Home' acuity : Acuity Feb 15 Contents Franz Drees-Gross, country director for Timor-Leste, Papua
New Guinea and the Pacific Islands, East Asia and Pacific at
the World Bank, expects more frequent disasters based on
evidence from climate models. As the earth warms, there
will be more frequent storms and more cyclones of greater
intensity, he says. An increase in rainfall and rainfall intensity
will also trigger more flooding disasters and mud slides.
“Unless you do something to increase resilience, you can
expect an increase in the fraction of GDP that’s lost every
year,” Drees-Gross says.
McCawley says that not only does the media highlight
disasters, but international agencies are paying more
attention to them, and organising assistance as well.
“Organisations such as the World Bank and ADB [Asian
Development Bank], which traditionally did not focus
on disasters, are now expected to respond quickly and
coordinate international reconstruction efforts,” he says.
“And the major relief and
reconstruction efforts they organise
attract media coverage.”
There is also a growing focus on the
economic impact of disasters.
Tim Kirby, managing director of
Environmental Risk Science and
Audit (ERSA), says every disaster
costs more than the last, particularly
as countries move from being less
developed to more developed.
“ The stakes are higher,” Kirby says.
From McCawley’s perspective,
it isn’t clear whether the economic impact of disasters is
increasing, but alongside the increased awareness of disasters
in general there is more awareness of the economic impact.
“First, international economic agencies usually quickly
mount teams to estimate the economic impact of disasters,”
he says. “ The result is that quite soon after disasters, there is
now considerable information – with a good deal of detailed
data – about the economic impact.”
McCawley says an increasing number of studies have
documented costs that tended to be overlooked in the past.
These include the long-term impact of disasters in disaster-
affected regions and the social impacts of disasters.
“Studies have shown that the long-term impact is more
serious than has been allowed for in the past,” he says.
Children who are orphaned after disasters, for example, are
likely to live in poverty for very long periods of time, and their
own children are likely to be born into poverty as well.
“Disaster therefore exacerbates long-term poverty,” McCawley
says. “And social impacts, such as long-term trauma for disaster
survivors, are often quite serious. In the past, social costs of this
“Studies have shown
that the long-term
impact is more serious
than has been allowed
for in the past. Disaster
sort were not documented and tended to be overlooked.”
Mark Skidmore, professor of economics at Michigan State
University and one of the world’s foremost experts on the
economics of disaster recovery, says that in the short run, the
impacts depend greatly on the level of development.
“Poor countries are much more vulnerable than rich countries.”
With the 2010 earthquake in Haiti, for example, structures
were not built to withstand a quake and the impact on the
country was devastating, Skidmore says.
“ They still haven’t really recovered. However, a quake of similar
magnitude in, say, California, might do significant damage to the
infrastructure, but won’t result in many lives being lost.”
The cost of disasters for small Pacific Nations is, however,
enormous. According to the World Bank’s Drees-Gross, natural
disasters cause an average annual loss of 6.6% GDP in Vanuatu
and 4.3% in Tonga. Both are located in the cyclone belt and “ring
of fire”, and are hit by tsunamis, cyclones and heavy rains.
In the past 30 years Tonga has
had five disasters that destroyed the
equivalent of more than 20% of GDP.
In December 2012, Cyclone Evan
hit Samoa causing damage worth 30%
of GDP. “ That’s a gigantic amount of
damage,” says Drees-Gross.
There can be a “silver lining” in
disasters, says Skidmore, if the rebuild
efforts strengthen the long-term
viability of the local economy.
According to the World Bank, the
Queensland Floods and Cyclone Yasi
created more than US$15b of damages and losses. It was one of
Australia’s most expensive natural disasters. But at the time, some
economists argued the rebuild was a boon for economic growth.
There is debate about whether the overall economic effect is
positive or negative, particularly in developed countries.
In developed countries, like Australia and New Zealand,
the economy suffers but money from insurance, savings and
government begins to flow and economic activity rebounds.
The Christchurch earthquake was the worst in New Zealand’s
modern history. Around 83% of all Canterbury homes suffered
damage to some degree. The recovery spend equates to 17% of GDP
measured in US$. Yet in the year to May 2014, economic growth in
Canterbury was 4.8%, which outstripped national growth of 4.2%.
But Skidmore warns a short-term rebound won’t necessarily
outweigh the cost of damage. “ There is definitely a loss of capital
stock, so rebuilding doesn’t necessarily result in economic gains.”
Successful rebuilding, he says, depends on well-developed
insurance markets, open trade that speeds the flow of
emergency resources, and effective management of disaster
preparation and response.
FOCUS DISASTER RECOVERY
acuity | FEBRUARY 2015
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