After Hurricane Otis made landfall in the southwestern state of Guerrero as a devastating Category 5 hurricane, many Mexicans voiced the same question: How will the affected region recover from the expected damage?
Just a few years ago, the answer would have been clear. Mexico’s Natural Disaster Fund, a pool of federal money for emergency relief, could have disbursed aid after assessing the infrastructure damage following the storm. But that tool was taken away in 2021 — a casualty of the austerity measures that the government of President Andrés Manuel López Obrador has implemented since he took office in 2018.
The fund “does not exist because it was an instrument riddled with corruption,” Mr. López Obrador said in 2021, although he did not provide evidence to back up his claim. “The money did not reach the people.”
The move coincided with a push for budget cuts across the federal government. The National Disaster Prevention Agency had its budget reduced from 82 billion pesos, or $4.2 billion, in 2018 to 67.7 billion, or $3.46 billion, in 2019, Mr. López Obrador’s first full year in power. The Civil Protection Agency, which also responds to national disasters, saw its funding nearly halved during that time, to 12.7 billion pesos, or $650 million, in 2019.
“We’re not used to having good disaster-relief mechanisms,” said Valeria Moy, general director of the research center Mexican Institute for Competitiveness. “When we have time we do prepare, but when we have these kinds of things, like this hurricane, then no, we are not ready.”
The Natural Disaster Fund, once considered one of the world’s most advanced financial instruments for disaster relief, was “unique” in that it allowed Mexico to quickly respond to these events, said Alejandro del Valle, an economist at Georgia State University. By law, the fund received 0.4 percent of Mexico’s federal budget every year, and if the money went unspent then it rolled into the next year.
The fund “had this whole set of rules that allowed them to always have money available,” he added, “and it had a bureaucracy that was ready to distribute it.”
In two separate studies, Mr. del Valle and his colleagues estimated the fund’s impact on recovery. The team found that it considerably accelerated economic recovery after a disaster and that it quickly restored access to health services — mitigating the number of deaths and easing bottlenecks in delivering disaster aid.
Without the Natural Disaster Fund, Mexico no longer has a regulated percent of the federal budget meant for disaster relief.
Laura Velázquez Alzúa, head of Mexico’s civil protection agency, said in a news conference in May that the government continues to have unlimited resources to assist the population during emergencies.
“Every financial possibility is open on the part of the government of Mexico to attend to the needs required to mitigate risks,” she said.
But this makes it more difficult for government auditing agencies to make sure federal money is correctly allocated to mitigate the affects of natural disasters, analysts warn.
“Next year’s allocation depends on other budget priorities, which who knows what they’re going to be,” said Ms. Moy, adding that this makes the federal budget for disaster relief fluctuate severely. “You introduce a volatility into something that could be secured in a fund.”
In 2018, before the López Obrador administration, the Mexican government allocated 33.3 billion pesos to the Natural Disaster Fund. Last year, disaster relief efforts received 9.9 billion pesos — an amount that increased this year to 17.9 billion.
Without the fund, infrastructure reconstruction spending also collapsed, said Jorge Cano, a researcher with Mexico Evalúa, a Mexico City-based research institute.
As of 2023’s second quarter, spending for reconstruction was only 4.2 billion pesos, about 60 percent less than the yearly average spent in the previous administration.
“There are certainly regions of the country and economic sectors that are left without reconstruction,” said Mr. Cano. The effect is that some affected regions are either not rebuilt after a disaster, he added, or that state governments need to cover those costs.
