SPRINGER BRIEFS IN ENVIRONMENTAL SCIENCE Sergio O. Saldaña Zorrilla Natural Disasters, Foreign Trade and Agriculture in Mexico Public Policy for Reducing Economic Vulnerability 123 SpringerBriefs in Environmental Science More information about this series at h ttp://www.springer.com/series/8868 Sergio O. Saldaña-Zorrilla Natural Disasters, Foreign Trade and Agriculture in Mexico Public Policy for Reducing Economic Vulnerability Sergio O. Saldaña-Zorrilla Research Scholar Risk, Policy and Vulnerability Program International Institute for Applied Systems Analysis (IIASA) Laxenburg , Austria ISSN 2191-5547 ISSN 2191-5555 (electronic) SpringerBriefs in Environmental Science ISBN 978-3-319-17358-0 ISBN 978-3-319-17359-7 (eBook) DOI 10.1007/978-3-319-17359-7 Library of Congress Control Number: 2015940008 Springer Cham Heidelberg New York Dordrecht London © The Author 2015 T his work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifi cally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfi lms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. T he use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specifi c statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. T he publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Printed on acid-free paper S pringer International Publishing AG Switzerland is part of Springer Science+Business Media (www.springer.com) Abstract The increasing frequency and economic losses from natural disasters within the framework of decreasing agricultural prices and trade liberalization is becoming crucial in increasing poverty in the Mexican rural economy. During the past two decades, the governmental withdrawal from supporting the agricultural sector with investments in physical, fi nancial and logistic instruments continues to stress agri- cultural livelihoods, as current private mechanisms have not replaced them effec- tively. It has contributed to making the agricultural sector particularly vulnerable to a number of hazards as it has weakened economic agents’ response and impeded assets accumulation. This book identifi es economic vulnerability to natural and eco- nomic hazards in order to assess public and private coping capacity, and provides a conceptual framework and economic theory that supports the overall approach and employed methodologies. It is based on quantitative and qualitative research meth- ods, and makes use of econometric analysis and stakeholders’ views aimed at fi nd- ing feasible solutions. Further, this book offers a spatial model that can support policy-decision-making for the creation of differential investments in productive infrastructure, as well as fi nancial instruments to reduce current vulnerability and poverty throughout the national territory. D uring the past three decades, over 80% of total economic losses from weather- related disasters occurred in the agricultural sector. In the same period, mean weighted agricultural prices have decreased over 50% in real terms, and since 1996 a trade defi cit has persisted in this sector. Currently, insuffi cient credit access, low coverage of crop insurance, as well as a near lack of investments to expand irriga- tion and further productive infrastructure, is sharpening the vulnerability of rural livelihoods. These facts explain why this sector produces only 4% of the GDP despite employing over 20% of the national workforce. These facts undermine farmers’ expectations of future incomes within the community, stimulating rural- urban out migration, which usually cannot be absorbed by the urban economy in light of the modest industrial dynamism of recent years. This leads to enlargement of informal sectors in large cities and migratory fl ows to abroad, among others. v Acknowledgments The author wishes to thank the following persons and institutions for contributing to the success of this book. Above all, special thanks to Dr. Joanne Linerooth-Bayer, Program Leader of the R isk and Vulnerability Program at the International Institute for Applied Systems Analysis (IIASA), who continually supported this work. Valuable criticism and suggestions from the following people have been decisive in writing this book: Dr. Reinhard Mechler, Dr. Uwe Schubert, Dr. Krister Sandberg, Dr. Neal Leary, Dr. Larry Willmore and Dr. Jose M. Albala-Bertrand. Particularly valuable was the encouragement obtained from the W orld Bank and the Provention Consortium, as well as from the START-IIASA A dvanced Institute on Vulnerability to Global Environmental Change , which fi nanced the various country consultations. vii Contents 1 Introduction ............................................................................................... 1 Introduction References ............................................................................... 4 2 A conceptual framework of economic vulnerability .............................. 5 2.1 Vulnerability....................................................................................... 6 2.2 Economic vulnerability ...................................................................... 7 2.2.1 Coping and adaptive capacity ................................................ 9 2.2.2 The cycle of economic vulnerability ...................................... 11 2.3 Drivers of economic vulnerability ..................................................... 13 2.3.1 Assets accumulation ............................................................... 13 2.3.2 Poverty and entitlements ........................................................ 14 2.3.3 Emigration as response to rural poverty ................................ 18 2.4 Agriculture as livelihood .................................................................... 18 2.5 Final comments .................................................................................. 21 Chapter References ...................................................................................... 22 3 Natural hazards and economic stressors ................................................ 25 3.1 Historical losses from natural hazards ............................................... 26 3.1.1 Hurricane ................................................................................ 26 3.1.2 Floods ..................................................................................... 28 3.1.3 Earthquake ............................................................................. 29 3.1.4 Volcanoes ............................................................................... 32 3.1.5 Droughts ................................................................................. 33 3.2 Hazard exposure of agriculture .......................................................... 33 3.3 Relative vulnerability of the poor ...................................................... 35 3.4 Trade liberalization ............................................................................ 39 3.4.1 Globalization and regionalization .......................................... 39 3.4.2 Growing share of foreign trade in the economy .................... 40 3.4.3 Negative terms of trade .......................................................... 41 3.4.4 NAFTA and agriculture .......................................................... 42 ix