A trail of destruction: The economies destroyed by natural disasters

Phillip Portman

Jun 29, 2021

From earthquakes and hurricanes to wildfires, tornadoes and everything in between, it’s clear that natural disasters leave a trail of destruction in their path.

But just how much do these severe weather events cost, and how do the expenses for natural disasters in your country compare to events around the world? Can disasters that cost a similar amount of destruction impact a country’s GDP differently?

We looked at several worldwide natural disasters between 2000 and 2019 with a damage bill that exceeded more than USD$1 billion. Not only did we investigate the total cost of these natural disasters, but how much they would be worth in today’s terms due to inflation.

Please note: We have endeavoured to include as many relevant disasters as possible based on reliable available data, however, we acknowledge that this list may not be comprehensive of all natural disasters that occurred between 2000 and 2019.

The cost of natural disasters from 2000 onwards

Table Sources

  1. Insurance Council of Australia – ‘CAT195 AUSTRALIAN BUSHFIRE SEASON (2019/20) NSW, QLD, SA, VIC’ – Accessed 30/11/2020
  2. The Lancet Planetary health – ‘Floods in China, COVID-19, and climate change’ – Accessed 30/11/2020
  3. AON (9 June 2020) – ‘Media release: Cyclone Amphan claims 133 lives amid $15bn economic loss, according to Aon catastrophe report’ – Accessed 30/11/2020
  4. gov – ‘2010-2019: A landmark decade of U.S. billion-dollar weather and climate disasters’ – Accessed 30/11/2020
  5. NOAA Nation Centers for Environmental Information – ‘U.S. Billion-Dollar Weather & Climate Disasters 1980-2020’ – Accessed 30/11/2020
  6. NOAA Nation Centers for Environmental Information – ‘Earthquakes’ – Accessed 30/11/2020
  7. KPMG – ‘May 2016 Wood Buffalo Wildfire Post-Incident Assessment Report’ – Accessed 30/11/2020
  8. NOAA Nation Centers for Environmental Information – ‘On This Day: 2011 Tornado Super Outbreak’ – Accessed 30/11/2020
  9. The World Bank – ‘Indonesia’s Fire and Haze Crisis’ – Accessed 30/11/2020
  10. Centre for Research on the Epidemiology of Disasters (CRED) – ‘Annual Disaster Statistical Review 2014 The numbers and trends’ – Accessed 30/11/2020
  11. NOAA Nation Centers for Environmental Information – ‘National Hurricane Center Tropical Cyclone Report – Hurrican Manuel’ – Accessed 30/11/2020
  12. World Vision – ‘2013 Typhoon Haiyan: Facts, FAQs, and how to help’ – Accessed 30/11/2020
  13. MNP – ‘Review and Analysis of the Government of Alberta’s Response to and Recovery from 2013 Floods’ – Accessed 30/11/2020
  14. The World Bank – ‘Thai Flood 2011: Overview – Rapid Assessment for Resilient Recovery and Reconstruction Planning’ – Accessed 30/11/2020
  15. NOAA Nation Centers for Environmental Information – ‘Tsunami Events’ – Accessed 30/11/2020
  16. The World Bank – ‘Queensland Recovery and Reconstruction in the Aftermath of the 2010/2011 Flood Events and Cyclone Yasi’ – Accessed 30/11/2020
  17. European Journal of Geography – ‘Xynthia: lessons learned from a catastrophe’ – Accessed 30/11/2020
  18. Royal Meteorological Society – ‘Klaus – an exceptional winter storm over northern Iberia and southern France’ – Accessed 30/11/2020
  19. Victorian Government – Royal Commission – ‘Volume I: The Fires and the Fire-Related Deaths’ – Accessed 30/11/2020
  20. S Commercial Service – ‘Renewable Energy Industry In Southern Taiwan 2018’ – Accessed 30/11/2020
  21. Science Daily – ‘Media release: Flooding And Damage From 2008 Myanmar Cyclone Assessed’ – Accessed 30/11/2020
  22. Oman Medical Journal – ‘Tropical Cyclone Gonu: Number of Patients and Pattern of Illnesses in the Primary Health Centers in A’Seeb Area, Muscat, Sultanate of Oman’ – Accessed 30/11/2020
  23. Swiss Re – ‘Press release: Swiss Re estimates its claims for winter storm Kyrill to be in the region of EUR 140 million’ – Accessed 30/11/2020
  24. World Heritage Encyclopedia – ‘Cyclone Gudrun’ – Accessed 30/11/2020
  25. Give2Asia – ‘News release: Give2Asia Revisits the Boxing Day Tsunami 10 Years Later’ – Accessed 30/11/2020
  26. Risk Management Solutions – ‘Central Europe Flooding, August 2002’ – Accessed 30/11/2020

Which disasters hit a country’s GDP the hardest?

While all these disasters cost billions of dollars, caused mass destruction and significantly impacted the countries they hit, we discovered that some cost more in terms of a nation’s Gross Domestic Product (GDP) than others.

Using the disaster cost as a percentage of a country’s GDP, we determined just how significant the event was on that country’s economy by looking at the top countries on the list.

 

At a glance – How countries cope after a natural disaster

We take an in-depth look at the three disasters on our list where the disaster cost had the greatest impact on the country’s GDP.

Haiti Earthquakes – 10 years on

What happened: A 7.0 magnitude earthquake hit Haiti on 10 January 2010. Around 230,000 people died, 300,000 were injured and more than 1.5 million were displaced due to collapsed infrastructure.11

The country had never seen damage at this scale before and the government wasn’t equipped to respond to a crisis of this size. Not only did a third of civil servants in the country lose their lives, but key administrative buildings were destroyed – further impacting recovery efforts. The nation’s capital, Port-au-Prince, was reduced to rubble, with some 35.3% of the nation’s population at the time (3.5 million) living in hard-hit areas.

The World Bank notes that the actual repair costs reached USD$11.3 billion11 – significantly more than the USD$8 billion of damage caused by the earthquake. The earthquake also caused a cholera epidemic.12 The outbreak is believed to have been caused by water contamination and as of 2020, the bacterial disease was close to being eradicated in Haiti.12

The current situation: It’s hard to fully understand how Haiti is coping more than a decade after the initial earthquake, given the country has experienced social-political change since 2018.12 The country remains the poorest nation in the Western Hemisphere, there’s been political instability and the COVID-19 pandemic has hindered Haiti’s weak economy.13

According to the United Nations Office for the Coordination of Humanitarian Affairs (OCHA), humanitarian organisations initially struggled to coordinate the response efforts; and due to the size of the disaster, reconstruction efforts have been long and difficult. The OCHA says that international aid wasn’t as effective as expected and that the situation has been further impacted by other disasters (such as Hurricane Matthew in 2016) and the cholera epidemic.

Several humanitarian groups have provided updates on how their efforts have helped Haiti. The Agency for Technical Cooperation and Development (ACTED) – a non-profit and non-political organisation – says it’s building 500 homes that are resistant to cyclones and earthquakes.12

The organisation is also conducting workshops that educate local leaders about disaster risks and rehabilitation after severe weather events.

Meanwhile, the World Bank notes that the Infrastructure and Institutions Emergency Recovery Project (IIERP) was set up following the earthquake, to support the Haitian Government and rebuild vital institutions and infrastructure that were destroyed.

Government functions have also been restored with the help of the International Development Association (IDA). The IDA has also redeveloped 100 kilometres of road, which created 95,000 days of work for Haitians, improved access to essential services and potentially boosted tourism to affected areas.11

Unfortunately, Haiti is regularly hit by natural disasters, with World Vision explaining that it’s difficult for locals to overcome poverty caused by these events.28

 

Christchurch Earthquake – 10 years on

What happened: A 6.3 magnitude earthquake hit Christchurch at 12:51pm on 22 February 2011, killing 185 people, injuring thousands and causing significant damage. It came six months after another quake hit the region, with previously damaged buildings reduced to rubble this time around.14

More than half of the CBD structures had to be demolished, thousands of homes were destroyed, and many suburban areas were abandoned. Residents across the city were left homeless, while others were left with no power or water.15

What’s more, is some areas of the CBD were cordoned off for more than two years after the earthquake.14 Parts of the city and surrounding areas were deemed unsuitable for rebuilding, with 8,062 households offered a buyout from the government. Other areas of the city have been considered fit to rebuild.

A national state of emergency was declared and the government launched the Canterbury Earthquake Recovery Authority (CERA) to help the city rebuild.15

The current situation: Following the earthquake, an estimated 70,000 people left Christchurch due to ongoing aftershocks and because their homes were destroyed and they had little access to essential services.16 However, the city’s population returned to pre-earthquake levels six years later in 2017.17

Statistics also show that Christchurch is slowly bouncing back. Compared to a 2013 census, Stats NZ found that in 2018, there were an additional 11,000 workers in the CBD.18

Of course, the city still faces hurdles a decade after disaster struck. For example, the Christchurch Central Recovery Plan notes that some key issues with Christchurch’s recovery include:

    • widespread damage is prominent and whole parts of the city need to be rebuilt;
    • there’s not enough demand from retailers or commercial businesses to fill the space; and
    • it will take a long time to redevelop Christchurch.19

Still, Christchurch City Council has several development projects in the pipeline, including:

    • upgrading transport infrastructure, such as road resurfacing;
    • development of new water supply facilities;
    • creation of parks and recreation facilities;
    • development of major facilities including council buildings, sport facilities, libraries and convention centres;
    • development of precincts around the city to attract more people to the city centre; and
    • multiple projects surrounding heritage buildings and community facilities.20

 

Puerto Rico Hurricane Maria – Three years on

What happened: One of the more recent natural disasters on our list was also one of the most destructive. In fact, Hurricane Maria is one of the top 10 most intense Atlantic hurricanes ever recorded.21 Sadly, Puerto Rico was already dealing with Hurricane Irma’s aftermath, which hit the nation just weeks before Maria. Two in three people were already without electricity, and a third was without clean water because of that disaster.21

The hurricane caused an array of damage, including:

    • destruction of 95% of the country’s cell towers, halting most telephone communications on the island nation
    • destruction of the country’s electricity grid, which cut power to the entire nation (25% of residents still had no power five months after the hurricane)
    • severe flooding of more than 30 rivers
    • destruction of most roads, with just eight per cent of all roads in the country open a month after Hurricane Maria hit
    • structural damage of many buildings
    • destruction of most traffic lights and road signs.21

Meanwhile, the official death toll was shrouded in controversy. Government figures initially claimed that 64 people had died,21 but later said that 2,975 people had lost their lives due to the hurricane.22 Many media outlets and researchers criticised the initial number and the government was ordered to release information about the deaths caused by the hurricane.29

In 2018, Governor of Puerto Rico, Ricardo Rosselló Nevares, released a statement and said ‘The hurricane killed 2,975 people. This is a fact, and based on that fact, we adjust the official number of victims. It’s not time to deny what happened – it’s time to make sure it doesn’t happen again.’22

The current situation: Much like the official death toll, controversy has surrounded Hurricane Maria’s recovery efforts in Puerto Rico. In January 2020, Governor Wanda Vázquez Garced ordered a thorough investigation into the mishandling of supplies that were intended to be part of recovery efforts for Hurricane Maria. Supplies were found unused in a warehouse – they hadn’t been distributed to those who needed them when the disaster first struck.23

As a result, Carlos Acevedo, Commissioner of the State Bureau for Emergency Management and Disaster Administration (NMEAD), was fired.23

Meanwhile, data from the United States Census Bureau shows that Puerto Rico’s population decreased by 12,848 (or 3.9% of the population) in the year following Hurricane Maria, with higher rates of out-migration (people moving to mainland America) observed.24

As for recovery efforts, the Federal Emergency Management Agency (FEMA) in September 2020 said it would award USD$13 billion worth of infrastructure grants in Puerto Rico and that the territory would also receive USD$11.6 billion in federal funding.25 This includes:

    • $9.6 billion for the Puerto Rico Electric Power Authority to fix Puerto Rico’s electric grid system
    • $2 billion for schools and educational facilities to be restored.

FEMA also explains that more than 4,800 projects now have funding, which will help restore and rebuild:

    • roads, buildings and structures of cultural significance such as theatres and town squares26
    • emergency services and public safety facilities
    • health care facilities.26

 

Brought to you by Compare the Market: Making it easier for Australians to search for great deals on their Home & Contents Insurance.

 

Methodology

Using various sources, we determined a list of worldwide natural disasters that caused more than USD$1 billion worth of damage in the year the disaster struck, where reliable data was available. We’ve endeavoured to include as many relevant disasters as possible based on reliable available data. However, we acknowledge that this list may not be comprehensive of all natural disasters.

The disasters analysed in this article includes floods, hurricanes, cyclones, hailstorms, fires, earthquakes and tsunamis. Using historical data, we determined what the damage caused by the natural disaster was in local currency, as well as in USD. We also converted these figures to understand how much the damage would cost in 2020 due to inflation.

To give us a better understanding of the financial impact at a country level, we took the financial cost of each individual disaster and presented it as a percentage of the relevant country’s GDP. GDP figures were based on World Bank Data for the year of the natural disaster.

We’ve also used statistics to help us determine the global cost per natural disaster between 2000 and 2019, the number of people impacted by natural disasters each year and the total number of natural disasters by year. The cost to individual countries was also taken into consideration.

 

Brought to you by Compare the Market: Making it easier for you to search for great deals on your Home and Contents Insurance.

Sources

  1. Our World in Data – ‘Global damage costs from natural disasters, All natural disasters, 1980 to 2019’ – Accessed 30/11/2020
  2. Our World in Data – ‘Number left homeless from natural disasters, All natural disasters, 2000 to 2019’ – Accessed 02/12/2020
  3. United Nations Office for Disaster Risk Reduction (13 October 2020) – ‘Press release: Human cost of disasters: An overview of the last 20 years 2000-2019’ – Accessed 03/12/2020
  4. Our World in Data – ‘Economic damage by natural disaster type, 1900 to 2019’ – Accessed 30/11/2020
  5. World Health Organization – ‘Floods’ – Accessed 03/12/2020
  6. World Health Organization – ‘Tropical Cyclones’ – Accessed 03/12/2020
  7. World Health Organization – ‘Wildfires’ – Accessed 03/12/2020
  8. World Health Organization – ‘Earthquakes’ – Accessed 03/12/2020
  9. Our World in Data – ‘Natural Disasters’ – Accessed 03/12/2020
  10. World Bank – ‘Natural Disaster Hotspots – A Global Risk Analysis’ – Accessed 03/12/2020
  11. World Bank – ‘Rebuilding Haitian Infrastructure and Institutions’ – Accessed 03/12/2020
  12. OCHA Services – ‘Press release: Haïti: Commemorating Ten Years since the Earthquake’ – Accessed 07/12/2020
  13. World Bank – ‘The World Bank In Haiti’ – Accessed 05/01/2021
  14. New Zealand History – ‘Christchurch earthquake kills 185’ – Accessed 07/12/2020
  15. Te Ara – The Encyclopedia of New Zealand – ‘Canterbury earthquakes and rebuild’ – Accessed 07/12/2020
  16. Te Ara – The Encyclopedia of New Zealand – ‘The 2011 Christchurch earthquake’ – Accessed 07/12/2020
  17. Stats NZ – ‘Canterbury rebuild seven years on’ – Accessed 07/12/2020
  18. Stats NZ – ‘Newly released census data shows Christchurch CBD bouncing back’ – Accessed 07/12/2020
  19. Canterbury Earthquake Recovery Authority – ‘Christchurch Central Recovery Plan’ – Accessed 07/12/2020
  20. Christchurch City Council – ‘Future projects’ – Accessed 07/12/2020
  21. Climate Gov – ‘Hurricane Maria’s devastation of Puerto Rico’ – Accessed 08/12/2020
  22. La Fortaleza – ‘Authorized statements by the governor of Puerto Rico, Ricardo Rosselló Nevares: Expressions of President Trump’ – Accessed 08/12/2020
  23. La Fortaleza – ‘Statement authorized by Governor Wanda Vázquez Garced’ – Accessed 08/12/2020
  24. United States Census Bureau – ‘Media release: Nevada and Idaho Are the Nation’s Fastest-Growing States’ – Accessed 08/12/2020
  25. White House – ‘President Donald J. Trump Is Supporting The People of Puerto Rico as They Continue to Rebuild Following Natural Disaster’ – Accessed 08/12/2020
  26. FEMA – ‘Three Years After Hurricane María, FEMA Obligations Reach $7.3 Billion’ – Accessed 08/12/2020
  27. NOAA National Centers For Environmental Information – ‘U.S. Billion-Dollar Weather & Climate Disasters 1980-2020’ – Accessed 10/12/2020
  28. World Vision – ‘2010 Haiti earthquake: Facts, FAQs, and how to help’ – Accessed 10/12/2020
  29. The Conversation – ‘Puerto Rico hurricane death toll: how the official and unofficial figures got it so wrong’ – Accessed 05/01/2021