VZCZCXRO2316
RR RUEHCN RUEHGH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHVC
DE RUEHIN #0236/01 0511008
ZNR UUUUU ZZH
R 201008Z FEB 08
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 8161
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEHBK/AMEMBASSY BANGKOK 4073
RUEHBJ/AMEMBASSY BEIJING 7846
RUEHUL/AMEMBASSY SEOUL 9335
RUEHKO/AMEMBASSY TOKYO 9591
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUEHC/DEPT OF INTERIOR WASHINGTON DC

UNCLAS SECTION 01 OF 03 TAIPEI 000236 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
INTERIOR FOR USGS; DEPT. FOR USAID/OFDA; DHS FOR FEMA 
 
E.O. 12958: N/A 
TAGS: AEMR ECON ETRD SENV TSPL TPHY TW
SUBJECT: TAIWAN REMAINS VULNERABLE TO ECONOMIC IMPACT OF 
NATURAL DISASTERS 
 
REF: A. 07 TAIPEI 2302 
     ¶B. 07 TAIPEI 21 
 
 ¶1. (SBU) This is an action request for USAID/OFDA. Please 
see para. 11. 
 
 ¶2. (SBU) SUMMARY. Taiwan is very vulnerable to natural 
disasters since it lies in the path of typhoons in the Summer 
and Fall and is also part of the Pacific Rim's 
earthquake-prone Arc of Fire.  Natural disasters such as 
typhoons and earthquakes can cause much economic loss, as 
shown by the major quake of September 21, 1999 and its 
economic impact on the IT sector.  According to data from the 
Directorate General of Budget Accounting and Statistics 
(DGBAS) and disaster relief offices, the 9-21 earthquake 
resulted in 2,494 deaths and financial losses of US $11.5 
billion, amounting to 3.5 percent of Taiwan's GDP in 1999. 
Taiwan's semiconductor industry was particularly hurt as 
power outages caused a fall in production of integrated 
circuits (IC) and affected the world supply, doubling prices 
in certain memory chips.  Taiwan's Dec 26, 2006 quakes also 
shutdown internet and telecom services from Taiwan to the 
rest of the world. Aside from earthquakes, the island is very 
prone to typhoon damage, as its mountainous terrain is 
subject to landslides, but losses have been confined to the 
agriculture sector.  Although in the past emphasis was placed 
on technological solutions to natural disasters such as 
emplacing seismic sensors nationwide, recent efforts have 
focused more on preventive measures such as encouraging 
people to purchase insurance for such eventualities.  Relief 
agencies wish to exchange experiences with their U.S. 
counterparts such as FEMA on command and control issues.  END 
SUMMARY. 
 
 
MOUNTAINOUS ISLAND WITH UNSTABLE SUBSTRATE 
------------------------------------------ 
 
¶3. (SBU)  Taiwan is two-thirds mountainous, with a 
geologically young substrate dating from the Cenozoic period 
(65 million years ago to present).  Taiwan's geographic 
position in East Asia makes it susceptible to both seasonal 
typhoons and earthquakes.  According to seismic experts, the 
young substrate is prone to collapse during earthquakes and 
typhoons and is the cause of numerous roads being closed due 
to landslides and rockfalls.  Development pressures have also 
destabilized the hillsides, as fruit farms and tea 
plantations on mountain slopes become highly susceptible to 
landslides during typhoons and earthquakes.  Much needed 
reforestation has not been able to keep pace and poorly 
enforced zoning practices contribute to the agricultural 
losses during typhoons and earthquakes. 
 
TYPHOONS--LOW CASUALTIES, HIGH ECONOMIC LOSS 
-------------------------------------------- 
 
¶4.  (SBU)  Taiwan lies in the path of yearly typhoons which 
begin to form in the summer months of June-July and continue 
to affect the island into November.  While life-threatening, 
typhoons primarily affect economic output in the agricultural 
sector.  Starting from the 1959 Typhoon Ellen, which resulted 
in extensive flooding and 667 deaths and economic losses of 
NTD37 billion ($1.1 billion), to the latest typhoon Krosa 
(reftel A) which killed 9 persons but caused economic losses 
of NTD100 billion ($3.1 billion), the trend has been 
diminishing casualties but growing economic loss.  Other than 
damage to infrastructure, flooding and landslides often occur 
during typhoons.  According to the National Center for 
Disaster Reduction (NCDR) experts, flooding results when 
streams cannot accommodate excess runoff during typhoons. 
Command and control during these episodes becomes problematic 
because multiple agencies exercise control over issues 
related to flooding and water resources.  Studies by the 
Water Resources Bureau of the Ministry of Economic Affairs 
(MOEA) indicate that on average, typhoon-related damage to 
agriculture account for 60 percent of the economic losses 
followed by fisheries (12 percent), irrigation (13 percent), 
transportation (9 percent) and communications (6 percent). 
 
EARTHQUAKES: WORLD CHIP MARKET AFFECTED 
--------------------------------------- 
 
TAIPEI 00000236  002 OF 003 
 
 
 
¶5. (SBU)  The September 21, 1999 "Chi-Chi" earthquake was the 
strongest in recent memory, registering 7.3 on the Richter 
scale.  It resulted in the deaths of 2,494 people, and 11,305 
injured.  Material losses amounted to NTD134 billion ($4.13 
billion).  The Chi-Chi quake resulted in the collapse of 173 
buildings and houses, and serious damage to 51,392 houses. 
Aside from buildings collapsing, roads were shut by rockfalls 
and power outages to the Hsinchu Science Park resulted in 
cumulative losses to the IT sector of US$700 million.  A 
two-week black-out in Hsinchu, center of Taiwan's 
semiconductor industry, caused a significant drop in IC 
production from Taiwan, resulting in average price increases 
of 25 percent worldwide for IC chips, with prices for certain 
types of memory chips increasing by 100 percent. In addition, 
share prices of U.S.-owned Dell computers dropped by 7 
percent on the NY Stock Exchange, according to industry 
analysts.  In real economic terms, total losses amounted to 
3.5 percent of Taiwan's GDP in 1999, compared with 2 percent 
for Japan's Kobe earthquake in 1995.  The estimated loss of 
revenue from the quake was about NTD 36.8 billion ($1.15 
billion), including tax revenue loss of NTD 24.9 billion 
($0.7 billion). 
 
¶6.  (SBU) Other quakes which caused a major shutdown of 
telecom services in the area happened on December 26, 2006 
(reftel B).  The quakes, measuring 7.1 and 6.9 on the Richter 
scale, damaged four major submarine cables which connected 
North America, Southeast Asia and Europe.  Local Chunghwa 
telecom claimed a revenue drop of NTD100 million ($ 3.06 
million) due to the disruption in services.  Cable repairs 
were estimated to cost about NTD50 million ($1.5 million) and 
take two weeks to restore.  Although loss of life was minor, 
with two deaths reported, the effect on the financial and 
telecommunications sector served as a warning of what could 
happen after an even stronger shock. 
 
 
DISASTER RESPONSE: TECHNOLOGY AND SOCIAL REMEDIES 
--------------------------------------------- --- 
 
¶7.  (SBU)   National Center for Research on Earthquake 
Engineering (NCREE), Director Tsai Ke-chyuan told AIT ESTH 
officer that earthquake strategy in the past focused on 
technical solutions to problems, i.e. rebuilding homes, roads 
and infrastructure, and restoring water and electricity. 
Taiwan's Central Weather Bureau has built a network of 1,000 
monitoring stations island-wide that will provide real-time 
indications of an earthquake's strength and potential damage. 
 The NCREE is also building the Taiwan Earthquake Loss 
Estimation System (TELES), a databank on previous earthquakes 
as well as information on roads, bridges, energy and water 
supply facilities which can provide quick data on the areas 
most in need of assistance if a major disaster strikes.  Once 
this network is set up it will provide quick information to 
emergency relief teams to tackle the most urgent needs. 
TELES can also be used to build earthquake scenarios and 
develop risk management tools such as estimating earthquake 
insurance.  On the power supply side, Yu Shang-Hsiung, 
Director of Power Development at state-owned utility Taipower 
Company, said his company has implemented a dual power grid 
system instead of a centralized single grid system for the 
sensitive science parks so that damage can be limited to one 
grid rather than cutting the power to the entire area. 
 
¶8. (SBU)  Typhoon remedies have largely been reactive, 
focusing on emergency response, rather than proactive like 
better land-use management.  Reforestation has been one area 
which the authorities have made progress.  According to 
Council on Agriculture (COA) data, from 2001 to 2006, 24,235 
hectares have been reforested.  Beginning in 2008, the 
Executive Yuan has also allocated NTD 7.18 billion ($222,29 
million) for five years, including subsidies to farmers to 
turn fallow land back into forested land.  Disaster relief 
agencies have focused on social approaches to disaster 
prevention by encouraging people to take earthquake 
insurance, educating people of earthquake risks and advising 
them to stockpile emergency supplies.  Although the 
earthquake helped contribute to tougher building codes and 
helped identify poorly-built structures around the island, 
Tsai of NCREE emphasized that the concentration of people and 
 
SIPDIS 
 
TAIPEI 00000236  003 OF 003 
 
 
high-rises in major cities like Taipei could still result in 
higher casualties in the event of a major quake. 
 
 
RECONSTRUCTION THROUGH THE PRIVATE RELIEF FUND 
--------------------------------------------- - 
 
¶9. (SBU)  To better understand reconstruction efforts by the 
authorities, ESTH officer met with the Shieh 
Jyh-cherng,Director of the Earthquake Relief Foundation 
(ERF).  The foundation was formed in 1999 as a state agency 
to manage relief donations.  Since the public did not trust 
the bureaucracy to manage such a large sum of money, the ERF 
became a quasi-independent body whose assets have grown 
substantially to NTD14 billion ($437 million).  ERF is run by 
a staff of 10 and has an operating budget of NTD 1.2 million 
($38,000) a month. No-interest loans were advanced to those 
who lost their homes due to the 9-21 earthquake.  Once they 
rebuild their homes, the beneficiaries are required to obtain 
their own loans from banks to pay the ERF back, ensuring the 
ERF fund remains viable for use at the next emergency.  Shieh 
said that 68 percent of the fund was earmarked for housing 
reconstruction, 15.8 percent for financial assistance to 
earthquake casualties.  However, Shieh is concerned for the 
funds' future unless the ERF is made into an official agency, 
subject to oversight.  (Note: The ERF is a typical solution 
borne out of distrust of bureaucracy--its Achilles Heel being 
its reliance on a strong personality, Shieh, rather than 
institutional mechanisms.)  When the ERF is disbanded later 
this year, all leftover monies will be turned over to the 
authorities for future relief use. 
 
DESIRE FOR LIAISON WITH FEMA 
----------------------------- 
 
¶10.  (SBU)  Our visits with the National Center for Disaster 
Reduction (NCDR) showed that Taiwan is technically 
well-prepared for any disaster related emergencies, from 
earthquakes to typhoons.  Because of better engineering 
practices, quick response, and forecasts and information 
flow, the casualty rate from typhoons has dropped 
considerably since the 1970s.  However, major earthquakes are 
a different matter, and tougher building codes are no 
guarantee of low casualties.  On the economic side, losses 
resulting from natural disasters will likely continue to 
grow, especially in agriculture, due to poor land-use 
practices.  The potential for a major disruption to key 
economic sectors such as the IT sector, which could have 
important repercussions to the world supply of semiconductor 
chips, remains a concern following the major quake of 1999. 
As such, the authorities have strengthened power supply and 
communications systems to avoid the power outages which hurt 
the IT sector so seriously then.  The wealth of accumulated 
knowledge from that quake is being used to plan major quake 
scenarios using computer modeling.  The bigger challenge is 
how to institutionalize a credible disaster relief fund as 
part of the authorities' overall disaster relief strategy and 
impart to the public lessons learned and the need for proper 
land use and preventive measures. 
 
¶11.  (SBU)  Action request: NCDR has expressed a wish to meet 
with their counterparts at the Federal Emergency Management 
Agency (FEMA) to share experiences in disaster management, 
particularly command and control systems.  AIT would 
appreciate if USAID/OFDA can help identify contacts at FEMA 
for such an exchange. 
 
 
 
 
 
 
 
 
 
YOUNG