Our award-winning reporting has moved

Context provides news and analysis on three of the world’s most critical issues:

climate change, the impact of technology on society, and inclusive economies.

Disaster losses set to outpace economic growth - study

by Megan Rowling | @meganrowling | Thomson Reuters Foundation
Monday, 14 May 2012 12:30 GMT

Governments urged to consider disaster risk in economic policy, with climate change impacts seen worsening future losses

LONDON (AlertNet) - Disaster losses in many low- and middle-income countries are likely to rise faster than economic growth unless governments change their economic policy to take account of increasing disaster risk, warns a new guide from climate experts.

Damage caused by disasters, such as floods and earthquakes, is outpacing wealth creation and efforts to protect people and assets in many places, according to the briefing from the UK-based Climate and Development Knowledge Network.

"Economic exposure to disasters is increasing faster than per capita gross domestic product (GDP), and the impacts of climate change on the severity and frequency of hazards will accentuate existing trends in disaster losses in the future," it says. 

"While support for effective disaster relief and recovery must remain, there should be a greater emphasis on proactive efforts to reduce risk, based on comprehensive risk assessments and the integration of risk-reduction measures into national economic and development planning," it adds.

The study notes that 2011 was the costliest year on record for disasters, with estimated global losses of $380 billion. The most expensive events included the Japan earthquake and tsunami, floods in Thailand which affected industrial areas, and extreme weather in the United States.

Average global economic disaster losses have risen by 200 percent over the last 25 years adjusted for inflation, the paper says.

This is due to rapid urbanisation, the movement of people and assets to coastal locations where disaster risk is often greater, and the degradation or loss of natural ecosystem buffers such as mangrove forests. A lack of appropriate legislation and land-use planning are making matters worse.

The trend is particularly strong in Latin America and South Asia, according to the guide. Risks have declined, however, in East Asia, the Pacific and many Western countries, thanks to progress on reducing vulnerability.

A few countries, like Mexico, have started to put aside money from their national budgets to cover the costs of disasters, the briefing notes. And some are investing in insurance to help pay for damage - the Caribbean Catastrophe Risk Insurance Facility, for example, was set up five years ago.

But the CDKN guide says financial measures alone are not enough.

"To reduce disaster losses, the balance of effort needs to shift towards reducing exposure through national and sector-based economic planning that takes detailed account of risk assessments," it advises.

A starting point should be a regularly updated national risk atlas, which shows where natural hazards are likely to occur, and who and what are most in harm's way. Laws and enforcement measures are also needed to make sure building codes are followed, and people do not build on dangerous flood plains and low-lying coasts, it adds.


Co-author Tom Mitchell, head of climate change, environment and forests at the London-based Overseas Development Institute, said companies must also take more steps to protect their assets.

"It is no longer acceptable to wait until something happens. A lot of work has been done on planning for disaster mitigation around the world, but rarely proactively by business," he said in a statement.

On Monday, the U.N.'s International Strategy for Disaster Reduction (UNISDR) said it will extend to 2015 a campaign to make cities more resilient to disasters. The initiative has attracted 1,020 cities around the world so far.

It will also provide city officials with new tools to assess their progress in tackling risk and climate change, including a handbook for local government leaders.

"Cities and towns are on the frontline when it comes to economic losses due to the rising frequency and intensity of floods and other disasters, which have accelerated since this campaign was launched two years ago," UNISDR head Margareta Wahlström told city leaders at a congress on resilient cities, adding that losses since then amount to $500 billion.

Jurgen Nimptsch, the mayor of Bonn, said the U.N. campaign is helping cities deepen their understanding of risks "accumulated from years of development without attention to proper land-use planning, uncontrolled population growth and other vulnerabilities".

"The key to a sustainable future lies in the hands of cities but only if they are risk-aware and ready to tackle their vulnerability," he said.


Our Standards: The Thomson Reuters Trust Principles.