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We're here with Warren Professor Howard Kruther who will talk about the implications of the earthquake in Nepal
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and the lessons it holds for other countries around the world. Welcome professor. Good to be with you Deborah.
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Well to first of all tell me what lessons do you think the United States and other countries can learn from what
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happened in Nepal and how they can better prepare for disasters? Well, first let me just say a word about
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Nepal if I could in the sense that this is an unbelievably devastating earthquake for the country and they are
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trying to recover and we will have to we can get into that a little later on but
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I did want to at least acknowledge the fact that they really are a country that has some challenges and are going to try
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to meet them. But in the context of the lessons for other countries, I think that what happened in Nepal is something
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that happens everywhere in the world. If something doesn't happen for a long
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period of time, it isn't going to happen to me is is basically how people feel.
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And Nepal had a very serious earthquake 80 years ago. And it was it did devastate the country. And in the
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process, of course, people were a little bit more reluctant to think about the fact that an earthquake could actually
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occur in the future. And that is certainly true here in the United States as well. People do not take preparations
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for uh disasters until after they happen. And the countries that have actually learned from earthquakes may do
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a bit better. And Chile being one example of that. Mhm. Can you tell me more about the extraordinary steps that
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Chile took in order to prepare for disasters? Well, Chile is a country that has had a number of earthquakes and we
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were very fortunate, my colleagues Mike Yuseim and Awan Michelle Kjan and myself
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to have had access to a number of the top leaders in Chile, including former President Pinera to really look at
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essentially how they had recovered from uh the 19 the 2010 earthquake that was a
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very serious one. And the reason that they were successful with respect to recovering from that earthquake is that
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they had two features that I think are very important. One is that they had a past history of a number of earthquakes
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and they had learned from them and as a result of that they had taken steps including well- enforced building codes,
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people purchasing earthquake insurance to protect themselves. And the second is that they had leadership in the context
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of the new president who came in actually was sworn in two weeks after the earthquake and his leadership
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actually was enormously important and the our book called leadership dispatches really highlights that point.
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So how do you compare what happened in Chile to how the US government handled hurricane Katrina and hurricane Sandy
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for example? Well, hurricane uh Katrina was a real challenge as I think we know.
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There were levies that were really poorly designed. Uh and as a result, there was an enormous amount of damage
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and there were real challenges in the recovery process. And as a result, not only were a number of people killed as a
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result of that, but it took quite a while for the and still in the process of actually restoring uh elements of the
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city uh because of that damage. Are there certain states like such as California that actually do an
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extraordinary job of disaster preparedness? California does a remarkable job of of preparedness for
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earthquakes because they've had a number of earthquakes and they've learned from
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those earthquakes and as a result there is a lot of measures in place that will I think reduce the damage. Although I
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will say that very few people today only 10% of the California residents have earthquake insurance. So there's going
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to be an interesting question as to what's going to happen if we do have a severe earthquake in terms of their own
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recovery. So from that vantage point, preparation on the part of the residents is is relatively uh in ineffective at
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the moment. When it comes to less developed nations, there's always the struggle to prioritize funding for
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immediate needs versus funding for uh future uh disasters. So what can a uh a developing country do to make sure
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they're uh prepared for disasters but at the same time they fund ongoing needs of
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the country. Right? Well, let's talk about Nepal as an example of that since
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they went through this very horrendous uh earthquake. Nepal actually did take some steps uh in the sense that many of
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the newer buildings were really enforced uh were built according to building codes that were enforced and to my
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knowledge and of course we'll find that out in in in the next week or so most of
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them did not suffer as a a large amount of damage uh and as a result of that I think you can the the city is at least
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KMU in the area was better prepared on the newer construction the challenge with a country like Nepal as we've all
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heard and and read about uh is that they have so many old buildings and a city like Bakapore outside of Kotmandu which
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historic treasures was really badly damaged and Kotmandu itself was damaged. I I should indicate uh I've learned a
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great deal about Nepal because my daughter Laura Kruther uh is an anthropologist who has studied Nepal and
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is obviously I've been there a few times for that reason and uh I'm tremendously
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impressed with the Nepales and their ability to sort of deal with the situation but we have discussed this
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since the earthquake and I think the general challenge that the country has is the leadership side and we'll have to
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wait and see how the government is going to have to deal with these issues because in a you do need leadership. Uh
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that's what Chile had. It's harder for a developing country. Haiti had enormous
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challenges after uh their earthquake. Uh Nepal is in far better shape in that sense than Haiti was where over a
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100,000 people were killed. Uh the death toll is 5,000. That's a large number,
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but really pales compared to what happened in Haiti. So I think we'll have to wait and see whether the government
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is going to be in a position to be able to take advantage of the situation. We do learn from catastrophes and there are
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the silver lining is you can do things better after a catastrophe than you can before. And let me give you one example
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in the United States just to highlight that uh before Hurricane Andrew that occurred in 1992. So a few years back
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now uh onethird of the buildings were built that did not satisfy building codes that the and they would have been
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saved had they met the codes and Florida was really not enforcing these codes. There was a wakeup call for Florida
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after hurricane Andrew and today they have the best building codes in the country or one of the best. So they
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learned from the disaster and the hope is that the developing countries can also learn and we're all hoping that
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Nepal can come out of this with a better understanding of how they're going to
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have to deal with disasters. In your opinion, what are some of the biggest mistakes that developed nations
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make when it comes to disaster preparedness? Well, I think the biggest mistakes and I wouldn't even call them
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mistakes. I think it's more in the context of constraints as you alluded. They don't have a lot of resources. So
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it's hard to all of a sudden say we are going to build everything so sturdy that
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will be prevented from another disaster. That's why the fact that new buildings
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in Nepal were built according to to code is a testimony to the fact that the country is doing that. Haiti for example
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did not have any building codes at all and a lot of the destruction occurred because of that. So it's the lack the
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resources and the constraints that really are a challenge and I think that's why in some sense uh you do need
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organizations like the World Bank uh to help out in in situations like that to maybe try to support uh these situations
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from the vantage point of individuals. They have a very similar problem. There are so many other things on their mind
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that it's very that are immediate needs that it's very very hard for them to
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devote time and resources to try to even think let alone deal with what they could do for a disaster. What about for
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developed nations? What are some of their biggest mistakes? Well, I think the biggest mistakes that that we face
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in in our country is what I alluded to earlier. the feeling that somehow it isn't going to happen to me and as a
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result I don't have to worry about this and that the costs associated with actually taking steps now are too high
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for us to put the resources in. And this is an issue that we have all of us have
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been thinking very very uh uh closely and deeply about in in the in the Wharton risk center. How do you begin to
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develop essentially strategies that are long-term that essentially are long-term
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in nature but that satisfy the shortrun needs? And so I think there are ways to begin to think about that and the
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develop hopefully the US will try to adopt some of these which is begin to think about long-term loans for example
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as a way of really spreading the upfront costs over a number of years. think about affordability issues and how
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you're going to deal with affordability in a way that will encourage essentially
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development in areas, but at the same time recognize that you have to be careful in terms of what you do and you
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have to make sure that you take care of people who can't afford a very high insurance premium. If there's a high
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premium that reflects risk and you have to help them out, but don't do it with
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an insurance premium, try to find other ways like means tested vouchers or some other mechanism that helps the
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low-income people because otherwise I think we're going to be in real real difficulty with respect to implementing
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some of these strategies that we all believe are desirable. What regulatory changes do you recommend that the US
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government take to make these remedies? Well, I think building codes being one example certainly not only with respect
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to earthquakes but with respect to floods and other disasters, making sure that buildings are welld designigned,
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that they are well enforced. Land use regulations are important with respect to that. And I'll tell you one
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regulation that we have been thinking a great deal about is related to insurance. And there is a general
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feeling that you need to subsidize premiums to help the low-income people as I alluded to. And one of the things
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that could be done and we feel is important let the insurance premium reflect the risk so that people know
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what they have to pay for to cover their risk and they also get rewarded. If it turns out that they take steps to reduce
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the risk they get a lower premium. So the premiums reflecting risk becomes important but then you have to feel
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figure out what you're going to do with the low income and the people who can't
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afford it or who need special treatment. That sounds logical but what is impeding
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these changes on the regulatory side. Well I think what's impeding it is we are all you know people are thinking
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purely about the short run in many of their decisions. We have a little expression that we've used and since
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you're asking this question I will use it here. Uh nimto behavior which is true
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of probably all of us but certainly true of politicians. Any idea? Can you explain? Not in my term of
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office if I can avoid that. And so thinking very short run makes it very very hard to deal with some of these
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long-term issues unless you can figure out a way to get rewards in the short run. And then I think in the United
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States uh certainly we have a certain degree of polarization in terms of different views on how to deal with this
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and that makes it very hard to get anything passed as we are aware of and hopefully that will change over the next
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couple of years and we'll just have to wait and see. Thank you professor. Good
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to be with you. [Music]