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How Natural Disasters Hit The Economy: 2.5 Trillion In 13 Years

Photo courtesy of UK Department for International Development via Flickr

How costly are natural disasters, and can these numbers be reduced?

Natural disasters are devastating on many levels, causing not only death and human suffering, but resulting in exorbitant amounts of money in reparation – about $2.5 trillion since the turn of the century, and $3.8 trillion since 1980.

By that trend, we’ve spent about twice as much globally in the last 13 years as the entire two decades prior. And as natural disasters have and will continue to be increasingly frequent (in part due to climate change), this statistic does not bode well for the future.

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Chart courtesy of the International Business Times.

In 2013, about 20,000 lives were lost, twice as much as the previous year. The global loss was $192 billion in 2013, $160 billion in 2012, and a record setting $380 billion in 2011.

The costliest natural disasters in the last decade include:

  1. Japan earthquake in 2011: $122-235 billion, 15,800 dead
  2. Sichuan earthquake in 2008: $150 billion, 70,000 dead
  3. Hurricane Katrina, 2005: $125 billion, 1800 dead
  4. Hurricane Sandy, 2012: $50-65 billion, 150 dead
  5. Chuetsu earthquake, 2004: $40 billion, 40 dead

These top disasters are merely by economic cost – when natural disasters occur in poorer countries, while the economic cost is less, the death rates are often much higher.

For example, Kashmir, Pakistan’s 2005 earthquake killed 87,350 at only a cost of $2bn dollars. In contrast, Hurricane Sandy saw 150 casualties, but cost the U.S. close to $65bn.

Causes and solutions

In the U.N.’s Global Assessment Report on Disaster Risk Reduction, a warning was issued to the business community that these natural disaster-related economic losses are “out of control” and will continue to escalate if nothing is done.

The report detailed a number of factors as likely causes, such as population growth driving businesses into hazardous locations, and rapid urbanization resulting in more people on less land.

Climate change is also a cause of weather related disasters like hurricanes and typhoons, though earthquakes remain the costliest and most fatal.

The U.N. Security General proposed that better risk management and smart investments on a business level would reduce such costs and damages, part of a framework being formulated this upcoming year, as the infographic below illustrates.

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Infographic courtesy of UNISDR via Flickr.

Of course, there is no way to actually prevent natural disasters from occurring – but reduction of loss of life and money is a goal the world is striving for.

The U.N. Framework Convention on Climate Change suggests that by lowering human impact on climate, preparing and reinforcing our cities’ resilience, and improving humanitarian response and aid, the government and other organizations can work to make change.

Technology vs. nature

Further, the World Disaster Report suggests that technology could revolutionize the future of humanitarian action, helping to prepare and assist with the greatest efficiency with tools such as social media and crowdfunding.

Already, tech-oriented approaches have and will continue to improve information gathering, data analysis, coordination, action, and fund-raising in the preparation, face, and aftermath of disaster.

Even if the weather can’t be changed, these solutions should help lessen the blow of nature’s malicious hand – and possibly keep it out of our wallets, too.

Updated

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Jennifer Markert