# 1. Introduction

In Latin America, economic activity and population mobility are heavily dependent on transport. Many economies rely on commodity exports and populations and economic production are concentrated in urban areas, often far from dispersed rural populations. Thus, connectivity among cities, mining and agricultural production areas, and external markets requires transport networks to move people and goods cost-effectively.

Peru’s difficult topography and climate create challenges for businesses and communities, as in much of Latin America, nearly all of the nation’s cargo travels by road. Median altitudes range from less than 500 meters above sea level on the coast and the Amazon regions to more than 3,000 meters in mountainous areas. Extreme temperatures, floods and landslides triggered by heavy rains sometimes lead to closures of important roads (MTC, 2005). In 1982-83 and 1997-98, severe El Niño events caused flash floods and landslides, resulting in huge losses. In 1982-83, for instance, most bridges on the northern areas of the Pan Americana road, along the Peruvian coast, were destroyed. Not all bridges have been rebuilt and many temporary structures remain. Such interruptions help explain the high logistics costs for export commodities in Peru.

To support economic growth, policy makers must ensure that as Peru develops, its road network is resilient to future shocks. Obviously, the best solution would be to fully protect the entire network against all possible disruptions. But because resources are limited, policy makers must know which roads are critical -- for instance, those with the most traffic, greatest socio-economic relevance, or most expensive consequences in the event of disruption -- and the best interventions to protect them against the disruption risks they face.

Identifying the most appropriate interventions to prevent or mitigate disruptions linked to natural disasters in a road network is challenging. First, it is difficult (and sometimes impossible) to predict the frequency, severity, and duration of the potential disruptions to which a road segment is exposed. Large data sets and sophisticated modeling are needed to accurately estimate the probability of an extreme event such as extreme rainfall or earthquake to occur in a particular place. In addition, climate change adds considerable uncertainty to the magnitude of mean and extreme changes in precipitation that may occur in a country or region. This uncertainty is even more pronounced at the fine scale needed for road projects – since downscaling climate data tends to amplify rather than reduce uncertainty.

Moreover, the economic impact of natural disasters on a road depends on many local variables that are sometimes unknown to analysts. The impact worsens if the road is not well maintained, if deforestation makes the terrain prone to landslides, or if emergency responses are not dispatched in a timely fashion to make the road operational again in a short time. Whether a critical road can be repaired in a few weeks or months can dramatically change the economic consequences of a disruption, as well as the type of interventions required.

Finally, the economic impact of a disruption in a road network is exacerbated if the road is critical to an economic sector, to a certain community, or to the entire transportation network. Traditionally, economic 2