these Departments is, without question, highlysignificant, given that the total damage represents between one-fifth and one-third of theirrespective GDPs. This analysis makes it possible to clearly identify the concentration pattern ofthe disaster’s negative effects, both in per-inhabitant terms and by geographic entity. Thefollowing maps present these results as a graphic.

73 United Nations Development Programme, Report on Human Development in El Salvador,

San Salvador, 2001.

84

EFFECTS OF THE JANUARY 13, 2001 EARTHQUAKE IN EL SALVADORSPATIAL DISTRIBUTION OF THE DAMAGES

($US per inhabitant)

SANTA ANA

AHUACHAPAN

SONSONATE

LA LIBERTAD

SAN SALVADOR LA PAZ

CHALATENANGO

CABANAS

SAN MIGUEL

MORAZAN

LA UNION

SAN VICENTEUSULUTAN

SAN MIGUEL

LA UNION

Daño per capita (US dolar)$ 1.02 - $ 99.68$ 99.68 - $ 287.29$ 287.29 - $ 610.27$ 610.27 - $ 937.57


N

EW

S


DISTRIBUCION ESPACIAL DEL DAÑO(US $ por habitante)

Fuente: CEPAL

Damages per capita (US dollars) Source: ECLAC

EFFECTS OF THE JANUARY 13, 2001 EARTHQUAKE IN EL SALVADORSPATIAL DISTRIBUTION OF THE DAMAGES

(Costs incurred on account of the earthquake as a percentage of the GDP)

SANTA ANA

AHUACHAPAN

SONSONATE

LA LIBERTAD

SAN SALVADOR

CHALATENANGO

CABANAS

SAN VICENTE

LA PAZUSULUTAN

SAN MIGUEL

MORAZAN

LA UNION

CUSCATLAN

% del PIB % 0.04 - % 3.74% 3.74 - % 8.83% 8.83 - % 20.21% 20.21 - % 35.1


N

EW

S

DISTRIBUCION ESPACIAL DE LA RELACION ENTRE DAÑO Y PIB(Porcentaje del PIB que costo el terremoto)


Fuente: CEPAL

% of the GDP Source: ECLAC

85

El Salvador’s situation can be better understood if the magnitude of the damage in theworst affected Departments, as described above, is compared to that of other recent disasters inthe region of Latin America and the Caribbean. As can be seen in the following figure, themagnitude of the damage in the most heavily impacted Salvadoran Departments is greater thanthat of other recent disasters in neighboring nations, with the exception of Hurricane Mitch inHonduras and Hurricane Keith in Belize.

0

10

20

30

40

50

60

70

80

Tota

l Dam

ages

as

a pe

rcen

t o

f th

e G

DP

Venezuela Georges KeithMitch Honduras Cuscatlán SonsonateUsulután La Libertad San Vicente

It is worth pointing out that the geographic distribution of the damage, as described in thepreceding maps, has both positive and negative implications. On the one hand, the earthquakedamage was concentrated in the relatively more developed geographic areas of the country. Thus,in very general terms, the hardships in the affected areas should be less difficult to overcome thanin Departments where poverty is more prevalent (Ahuachapán, Cabañas, Morazán, and LaUnión). In this sense, losses reflected in the human development index did not directly impact theDepartments with the highest concentrations of poverty. In this regard, see the following map,which shows the Human Development Index for El Salvador in the year 2000.

86

EFFECTS OF THE JANUARY 13, 2001 EARTHQUAKE IN EL SALVADORSPATIAL DISTRIBUTION OF THE HUMAN DEVELOPMENT INDEX (HDI)

SANTA ANA

AHUACHAPAN

SONSONATE

LA LIBERTAD

SAN SALVADOR

CHALATENANGO

CABANAS

SAN VICENTE

LA PAZUSULUTAN

SAN MIGUEL

MORAZAN

LA UNION

CUSCATLAN

0.686

0.625

0.668

0.640

0.764

0.7260.667

0.608

0.646

0.6540.687

0.617

0.627

0.696

20 0 20 40 60 Kilometers

N

EW

S

Fuente: PNUD, Cifras prel iminares del informesobre desarrollo humano de El Salvador , año 2000.

DISTRIBUCION ESPACIAL DEL INDICE DE DESARROLLO HUMANO (IDH)


IDH para El Salvador 0.702

Indice Desarrollo Humano

0.608 - 0.6270.627 - 0.6540.654 - 0.6960.696 - 0.764

HDI for El Salvador is 0.702 Source: UNDP - Preliminary figures from theHuman Development Index Report on Human Development in El Salvador, Year 2000

In addition, on the positive side, it should be noted that the disaster provides anopportunity to rebuild property that was damaged or destroyed. In doing so, mitigation measurescan be introduced so as to provide the affected population with housing and with means ofproduction and income that are less vulnerable to extreme natural events in the future.

On the negative side, in order to rebuild, it will be necessary to concentrate resourcesearmarked for development by the government into the Departments that were affected the most.Yet these zones partially coincide with those that were already receiving the highest levels ofpublic investment. Such a situation would create setbacks in overcoming problems of poverty inthe relatively less developed regions.

Upon analyzing the aggregate and relative figures presented above, it can be noted thatthe January 13 earthquake caused damages with very particular characteristics, prominent amongwhich were the following:

- A relatively high amount of damage, two-thirds of which corresponds to the privatesector, with damages distributed throughout most of the country;

- The dislocation and destruction of the highway transportation infrastructure, which hasresulted in significantly increased transportation costs;

87

- Destruction or a significant impact upon housing and human settlements, especially insmall-sized urban zones and in rural areas, which aggravates preexisting shortages;

- Destruction or damage to public health and education services, with the resulting setbackto the country’s efforts in these sectors;

- Destruction or damage to production and inventories of micro, small, and mediumenterprises in the fields of agriculture, industry, and trade, while large-scale businesses inthose same sectors have gone relatively unharmed;

- Significant damage to the environment, with a loss of large land areas due to landslides,while numerous hillsides have become unstable;

- A considerable concentration of damages in certain Departments, principally locatedalong the Pacific coast;

- Significant losses in various Departments, whether measured in per capita terms or interms of the loss as a percentage of the Department’s GDP.

Nonetheless, the damage described above should also be considered in other contexts. Inthe first place, the destruction of property represents almost one-third of the gross annualformation of fixed capital in the country. This figure gives an idea of the efforts that will beneeded for its replacement. Moreover, replacement costs will be notably higher than the value ofthe affected property as of the time of the disaster. Estimates of the investments that will beneeded for said purpose are close to 1.5 billion dollars. Yet, despite the existence of some idlecapacity at present, the construction industry’s capacity is limited. All this leads to a conclusionthat it will take at least three years to replace all of the lost property, and that the population willhave to endure inferior conditions of life throughout said period.

In the second place, damages to the transportation infrastructure are increasing cargo andcommuter travel times, the additional costs of which are estimated at nearly US$220 million.Said costs will eventually have to be absorbed by the user population, with the resulting impacton the cost-of-living index. Similarly, despite aid received from the international community, theunforeseen costs incurred by the government will inevitably result in an increased financialdeficit, as shall be seen in the following chapter.

In the third place, production losses represent less than 3% of the country’s exports, whichcould give the impression that the country’s production capacity is virtually intact. Nonetheless, agood part of the production lost is that of micro and small enterprises, earmarked for domesticconsumption. This will lead to a loss of income for those population sectors, a high percentage ofwhich is comprised by women. Moreover, it could result in shortages of various products on thedomestic market, which would have to be imported to meet demand.

In the fourth place, some of the costs resulting from the disaster that occurred in ElSalvador impact the Central American region as a whole. As such, the tragedy is also regional inscope. In this regard, it should be pointed out that the cut-offs in the Pan-American Highwaycreated by the earthquake are making it necessary for cargo and commuter traffic to take longer,alternate routes, resulting in delays and increased transportation costs for intra-regional trade. Inaddition, foreign tourists have been canceling reservations throughout the Central Americanregion, in a belief that the damages are generalized. Finally, the regional transformation andmodernization strategy that the Central American countries will be presenting to the internationalcommunity, with the aim of seeking partners to combat poverty, will be slightly modified,

88

placing greater priority on reducing vulnerability to disasters and to diminishing their impact. Yetthis approach should not decrease the attractiveness of Central America as an investmentopportunity.

89

III. MACROECONOMIC EFFECTS

1. Summary of the Damage

The total damage caused by the earthquake is equivalent to 9.5% of GDP in the year 2000, equalto practically all public consumption in that year. It could also be considered equivalent to thevalue of all agricultural production in that year. At the same time, the total damage as apercentage of the year 2000’s exports and imports was 34% and 23% respectively. These areconsiderable magnitudes for an economy that had a nominal GDP of 13.2 billion dollars (atcurrent prices) in the year 2000. Finally, direct damage calculated as a percentage of gross fixedcapital formation was equivalent to 34%. This is not an insignificant figure for a country with amoderate investment ratio.

A summary of the total damage and of the reconstruction costs estimated in the report ispresented below. The consequences will be both short and medium term, not only because of theloss that the damage represents, but also because it will have an impact on the country’seconomic growth over several years, depending on progress in reconstruction.

Table 21

TOTAL DAMAGE AND COST OF RECONSTRUCTION


Total damageCost of

Reconstruction


Education 153.2 231.4 73.1

Health 61.3 231.0 138.1

Housing and settlements 257.2 716.6 93.0

Electricity 6.5 3.6

Water and sanitation 16.3 20.4 8.5

Highway infrastructure 375.3 145.9 148.7

Agriculture and fishing 85.6 6.4 27.8

Industry, trade, and tourism 189.7 33.9 29.8

Environment 67.5 107.0 21.4

Other damage and emergencyexpenses

42.9

Total 1,255.5 1,492.6 544.0

Source: ECLAC, prepared by mission.

90

Reconstruction costs are greater than total damages, because the amounts were derived byidentifying projects that incorporate prevention and mitigation criteria. The total of almost 1.5billion dollars represents approximate investment amounts for the reconstruction period, whichcould be three to five years long, equivalent to more than 13% of internal investment made in theyear 2000. The increase in the trade deficit of US$544 million over a similar period, and thesubsequent effect on the balance of payments, might continue to be offset as in previous years bythe flow of remittances from emigrant family members. Nevertheless, given a possible slowdownin the US economy, these flows may increase in the short run (from three to six months), but fallin the future. It is to be hoped, in any case, that the trend noted in previous years will continue.

2. The Situation before the Earthquake

Overview

The Salvadoran economy had a 2% GDP growth rate in the year 2000.74 This represents acontinuation in the slowdown of the economy for the third consecutive year. This performance isassociated in large measure with the reduced momentum of the export sector due to less favorableterms of exchange, which, in turn, are a result of the fall in international coffee and sugar pricesand the increase in fuel prices. A slowdown was also experienced in the sectors of construction,agriculture for internal consumption, and trade.

In terms of public finance, deterioration was noted with respect to 1999, which, togetherwith the external sector, constituted the most vulnerable area in terms of the economy. Thisdeterioration occurred despite efforts to apply a conservative fiscal policy in spending, as well asmeasures aimed at broadening the taxpaying base while reducing tax avoidance and evasion.Some of the government’s basic assumptions with regard to the economic situation before theearthquake are presented in Table 22.

A central government fiscal deficit of 2.3% of the GDP was recorded at the close of theyear 2000, which is slightly lower than the corresponding deficit for 1999. For the year 2001,without the effect of the earthquake, the fiscal deficit had been estimated at 2.8%. If the currenttrend in revenue collection had continued, it was projected that pressure on the deficit wouldincrease, especially because of pensions payable by the government over the next five years, inan amount of more than one billion dollars. Revenue collections were also expected to diminishdue to a loss of duties, pursuant to the free trade agreements that the country has signed.

74 According to latest official December estimates

91

Table 22

SELECTED ECONOMIC INDICATORS

1999 20002001

(Before the earthquake)

Targets

Real GDP (%) 3.4 2.0 3.5 - 4.5Inflation (%) -1.0 4.3 2.0 - 4.0

Assumptions

Coffee harvest 1999/00(in hundreds of millions of pounds)

3.2 -.- -.-

Coffee harvest 2000/01 and 2001/02(in hundreds of millions of pounds)

2.9 3.2

Coffee exports(in hundreds of millions of pounds)

2.5 3.1 2.6

Average price of coffee exported(dollars per hundred pounds)

99.0 96.5 75.0

Export of goods FOB (in millions of dollars) 2,500.4 2,981.9 3,603.1Import of goods CIF (in millions of dollars) 4,119.9 4,908.1 5,782.0External inflation (%) 2.6 3.7 2.0 - 3.0

Source: Central Reserve Bank (Banco Central de Reserva).

In real terms, the highest growth was to be found in the transport and communicationssectors (6.2%), banking and insurance (5.1%) and manufacturing (4.5%). In the external sector,exports of goods and services increased by 17.3% and imports by 18.1%, bringing the deficit ongoods and services to 26%. The trade deficit represented 3% of the GDP, compared with 2% in1999. For the year 2001, before the earthquake, it was estimated that the deficit would be reducedto 2.5%, based on expectations that the benefits of broadening the Caribbean Basin Initiative,particularly in the textile sector, would improve exports of maquila products.

Trade deficits continue to be offset by family remittances, which totaled 1.751 billiondollars in 2000. Additionally, the Central Reserve Bank accumulated net international assets in asum approaching 1.900 billion dollars, equivalent to four and a half months of that year’simports.

Inflation, measured by the national consumer price index (CPI), underwent a December-to-December variation of close to 4.3%, reversing the deflationary trend of the previous year of-1%. Before the earthquake, a December-to-December inflation rate of 3% had been projected.

In addition, the Monetary Integration Project was announced in late November 2000 andcame into effect on January 1, 2001, setting the prevailing exchange rate that had been in effectsince 1994 at 8.75 colons per dollar, allowing the free circulation of other currencies alongsidethe colon, and turning the dollar into a unit of account within the financial system. In the year

92

2001, before the earthquake, the government had hoped that this process would promote the flowof capital and increase direct foreign investment.

It is worth noting here that macroeconomic adjustment mechanisms when faced withexternal shocks (e.g. the 13 January earthquake) in a “dollarized” scenario are totally differentthan those in a scenario with a national currency. In the dollarized scenario, the adjustment ismade via fiscal measures and through the labor market; in a national currency scenario it may bethrough modifying the nominal rate of exchange. Strict control of public finances is required in adollarized scenario, and there is a need for greater external resources along with considerableflexibility in the labor market.

3. Forecasts for 2001 after the Earthquake

The adjustments that will have to be made to the economy due to the earthquake will translateinto changes in prices, production, and employment. Some forecasts that offer a view of the mostprobable macroeconomic scenario for 2001, after the earthquake, take into account the role ofeconomic policy and, consequently, future challenges for reconstruction.

Two scenarios appear likely. In both of them, reconstruction tasks would foment growthin sectors like construction, although in the first scenario investment flows would be insufficientand external financing would not meet expectations. Furthermore, in the first scenario, theeconomy’s rate of growth might range between 3 and 3.5% The second scenario assumesadditional annual investment, over and above projected investment rates before the earthquake, ofUS$150 million in the construction sector, a significant part of which would be financed byexternal resources, with an increased flow of family remittances and a relative improvement interms of trade. The rate of growth in this case could rise to between 3.5 and 4%.

In the second (optimistic) scenario, nevertheless, the economy’s growth rate would still beless than pre-earthquake estimates. Obviously, and as previously mentioned, the magnitude ofthis change will be, in turn, a function of reconstruction tasks and of public spending andinvestment levels. The magnitude of these efforts will determine the degree of the expectedimpacts, since this same process may stimulate sectors such as construction, which has sufferedstagnation over the last few years. Productive sectors might also take advantage of theopportunity represented by the reconstruction tasks and provide a significantly highercontribution to overall efforts.

For the second scenario mentioned above, an internal inflation rate of between 3.5 and 4%is expected and the non-financial public sector deficit could reach 4% of GDP. Growth will beseverely restricted if investment levels are lower than expected, however, in which case theburden would be transferred to other sectors, such as farming, industrial manufacturing, or smallretail businesses. These sectors, given the current conditions, would not be able to stimulate fasteror higher growth than the rate experienced over the past three years.

Figure 4 shows the differential in the rate of economic growth that is expected on accountof the earthquake. The speed at which this gap is closed will depend on the spending andinvestment levels planned over the next three to five years, and by the amount of available

93

internal and external financing for attending to restoration and reconstruction needs. As a resultof the January 13 disaster, the main increases will necessarily go to public investment ininfrastructure and roads, accompanied by private sector efforts, especially in the reconstruction ofhousing and resuscitation of the social infrastructure.

The main impact of the earthquake on the rate of GDP growth, in terms of the GDP’spercentile structure, is on social sectors (40%), infrastructure (32%) and productive sectors(20%). In the social sector, the biggest effect is on housing. In the infrastructure sector it is onroads, where repair and reconstruction could raise the country’s low levels of public and privateinvestment. Finally, in the productive sectors the greatest damage occurred in micro and smallenterprises. Many such enterprises have begun their economic reactivation on their owninitiative, although many others will permanently vanish or will only be revived throughorganized programs that offer credit for working capital and inventory recovery.

Figure 4

DIFFERENTIAL GDP GROWTH RATE CAUSED BY THE EARTHQUAKE

0 . 0

1 . 0

2 . 0

3 . 0

4 . 0

5 . 0

6 . 0

1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3

Y e a r s

GN

P G

row

th R

ate

A n t e s d e l t e r r e m o t o

D e s p u é s d e l t e r r e m o t o

B e f o r e t h e e a r t h q u a k e

A f t e r t h e e a r t h q u a k e

94

Table 23 shows overall supply and demand at current prices. The column of post-earthquake projections includes the increase in imports that may be brought about byreconstruction tasks.

Table 24 shows overall supply and demand at 1990 constant prices. The forecast for 2001was estimated by the Central Reserve Bank for a pre-earthquake scenario with GDP growth rateof 4.5%. All the post-earthquake estimates were made by ECLAC, and show a GDP growth rateof 4% in the first year (2001), with higher rates of growth in 2002 and 2003.

4. Central Government’s Fiscal and Economic Policy

Pressure on public finance has increased because of the earthquake. The correspondingadjustment should, in principle, be channeled through greater foreign debt. Naturally, thispressure will diminish if revenues increase, either due to stronger tax-collection measures, or, ashas been seen in other countries, through the creation of a specific tax for reconstruction. Ingeneral, in 2001, an increase of between 1 and 1.5% may be expected for the centralgovernment’s deficit with respect to the GNP, 75 as a consequence of the US$43 millionearmarked for the emergency. The repair, mitigation, and prevention work planned for the periodbefore the 2001 rains are estimated at approximately US$90 million. The reconstruction activitiesthemselves, which would be commenced during the first six months of the year, could easilysurpass 150 to US$200 million. This amount could be planned for 2001 and the requiredinvestments deferred to later years to meet reconstruction needs.

To sum up, we conclude that a small, open economy, such as that of El Salvador, facesincreased pressure on its public finances because of the earthquake. Indeed, the added expenses,over and above import requirements, especially in the construction and housing sector, could leadto simultaneous internal and external imbalances that would translate into adjustments leading toincreased unemployment, unless additional finance is forthcoming from the internationalcommunity. Such fresh resources would have to be at least partly concessionary to not accentuatethe country’s external fragility through the increased foreign debt.

75 Including the non-financial public sector.

95

Table 23

OVERALL SUPPLY AND DEMANDAT CURRENT PRICES

(in millions of colones)

Percentage structure withrespect to GDP1999

Preliminary

2000ForecastRev. Dec.

2001Forecast

b/ earthquake

2001Forecast

a/earthquake 2000 2001before

2001after

Overall Demand 149,779.1 163,730.2 180,767.7 182,163.7 141.6 145.0 146.8Consumption 104,605.4 111,988.5 121,514.9 121,503.2 96.8 97.5 97.9 Private 93,624.4 100,411.5 108,649.9 108,569.6 86.8 87.2 87.5 Public 10,981.0 11,577.0 12,865.0 12,933.6 10.0 10.3 10.4Gross domestic investment 17,741.6 19,574.9 21,310.2 22,588.3 16.9 17.1 18.2 Fixed capital formation 17,618.9 19,436.2 21,083.3 22,406.1 16.8 16.9 18.1 Private 14,376.1 16,011.2 17,148.1 18,216.4 13.8 13.8 14.7 Public 3,242.8 3,425.0 3,935.2 4,189.8 3.0 3.2 3.4 Variation in inventory 122.7 138.7 226.9 182.2 0.1 0.2 0.1Export of goods and services 27,432.1 32,166.8 37,942.6 38,072.2 27.8 30.4 30.7

Overall supply 149,779.1 163,730.0 180,767.6 182,163.7 141.6 145.0 146.8Imports of goods and services 40,693.6 48,062.9 56,108.5 58,108.5 41.6 45.0 46.8Gross Domestic Product 109,085.5 115,667.1 124,659.1 124,055.2 100.0 100.0 100.0Agriculture and livestock 11,725.9 11,806.7 12,414.4 12,086.2 10.2 10.0 9.7Mining and quarrying 435.2 461.7 499.3 499.3 0.4 0.4 0.4Manufacturing industries 24,545.9 27,092.3 29,476.9 29,412.6 23.4 23.6 23.7Electricity and water 2,020.4 2,350.9 2,551.8 2,444.5 2.0 2.0 2.0Construction 4,773.6 5,037.0 5,484.0 5,799.8 4.4 4.4 4.7Retailing, restaurants, and hotels 20,740.6 21,462.6 22,857.8 22,632.3 18.6 18.3 18.2Transportation, storage, andcommunications

9,209.3 9,955.6 10,858.2 10,858.2 8.6 8.7 8.8

Banking, insurance, and other financialinstitutions

4,606.9 4,952.7 5,417.8 5,417.8 4.3 4.3 4.4

Real estate and services rendered tobusinesses (a)

4,544.3 4,704.7 5,000.9 5,050.9 4.1 4.0 4.1

Housing rentals 8,634.9 9,027.4 9,649.4 9,699.4 7.8 7.7 7.8Community, social, personal, anddomestic services (b)

7,191.5 7,751.1 8,143.1 8,034.7 6.7 6.5 6.5

Government services 8,071.2 8,491.7 9,084.5 8,898.5 7.3 7.3 7.2 MinusAttributable banking services 4,506.6 4,845.4 5,225.4 5,225.4 4.2 4.2 4.2 PlusDuties and VAT 7,092.4 7,418.1 8,446.4 8,446.4 6.4 6.8 6.8

Source: ECLAC, preliminary estimates based on figures from the Central Reserve Bank.(a) Includes leasing and use of non-residential properties; professional legal, accounting, and audit services; preparation of data,

computer services, architectural services, and advertising.(b) Includes private education and health services, entertainment services (cinema and television) and other services such as

veterinary services; trade, professional, labor, and religious associations; electrical and auto repair shops.

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Table 24

OVERALL SUPPLY AND DEMANDAT CONSTANT PRICES

(in millions of colones)

Relative change2000/99 2001/00 2001/001999

Preliminary2000

Rev.Dec.

2001Forecast

b/ earthquake

2001Forecast

a/ earthquake b/eqk. a/eqk.Overall Demand 84,898.5 89,439.8 96,081.2 97,100.6 5.3 7.4 8.6Consumption 55,411.1 56,273.4 58,777.6 58,776.9 1.6 4.5 4.4 Private 50,710.6 51,557.7 53,749.1 53,720.7 1.7 4.3 4.2 Public 4,700.5 4,715.7 5,028.5 5,056.1 0.3 6.6 7.2Gross domestic investment 10,594.8 11,149.5 11,957.8 12,630.6 5.2 7.2 13.3 Fixed capital formation 10,488.3 11,054.0 11,670.8 12,400.2 5.4 5.6 12.2 Private 8,829.3 9,421.4 9,851.4 10,463.2 6.7 4.6 11.1 Public 1,659.0 1,632.6 1,819.4 1,937.0 -1.6 11.4 18.6 Variation in inventory 106.5 95.5 287.0 230.3 -10.3 200.5 141.2Export of goods and services 18,892.6 22,016.9 25,345.8 25,693.2 16.5 15.1 16.7

Overall supply 84,898.5 89,439.8 96,081.2 97,100.6 5.3 7.4 8.6Imports of goods and services 29,015.1 32,455.2 36,550.4 37,855.7 11.9 12.6 16.6Gross Domestic Product 55,883.4 56,984.6 59,530.8 59,244.9 2.0 4.5 4.0Agriculture and livestock 7,205.1 7,145.9 7,403.0 7,207.0 -0.8 3.6 0.9Mining and quarrying 242.6 249.9 262.3 262.4 3.0 5.0 5.0Manufacturing industries 12,655.3 13,225.8 14,109.9 14,079.8 4.5 6.7 6.5Electricity and water 350.2 354.3 374.4 358.6 1.2 5.7 1.2Construction 2,176.6 2,126.5 2,243.4 2,373.1 -2.3 5.5 11.6Retailing, restaurants, and hotels 10,940.9 11,030.8 11,370.7 11,259.9 0.8 3.1 2.1Transportation, storage, andcommunications

4,554.8 4,836.6 5,124.8 5,124.2 6.2 6.0 5.9

Banking, insurance, and other financialinstitutions

2,098.4 2,205.2 2,337.5 2,337.3 5.1 6.0 6.0

Real estate and services rendered tobusinesses (a)

1,811.4 1,838.6 1,893.7 1,912.5 1.5 3.0 4.0

Housing rentals 4,719.4 4,790.2 4,876.4 4,901.2 1.5 1.8 2.3Community, social, personal, and domesticservices (b)

2,889.7 2,928.3 2,982.1 2,942.0 1.3 1.8 0.5

Government services 3,093.1 3,099.3 3,145.8 3,081.2 0.2 1.5 -0.6 MinusAttributable banking services 1,825.6 1,918.7 2,005.0 2,005.1 5.1 4.5 4.5 PlusDuties and VAT 4,971.5 5,071.9 5,411.7 5,410.9 2.0 6.7 6.7

Source: ECLAC, preliminary estimates based on figures from the Central Reserve Bank.(a) Includes leasing and use of non-residential properties; professional legal, accounting, and audit services; preparation of data,

computer services, architectural services, and advertising.(b) Includes private education and health services, entertainment services (cinema and television) and other services such as veterinary

services; trade, professional, labor, and religious associations; electrical, auto, watch and jewelry repair shops.

97

5. The Impact on Employment

a) Overall Impact

An initial estimate was made regarding the direct impact that the disaster will have onemployment and the income of the population throughout the country, as well as on incomegenerated by projected investment over the reconstruction period. This enables complementarymechanisms to be identified which would facilitate economic reactivation of the areas mostaffected by this natural phenomenon. In this manner it might be possible to contain or mitigatepotential migratory flows that may increase areas of poverty on the periphery of urban areas.Such mechanisms would be aimed at enabling the affected populations to undertake their own“family reconstruction” process, which is almost always absent in macroeconomic analyses onevents of this kind.

First, we identified the economically active population (EAP), who may have beenaffected by a loss of employment, reduced income, or income that may be lost or reduced in thefuture. These groups are defined as EAP at risk. Following this, an attempt was made to identifythe vulnerable EAP, a concept that refers to that portion of the EAP at risk who, in view of theirlevels of poverty, are faced with greater difficulties in recovering from the losses suffered. Thevulnerable EAP is calculated as the product of the EAP at risk and the poverty index.

Table 25 shows the vulnerable EAP or employment in the Departments most affected bythe earthquake, along with the corresponding effects on housing and the affected population. Thetable includes vulnerability indicators, such as total poverty, unemployment rates, and femaleemployment, among others.

b) Impact by Sectors

The greatest impact of the earthquake was in semi-urban and rural areas. This correspondsto the location of the economically active population and is expressed as a more accentuated riskin sectors such as housing and infrastructure, as well as in some productive sectors. Small andmicro-business, 76 the agricultural sector 77 and maquila activities, situated in the most affectedareas, constitute the most vulnerable and “at risk” economic activities, and consequently face ahigher probable impact on employment. Each of these is treated separately in the followingsections.

76 Includes small firms that produce goods and services, craftsmen’s workshops, family

businesses, self-employment activities, and informal trade.77 Mainly includes agricultural and fishing activities and basic transformation of agricultural

production (coffee and sugar processing plants).

98

Table 25

ESTIMATES OF VULNERABLE EMPLOYMENT OR EAP (ECONOMICALLY ACTIVE POPULATION)

Factors aggravating vulnerability% 80

DepartmentAffected

population (%)EAP at risk

78

OverallPoverty

(%)

VulnerableEAP

79 FemaleEAP

Unemploy-ment

Damagedhousing

Total 421,486 203,381

Usulután

La Paz

La Libertad

Sonsonate

San Vicente

Ahuachapán

San Miguel

San Salvador

Santa Ana

Cuscatlán

96.07

76.03

21.20

21.40

55.90

21.00

12.80

2.00

6.90

18.1

120,230

82,624

57,093

37,151

33,117

22,884

22,226

16,920

14,892

14,349

55.8

49.3

32.9

60.5

39.9

60.3

44.6

28.4

45.7

39.9

67,088

40,734

18,783

22,476

13,213

13,799

9,912

4,805

6,846

5,725

36.5

38.0

42.4

37.6

32.3

28.2

36.4

45.1

36.3

41.8

8.7

6.3

6.5

7.2

7.3

8.5

6.5

7.0

7.7

6.9

71.3

63.0

20.4

25.9

64.4

14.3

11.7

2.7

6.2

20.6

i) Small and Medium Enterprise (SME). Given the severe impact of the earthquakeon the housing sector, combined with the fact that one of every twenty homes in the country isthe site of small-scale economic activity (so-called “productive dwellings”) run by women whoare heads of households, this sector has been directly affected.

Along with unregulated markets, these small stores provide most basic goods to the semi-urban and rural sectors and to the low-income population in general. The interruption in theiractivities, the loss of their inventories and the potential increase in transportation costs in areasaffected by the interruptions in access roads, means an additional loss of sources of employmentand income. Also, there is a related risk of reduced income in other economic sectors, due topotential price increases for basic goods in the affected areas, stemming from greater costs, lackof supplies, and speculation. This is a phenomenon that usually appears with some delay,corresponding to the beginning of restoration and reconstruction activities81 in the affected areas.

78 The EAP sector that may have been affected by lost employment, reduction in income, and

income in the process of being lost or reduced.79 This refers to the EAP sector at risk that, given its high poverty level, could face more

difficulty in recovering from the damages. It is equivalent to the product of the EAP at risk and povertyindexes.

80 Vulnerability is aggravated by being a female worker, by the difficulty in finding work, andby the economic burden of restoration or reconstruction of housing.

81 The arrival of food aid and emergency supplies, and the onset of reconstruction work, has thisimpact on prices.

99

This means that those affected by the disaster are “doubly punished” by the disaster, as therelative costs of their “private reconstruction” increases.

Information obtained by the National Commission for Micro and Small Enterprise(CONAMYPE) has been used to identify the impact of the earthquake on this sector. Based oninformation from the 1998 census of establishments, considering the municipalities affected, andcorrelating the number of dwellings containing SME establishments to the number ofestablishments affected in terms of destroyed or damaged dwellings, the following has beenestimated:

- A total of 21,500 employment lost, based on 11,820 units destroyed and 1.82employment per establishment; 82

- An estimated 11,040 employment lost, in 20,218 damaged units and 30% ofemployment lost per establishment;

- A total of 9,200 employment at risk, in the same 20,218 damaged units,amounting to an additional 25% of employment at risk;

- A total of 16,254,000 dollars in lost income, supposing that 30% ofestablishments are rebuilt in the first three months (with an average 1.5 monthsin lost 83 wages); that another 40% of establishments are rebuilt in the followingsix months, with an average 4.5 months of lost wages; and that the other 30%lose their income for six months and then experience a 25% reduction of theirincome for the remaining sixth months of the year;

- A loss of 7,153,900 dollars, supposing that 50% of establishments are rebuilt inthe first six months, with an average loss of three months’ wages, while the other50% are restored in the following six months, with an average loss of sixmonths’ wages, and

- Damage will be suffered predominantly by women, given that femaleparticipation in the sector is 65%. (See Table 26.)

82 This was calculated based on the 1998 survey of micro-businesses and weighted on the basis

of the type of business destroyed in the following categories: subsistence-level micro-businesses and thosewith minimal accumulation of capital, 1.5 employees per business; micro-businesses with greater capital-accumulation rates, 3.5 employees per business; small business, 25 workers per unit.

83 Based on the minimum monthly wage of 144 dollars per month.

100

Table 26

IMPACT ON EMPLOYMENT AND SME INCOME

Department Businessesdestroyed

Businessesdamaged

Employmentlost

Employment atrisk

Wage loss indollars

Total 32,540 9,200 23,407,920

Usulután

La Paz

La Libertad

Sonsonate

San Vicente

Ahuachapán

San Miguel

San Salvador

Santa Ana

Cuscatlán

3,880

2,853

1,985

1,404

477

87

582

175

128

229

3,398

3,668

1,633

2,242

3,801

440

2,510

842

156

1,265

8,345

7,557

4,936

1,852

3,047

351

2,975

1,020

335

1,257

2,359

2,137

1,396

524

862

99

841

288

95

355

6,117,887

5,485,730

3,624,167

1,270,555

2,071,840

242,233

2,066,072

702,281

242,935

864,864

ii) Agriculture and Livestock sector. In the case of this sector, there are twoimpacting factors: first, lost production on cultivatable land, damage to infrastructure, andreduction in fish catches; secondly, there are a set of indirect factors, mostly involving the loss ofrented housing, associated with the low profitability of previous activity.

This second factor cannot be measured directly and can only be estimated, based on priceprojections for certain crops, such as coffee, which were already suffering a reduction ininvestment. This led to lower employment productivity, and (in order to recover efficiency) couldlead to further employment losses where the worker or resident laborer becomes disconnectedfrom his home at the production site. It has been impossible to quantify this scenario of potentialemployment loss.

Based on information provided by the Ministry of Agriculture’s Farming and LivestockPolicy Analysis Unit, complemented by the Food and Agriculture Organization (FAO), thefollowing employment losses have been calculated:

- 1,240 employment in irrigated districts;- 215 employment in small irrigated operations;- 630 employment in coffee-processing plants; and- 2,015 employment in coffee picking.

In order to quantify wage losses, the following recovery periods for the aforementionedactivities have been estimated:

- Three months for irrigated districts and small irrigated operations;

101

- Six months for severely damaged coffee-processing plants; three months forthose suffering serious damage, and no impact for those with minor damage;

- Twelve months for coffee plantations, even though these take an average of fouryears to recover. However, keeping in mind the current scarce profitability ofthis activity, we believe that this sector will not recover and that its laborers willhave to migrate to other sectors, which will take a year, and

- Three months for the return of the biomass and for the restoration of fishingsector infrastructure.

Employment and wage losses in this sector are shown in Table 27.

Table 27

EMPLOYMENT AND INCOME LOSSES IN THE FARMING AND LIVESTOCK SECTOR

Department Total Districts at risk Smallirrigation

Coffeeoperations

Coffee plantations Fishing

Employment

Dollars(thous.)

Employment

Dollars(thous.)

Employment

Dollars(thous.)

Employment

Dollars(thous.)

Employment

Dollars(thous.)

Employment

Dollars(thous.)

Total 4,716 2,859.0 1,840 794.9 235 101.5 630 466.6 484 836.4 1,527 659.7UsulutánLa PazLa LibertadSonsonateSan VicenteAhuachapánSan MiguelSan SalvadorSanta AnaCuscatlán

1,1667

2,691549

9165

120

108

570.712.1

1,687.4282.115.694.2

1.78.6

186.6

515

1,325

222.5

572.4 7645

114

32.819.4

49.2

70

44050

50

20

51.8

319.743.2

43.2

8.6

357

30518

911

108

60.512.1

527.031.115.6

1.71.7

186.6

546

545435

235.9

235.4188.3

Therefore, the loss of employment and income in the farming and livestock sector at thenational level is estimated at 4,716 lost employment and US$2.8 million, respectively.

iii) Maquila sector. Given its recently built, modern infrastructure, this sector,especially the clothing production branch, did not suffer serious physical damage. However, workstopped for between 48 hours and one week in order to allow for inspections by insurancecompanies. Nonetheless, in all cases workers were paid half-wages, even after the three daysrequired by law in some cases.

On the basis of the information obtained from a telephone survey conducted by theSalvadoran Clothing Industry Association (Asociación Salvadoreña de la Industria de laConfección – ASIC), as well as 42 surveys processed by an International Labor Organization(ILO) project on the topic of women in the maquila industry, the following wage losses could beestimated:

102

- 5,358 workdays lost in duty-free zones; and- 2,751 workdays lost in Depósitos de Perfeccionamiento Activo [Preferential tax-

treatment and investment zones for finishing plants], of which 2,042 corresponded tofemale labor.

Although no permanent production halts have been reported by businesses, nor requestsfor cutbacks in personnel, there has been a slight increase in notifications of layoffs registered atthe Ministry of Labor. According to ASIC, this is because some companies, to help out theirworkers, are rescinding contracts and then reinitiating work activities, thus allowing the workersto receive service-time indemnities. Nonetheless, in the areas around El Progreso and San Bartolothere have been some cases of persons who claim to have been fired on the grounds that they didnot go to work during the three days immediately following the earthquake, at which time theywere recovering their belongings or attending to affected family members. There are also reportsof workers whose wages have gone down due to the fact that they are taking longer to get to theirwork site, either because of a change of residence or difficulties with urban transportation.

103

IV. CONSIDERATIONS FOR RECONSTRUCTION

1. Some Strategic Guidelines

This catastrophic event has once again brought to light pre-existing situations, both positive andnegative. These factors were clearly manifested in situation prior to the disaster, during theearthquake itself, and in the management of the emergency. They will also clearly impact on therecovery and reconstruction period, during which it is hoped that unfavorable conditions can beimproved, based on the lessons learned.

When the earthquake struck El Salvador on January 13, 2001, the country was immersedin a process of economic and political change aimed at meeting the challenges of the 21st century.The country succeeding in ending its armed conflict through the Peace Agreements of 1992 andhas made progress in consolidating the democratic process through opening its economy forinvestment and implementing a market economy. The country therefore faces the challenges ofglobalization (external opening) and decentralization (internal opening). Progress has been made,in accordance with the government plan, toward a modernization of the State, broadened socio-economic opportunities, and social and community participation.

Given the magnitude and scope of this earthquake, factors influencing the internalopening, such as territorial management and local economic development, take on moreimportance than ever. In this context, it is worthwhile to consider the country’s weaknesses andstrengths.

Among the positive factors that were highlighted by the El Salvador earthquake is theenterprising spirit of the country’s inhabitants and their will to overcome the disaster and itsdevastating effects.

Other positive features are a relatively stable macroeconomic situation, characterized by amoderate rate of growth associated with a dynamic maquila exporting sector, a significant flowof private money transfers (remittances), low inflation, an exchange rate that has been stable forseveral years, and international reserves comparable to the money supply within the frameworkof the process.

One clearly negative factor highlighted by the earthquake and its multiple aftershocks isevidence of geomorphic vulnerability. This derives from seismic features and numerous localfaults. The earthquake also revealed the country’s fragile ecology, owing in part to inadequateenvironmental management; in part to agricultural practices, which in some cases were notadapted to hillside cultivation and lacked the necessary care and technical know-how; in part tothe cumulative effect of natural events; and in part to other factors. The aggregate consequencesof these causes were disastrous. Adding to these problems was the fact that a number of thebuildings affected or destroyed were located in unstable, high-risk areas. In some casesinadequate construction practices had been employed, not only in terms of the materials used, butalso in terms of insufficient reinforcement and technical design to make them sufficientlyearthquake-resistant.

104

A third consideration —and one difficult to evaluate— is the economic state of theaffected regions. Some Department’s were in conditions of backwardness or insufficient growth,especially with respect to the traditional activities of coffee and basic cereal production by smallproducers on an unprofitable scale. In general, there has been insufficient development of newagricultural activities and new services, such as agro-tourism and eco-tourism, to complementbasic subsistence activities. Such a new approach would reduce the excessive dependence oncrops vulnerable to world market fluctuations, and would improve the competitiveness of theaffected Departments relative to the rest of the country.

Internal and external restrictions on local fiscal and financial resources, and on thecapacity to absorb and manage new investments make it necessary to define priorities, goals, anda reconstruction strategy. In order to be effective, these policy elements must be based on theneeds of those affected. They must be based on input from the affected people themselves and beaccepted and “appropriated” by them. Furthermore, technical and financial internationalassistance will be necessary, beyond that which has been received up to now. Otherwise, it willbe more difficult and costly for the country to recover from the hardships of the earthquake,making it necessary to postpone important initiatives commenced prior to the disaster.

These factors, if properly taken into consideration when formulating a reconstructionstrategy, programs and projects, will provide a more solid, more positive basis for regionaldevelopment, under less vulnerable conditions. Moreover, these factors will make it possible toimplement mitigation activities in communities, with the participation of local people in theprocess.

2. The National Strategy

Reconstruction is a national responsibility, in the sense that the country must necessarily face theconsequences of the disaster on the basis of its own resources and abilities. Nonetheless, externalcooperation will be needed in due measure, as it is clear that El Salvador cannot manage all thison its own.

Among the most important considerations is to take preventative measures in anticipationof future events. Such measures, in practice, serve to reinforce the regional guidelines that thecountry —along with the other nations of Central American— has submitted for consideration tothe international community in the framework of the Regional Consulting Group for theModernization and Development of Central America (Grupo Consultivo Regional para laModernización y Desarrollo de Centroamérica). 84

Restoration and reconstruction proposals must be defined by the nation in accordancewith the country’s priorities, general social and economic objectives predating the earthquake,and pre-disaster economic trends, especially in the affected area.

84 Initially called by the IDB and the Government of Spain for January 18 and 19. It waspostponed due to the January 13 earthquake and is to be held on March 8 and 9, 2001, following thesession of the El Salvador Consulting Group (Grupo Consultivo para El Salvador).

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The results of the January 13 earthquake, described in this report, show that the damagewas centered especially in the Departments of La Paz, Usulután, San Vicente, and La Libertad.The Departments in the north of the country (Cabañas, Morazán, and Chalatenango) were lessaffected, but have the highest rates of poverty in the country, meaning that in net terms, they are asource of emigration. The capital city of San Salvador suffered relatively less damage, which willlikely contribute to increased internal migration towards the capital, as well as migration abroad,thus widening the gap between urban and rural areas.

It is particularly worrisome that the situation could be exacerbated in the near future bythe coming rainy season, which would aggravate the aftermath of the earthquake, causing bothloss of life and material damages.

The obstacle to making simultaneous progress in the various aspects of the above-mentioned strategy (reduction of poverty, decentralization, reconstruction, and an opening of theeconomy) create pressure for additional resources which, internally, would be reflected by anincrease in the fiscal deficit, and externally, by an increased trade deficit.

Additional foreign aid is needed, therefore, as an indispensable complement to cover thedemand for resources. The ability of the central government to finance these activities is limitedby the current budget, and the municipalities have limited tax collection powers (0.6 percent ofGDP, which is equivalent to 3.5 percent of all tax revenues). This demonstrates that resources areinsufficient to satisfy basic needs even under normal conditions. It also shows that themunicipalities are dependent upon the central government to provide services to communities. 85

The disaster occurred in such a context and the need for reconstruction has now been added, ashas the need for the community to be able to participate in the solution to its daily problems. Thisis why it seems consistent —both in terms of the country’s general development and in terms ofthese new needs— to structure reconstruction around an understanding of local demand. Thechallenge is to strike the delicate balance needed to coordinate efforts, while attending toprocesses at a national level and getting on with rebuilding.

3. Some Concepts for Reconstruction

National reconstruction will require some form of territorial budget in order to create synergiesand stimulate local economies. Specifically, we consider it important:

a) To prioritize investments in the most vulnerable areas, with support from the localentrepreneurial community, strengthening the community’s social organization and taking intoaccount current situations of gender inequality;

85 Several studies on municipal finances in El Salvador show that municipal finances are very

weak, taxes for services do not cover costs, and municipal taxes are regressive. This limits the possibilitiesof improving the quality of local services. The municipalities studied are not capable of financing theircurrent expenses with their current income. It must be kept in mind that a transfer of responsibilities to themunicipalities is a positive trend to the extent that the public entities assuming such responsibilities areprepared for them and are capable of mobilizing their own new resources.

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b) To include approaches to risk management, village development, and housingwithin local development plans ;

c) To improve roadways, reducing their vulnerability and increasing access to SanSalvador;

d) To encourage agreements among municipalities and land use planningmanagement;

e) To open lines of financing and other credit and mutual aid mechanisms for basichousing in rural areas, and

f) To provide technical support to municipalities in order to strengthen theiroperating and management capability, which helps to raise levels of local demand.

Priority should be given to investment in water and sewage systems, primary health care,schools, housing, irrigation systems, and rural roads. The investments should be accomplishedthrough a coordinated, decentralized approach, that includes the promotion of local companiesand employment. Such an endeavor is one of the greatest challenges during the reconstructionstage. Projects could be designed and executed in coordination with municipalities (by theadministration itself or through contracting), community associations, and civil organizationsoperating at the local level.

National synergies should be harnessed to accomplish the priorities and promote thestrategy of the national development plan. The general frame of reference would be nationalreconstruction and development, and a promotion of competition to make foreign investmentmore attractive. As has already been mentioned, other factors will also influence the viability andefficiency of this reconstruction plan in its implementation stage. One of the most significant ofthese factors are the country’s ability to absorb investment and foreign aid. The other majorchallenge is to strengthen the institutional mechanisms needed for reconstruction: coordination,decentralization, and community action.

Synergies on the level of the Central American region aimed at making progress in thereconstruction work could reinforce the plan. Through regional cooperation and integration,efforts could be channeled into reducing risks, the creation of early-warning mechanisms, andimprovements in disaster management, within a framework of regional projects or programs.Examples of such joint efforts might include the management of hydrographic regions;improving the ease of communications for commerce; integrated risk management; andenvironmental management aimed at reducing vulnerability in the region. All this would have totake into account the concepts of strategic eco-regions, zoning, and the development andpromotion of productive activities in the framework of diversification and increasedcompetitiveness.

Attending to social concerns in the reconstruction process is even more important thanrebuilding lost infrastructure, particularly the strengthening and recovery of ties and bonds amonglocal actors (restoring “social cohesion”). This implies that the reconstruction program must

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explicitly aim to create employments and channel workers —both men and women— intoreconstruction efforts, but without distorting the traditional labor market for the coffeeplantations. One conclusion is that a basic instrument in the reconstruction process must be thecreation of credit and financial mechanisms to promote social, economic, and environmentalrestoration. In addition to extending the periods for covering liabilities and debts resulting fromthe earthquake, fresh resources must be earmarked for producers and merchants —among whoma significant proportion are women— so that they may renew their activities (restocking,repairing infrastructure, and acquiring new equipment). Without these resources, the extension ofperiods to pay back accumulated debt would not be enough.

Given the different impact of the earthquake on men and women, and the fact that thedamages suffered by the latter in terms of employment and earnings are less visible, werecommend that special attention be paid to the specific needs of women. It is important thatthe creation of employment and of credit and financial mechanisms for economic restoration donot exclude women nor increase the economic and social gender gap.

The reconstruction process could be viewed as a great opportunity to move towardequality between the sexes. This premise must be an integral part of reconstruction guidelines, inwhich important concerns must not be forgotten in the face of urgent ones. 86

Priority attention must be given to those small and micro business people and otherswho have lost their home and yet were not the homeowners. This is an especially vulnerablegroup to whom concessional resources will have to be selectively provided, either usingresources from international financial entities or other forms of cooperation. These resourcesmust be managed by national institutions with experience and knowledge vis-à-vis these low-income sectors. This should not, however, turn into simple aid. What is needed is to encourageequal partnerships in the community.

A fundamental consideration, given the vulnerability and seismic fragility of the area, iszoning. An instrument for territorial planning is now being defined. Based on a proposal that had

86 The following information, which identifies women as a group especially vulnerable todisasters, should be taken into consideration: Disasters affect the ability of affected women to generateincome, since the time they devote to caring for their family and the community increases, with theconsequent opportunity cost. The so-called “patio economy” and small livestock production are alsodirectly affected, raising secondary poverty. The number of women heads of household (28.2% of allhomes, according to the “Multi-Purpose Home Survey” - Encuesta de Hogares con Propósitos Múltiples:EHPM, 99) could rise as a result of greater migration by men in search of opportunities elsewhere. Thisfact could also affect the already skewed land distribution pattern (88.82% in the hands of women, EHPM,96-99), since in some cases land must be sold to finance the costs of a journey to another country. Thegeneration of new employment through reconstruction projects must aim to providing workproportionally to men and women and at paying them both equitably, since the average wage of women is73% that of the male average (Source: National Human Development Report (NHDR), 2001). The receiptof technical assistance must improve its focus on women, since only 23% of all female agriculturalproducers in El Salvador received assistance as compared to 51% of all male producers (EHPM, 1998). Itis important to facilitate access to credit for reconstruction and productive restoration targeting women.Changes in the access to resources must be accompanied by greater female participation in decision-making processes and also by changes in roles in the family and in society.

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already been made before the earthquake, technical and legal instruments will be created toreduce vulnerability. The earthquakes made clear that priorities must be reexamined, micro-financing projects must be enhanced, and other measures must be taken to foment a use of spacethat reduces risks. This must be done, however, without discouraging local activities andinitiatives for recovery, such as home-building by families themselves in the case of housing,which is the sector most affected. One effect of the disaster is the increased value that politiciansand national administrators are now placing on risk management.

Since human use of space can be differentiated by gender-related factors, we recommendthat this be taken into account in the zoning process. In the interests of sustainable humandevelopment, we also recommend, a proportional participation of men and women in theprocesses of housing design, micro-zoning, urban planning, zoning, and in general, in alldecision-making processes involving technical actions that affect or change human surroundings.This participation must not be limited to social aspects, but rather must include all aspects:technical, scientific, political, social, etc.

Another important consideration is that, given the nature of the damages, a differentapproach must be taken to deal with the effects of the disaster for each Department andaffected group. This is even more critical considering the fragility and weaknesses that havebeen aggravated by the disaster, which are serious enough in some cases to require urgent actionbefore the beginning of the rainy season (in late April or early May). This brings us to the need toestablish target dates for reconstruction. The question of the pace of reconstruction, mentionedabove, involves taking into account the urgency of a given problem, the resources available, andthe importance of handling those resources through a coherent strategy for sustainabledevelopment.

There are other special considerations that must be taken into account. One of these is therelationship between the disaster and changes in internal migration patterns. This topic is relatedto the changes in the employment situation after the earthquake. Some migratory flows willundoubtedly increase. Two forces will affect the movements of people after the earthquake: theloss of rural employment and the demand for construction workers.

Another matter that must be dealt with is the use of proper construction materials, theavailability of the same and the environmental impact of using certain local materials. Such is thecase —which is a cause of concern to some— of individuals employing traditional forms ofconstruction to build their own homes. This involves the use of mangrove in some coastal areas,adobe and “bahareque” (straw and mud on a wood frame), and the use of wood for temporaryhousing. We have indicated the need to establish more technically advanced production processesso as not to increase vulnerability, while endeavoring to reuse or recycle construction materialsdiscarded as debris. As for the capacity of the construction sector, the recession in theconstruction industry undoubtedly ensures the existence of idle resources—especially machinery— readily available to respond to the need for reconstruction, so long asthe necessary financial resources are available. Nonetheless, the demands of reconstruction maygenerate “false hopes” regarding the robustness of the construction sector in the region.

In the coffee sector, the reconstruction of coffee-processing plants and other associatedinfrastructure provides an excellent opportunity to replace the old installations with new ones

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incorporating clean technologies and offering lower operating costs. Several options wouldencourage the use of these technologies and make Salvadorean coffee more competitive oninternational markets, recovering lost ground, especially in European countries. It may be cheaperto replace old operations with ecological technology if materials available within the country areused, and by building smaller plants requiring fewer consumables for their operations.

In the rural non-coffee sector affected by the earthquake it is very important tosignificantly enhance programs aimed at diversifying and modernizing production in order toincrease rural income and thus reduce this sector’s vulnerability. Another crucial matter is thereconstruction of productive infrastructure on rural land.

a) Toward Correct Environmental Management: Recommended Action Guidelines

In accordance with the results of the environmental assessment of the damages occasionedby the earthquake in El Salvador, the following lines of action are recommended:

i) Developing and/or strengthening a follow-up and evaluation program on possibleenvironmental risks posed by natural disasters, with participation from institutions responsible foradministering and managing such disasters;

ii) A risk-reduction program including, among other actions, the stabilization andrecovery of hillsides and embankments;

iii) A program aimed at the correct disposal of debris ;

iv) Developing and implementing a comprehensive action program for thepreservation and sustainable use of hydrological basins, as part of a broader program to reducethe country’s environmental vulnerability;

v) Developing and implementing a Zoning and Development Plan. This is one of thebasic elements for reducing environmental vulnerability. In El Salvador this is a process that hadbegun before the earthquake of January 13, 2001, and

vi) Processes fomenting social organization and participation, reinforcing a sense ofbelonging and a desire to preserve the natural environment.

Responses to disasters are passive and temporary, with extremely high costs in terms ofmoney and human lives. In contrast, the concept of reducing vulnerability is proactive, since theprobability of losses can be reduced before a threat turns into a disaster, while at the same timeminimizing the magnitude of the damages. Adopting efficient strategies for preventing andreducing vulnerability would allow billions of dollars to be saved, would prevent the loss of agreat amount of accumulated wealth and, above all, would save thousands of lives. A large partof the resources used today in emergency activities, recovery, and reconstruction, could bedevoted to promoting balanced and sustainable development, which would reduce vulnerabilityto natural dangers.

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This is consistent with the commitments made by the country in 1999, when it signed theGuatemala II Declaration on the Five-year Central American Plan for Disaster Reduction.

b) Strategies for Employment Recovery

The main obstacle to restoring employment after the disaster is the weakening of localeconomies in the areas most affected by the earthquake. This situation is the result of theearthquake’s effect on the circulation of commercial flows, the reduced buying power of localmarkets, the loss of productive assets and the paralysis or lack of supporting infrastructure, aswell as the fact that the work force is generally unskilled.

Furthermore, repeated devastation by natural forces, such as Hurricane Mitch andsubsequent floods, and the 1986 earthquake, which involved more than 10 years’ reconstructionefforts, have made local economies even more fragile. This has prevented them fromparticipating in the modernization process that the country was engaged in throughout the 1990s,which further restricts their chances of consolidating a process of sustained development orpreserving and enhancing the conditions necessary for generating sources of employment.

The proposed strategy for recovering employment involves two areas of intervention:

i) The first is to try to offset the depression of local economies, caused by their lossof income sources, their reduced economic efficiency as a result of damage to infrastructure andsupport services, and their loss of productive capital. This calls for an injection of economicresources through productive investment. It can be accomplished by stimulating local demand, byemploying labor-intensive practices in reconstruction that prioritize an incorporation of theaffected persons and, through wage payment, by provide them with the purchasing power toattend to their own urgent consumer needs and private “reconstruction.”

ii) The second way to stimulate local markets would be to reactivate local supply,through contracting out small and medium-sized reconstruction work. Local and regionalcontracting and subcontracting procedures and regulations would be revised to stimulate the useof local materials and related services provided locally. In this context, an attempt would be madeto stimulate construction employment, while not creating competition with agricultural laboractivities.

c) Housing and Human Settlements: Guidelines for Reconstruction

The main concern of reconstruction is not only to provide acceptable housing built withpermanent and stable materials, but also to promote integral local development, while at the sametime improving access to basic services and community infrastructure. The disaster worsened thecountry’s already poor housing situation.

In terms of housing construction, a comprehensive vision is needed of how to rebuild thehuman settlements destroyed and damaged. This reconstruction requires consideration of aspects

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of economic and social development, while not losing sight of gender equity and environmentalconsiderations aimed at sustainable development in the country.

Reconstruction strategy must progress within a general framework that includes aspects oflocal development and zoning, based on the realities faced by local authorities in the affectedareas. To do this, it will be of vital importance to establish national strategies with the local levelin mind, involving government institutions at all levels, national and international organizations,academic and research institutions, the private sector, NGOs involved in village development andgrassroots and community organizations. Special attention must be given to indigenouscommunities and women’s organizations, the Church, workers’ associations, etc.

The comprehensive programs required for the reconstruction process must consider thefollowing:

i) Housing Programs. It is fundamental to guarantee that from the start of physicalreconstruction, earthquake-resistant techniques and standards are included in the plans; thatgreater technical support and supervision of commercial and family construction processes isoffered; that on-site training programs are implemented and are aimed at men and womenparticipating in the reconstruction process. The reconstruction of homes will depend on the socio-cultural conditions of each region and will take into account the specific needs of each sex. Thesupport of local and community initiatives will be considered, as well as the maintenance ofappropriate urban planning.

We suggest giving priority to the development of programs for affected families to build orrestore their own homes, with technical support from universities, research institutes, andarchitecture, engineering and construction associations, as well as experienced NGOs. In thisway, better technical criteria can be employed for building earthquake-resistant structures, whilereducing vulnerability to natural and environmental disasters.

1) Interim Services to the Affected Population. One of the areas that should begiven maximum priority by government and non-governmental institutions is the rebuilding ofdamaged homes. It must be kept in mind that during the restoration process and during the firsthalf of the year, an adequate temporary or definitive solution must be guaranteed in order tomitigate the effects of the first rainfalls of the rainy season.

There will be an overlap in the restoration and reconstruction periods and the time that itwill reasonably take to rebuild dwellings and thus return families to their homes. It will thereforebe necessary to continue operating temporary housing for some time, while providing minimallyacceptable conditions to the families living in them. This means they must be provided withspace for domestic work, preparing food and other activities, and with adequate means fordisposing of liquid and solid wastes. This will facilitate work done mostly by women. It is alsonecessary to maintain health-care services in order to prevent the outbreak and spread ofillnesses, epidemics, and behavior that could affect the precarious living conditions of thispopulation.

2) On-site Reconstruction. These are programs offering comprehensivesupport to owners of urban and rural land whose homes were destroyed by the earthquake. Where

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public services infrastructure are available and where risk analysis has been favorable, newbuildings may be rebuilt on the same site as the old home.

There is a clear need for quick and effective intervention in this regard, since some homeswhich were partially damaged or destroyed are now being repaired or rebuilt by those living inthem, without the technical means to guarantee stability in the immediate future.

3) Relocation of People and Homes. Resettlement programs are necessary forthose families who cannot be relocated on the same site, due to a high risk of the site of theirprevious residence, or based upon a municipal vulnerability analysis.

ii) Improvement and Repairs to Damaged Homes. Programs for rebuilding homes andin support of owners of housing damaged by the earthquake are necessary in order to restore suchhousing and make it habitable.

New Homes. For this type of intervention it is necessary to immediatelycommence projects on available land with short-term possibilities of being serviced by publicutilities. The challenge is to create mechanisms to allow those affected to be compensated, whileattending to the housing shortage. In this way, innovative results in urban planning could beachieved and projected schedules of the housing policy could be met.

iii) Urban Infrastructure.

1) Repairing and Rebuilding Community Infrastructure. Under this headingwe include work and activities to recover damaged infrastructure affecting health, education,orphanages, and homes for the elderly, as well as infrastructure related to leisure, culture, andsports.

2) Repairing and Rebuilding other Public Infrastructure. This headingincludes all activity and work to recover public or community infrastructure other than as listedabove. This includes public buildings, urban infrastructure (transportation terminals, marketplaces, slaughterhouses, churches, community centers, cultural centers, etc.), the infrastructure ofresidential public utilities (drinking water, sewage, rubbish collection, electricity, and telephoneservice) and roadway infrastructure, principally due to the size of investment required and theindirect costs that are being generated.

iv) Urban Environmental Management. This will have to be considered as a far-reaching concern that affects all of the previous ones. It should seek to mitigate and correct theenvironmental impact caused by the earthquake and the after-effects that surface during theupcoming rainy season. Equally, it should aim at ensuring the inclusion of an environmentalapproach to zoning, recovery, and reconstruction activities for the country’s human settlementsand a sufficient supply of environmental and natural resources for reconstruction.

1) Strengthening of Local Management. This aspect seeks to strengthen locallevel institutions in risk prevention and management; obtaining, processing, and systemizing ofrelevant information; and the capacity to arrange natural disasters. This component includes theconducting of studies to formulate zoning and urban development plans among municipalities

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that share the same eco-regions, as such elements are indispensable in defining land-use. Suchplans should must also take in account studies regarding the risk of natural disasters.

2) Productive Projects. This program will have to consider aspects such as:the development of productive agro-forestry systems that allow for economic reactivation at alocal level; the use of living barriers to protect hillsides; and integral management of solid waste,including the final disposal of debris.

v) Reactivation of the Economic and Social Cohesion among the AffectedPopulation.

1) Reactivation of Social Cohesion. Consideration is given here to carryingout activities that relate to social services and intervention so as to re-establish the affectedpopulation’s emotional well-being. In this way, the affected population will be able to organizeand find the strength to become an active part of the reconstruction process and to take part increating a more democratic and equitable society in which everyone participates.

A top priority is to support local government efforts for creating communal centers staffedwith service personnel such as psychological care and counseling to affected persons. Specialemphasis should be placed on servicing the vulnerable population such as children, handicappedpersons, pregnant women, those with small babies, and the elderly. This should be done in such away so as not to create an additional burden on women, to the detriment of income-generatingactivities.

2) Economic Reactivation and Employment Creation. Programs for rebuildinghuman settlements represent a significant opportunity for economic reactivation and employmentcreation at the local level. As mentioned above, employment in the construction sector willenable local socio-economic processes to become more dynamic and will assist in reactivatingthe economy, by creating employment and providing opportunities to participate in the domesticmarket.

Small building-materials manufacturers should, as far as possible, be supported in the irrecovery. These will contribute to satisfying internal demand for materials, creating employment,and generating local income.

Likewise, the restoration of productive domestic space should be encouraged (waterdelivery and management, husbandry of small domestic species, food and clothing production forcommercial purposes, etc.).

d) Vulnerability and Framework for the Project Development

The main objective of the projects is to help the affected population recover and improvedestroyed and damaged assets, to re-establish social services, tourism, production, and exportprocesses and, in general, to cooperate in efficiently reactivating economic and socialdevelopment.

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The proposed investment projects, taken as a whole, provides the elements of a plan forinvestment program. These projects have been developed to the stage of profiles. It is sought toprovide sufficient information on the projects’ objectives, scope, expected results, activities, tasksto be undertaken, and investments to be made, expected financing, and the special characteristicsof each initiative. These profiles are compiled in an addendum to this report, which summarizesthe amounts per sector. They have been developed by governmental authorities, with supportfrom the mission, in response to the damage estimates submitted, in an attempt to recover whathas been lost and make it possible to reduce vulnerability in the future.

This list is not exhaustive and does not set orders of priority or preferences. The actualfeasibility and importance of these projects will depend on official reconstruction guidelines andon the proposed strategies and policies provided by the country. It should be noted that in order todevelop such criteria, there is a need to strengthen technical capacities for formulating projectproposals in the very short term.

Down the road, on the basis of the cooperation offers that materialize in the ConsultativeGroup, El Salvador will be required to submit more in-depth profiles. This will lead to definitiveprojects that will be submitted for financing. The prioritization of these projects will providespecific content to the strategy and the restoration and reconstruction programs. Implementationof these programs will first be geared towards an improvement in the living conditions of theaffected population. It will also aid in recovering from the physical and economic losses incurred,and will reduce indirect costs. Next, there will be a clear improvement in design and locationstandards in place before another such phenomenon occurs. Finally, works will be set in place,along with monitoring systems and mechanisms to mitigate the extremely adverse consequencesthat would result from torrential rains and floods when the rainy season begins.

Documents

The January 13, 2001 earthquake in El Salvador ... · earthquake in El Salvador. ... poverty in the rural zones farthest removed from national development, ... Margarita (Deputy Chief,