Natural Disaster and Its Effect on Economy
Disasters in all forms, whether made-created or natural have an immediate direct reflection on the economies where they strike and in a chain-reaction on overall economies because of the complex demands that have to be addressed to bring relief and a sense of normalcy as best as possible.
However, in this topic the economical effects due to natural disaster are specifically being addressed and first we should look at some of the different types of natural disaster faced by humankind the world over. These include earthquakes, volcanic eruptions, flooding in all forms including typhoons and tornados; tsunamis, landslides; out-break of diseases and even lightening among other natural phenomena. Most of the times, these natural disasters strike without early warning causing devastation to people, their properties and livelihoods and the environment. As a consequence, economies are strained to provide relief and rehabilitation and other humanitarian aid to the affected people and for the repair of damaged infrastructures (http://daccessdds.un.org/doc/UNDOC/GEN/N06/365/43/PDF/N0636543.pdf?OpenElement)
One point of interest to be made is that in comparison with the past, the modern world has an increased population with a better organised living style, based on close and densely populated communes with larger houses, buildings, industrial complexes and overall structures. Therefore, more people are likely to be affected when natural disasters strike due to this important factor.
In recognition of the terrible devastation natural disasters can cause, all second Wednesdays in Octobers are now considered as International Days for Natural Disasters by the United Nations, to refocus the urgent need to prevent activities and reduce loss of life, damage to property, infrastructure and the environment. Plus, to focus on finding ways and means of managing social and economic without disruption when natural disasters strike. (http://daccessdds.un.org/doc/UNDOC/GEN/N06/365/43/PDF/N0636543.pdf?OpenElement)
Background to Natural Disaster and Its Effect on Economy
The regularity with which natural disasters strike is rising but with unpredictable intervals. The reasons for these disasters are also due to the consequences of development and industrialisation, deforestation and constant degradation of the ecological systems the world over. For examples, when the Caribbean was hit be tropical storms in 2004, due to deforestation there was nothing to stop the storm waters from wreaking devastating havoc in Haiti. Similarly, European countries such as Germany and France were adversely affected when their major rivers over-flooded because they had been straightened to ease the flow commercial traffic on them. While the element of human behaviour also plays a part towards the growing patterns of climate changes and global warming, the natural phenomena factors have also to be considered as the reasons for natural disasters. For instance, the so-called “Ring of Fire” collection of earthquake fault lines and volcanoes surrounds the entire Pacific Ocean. The countries of the Asia Pacific region therefore experience more natural disaster in comparison to countries in other parts of the world. Poverty in general, growing populations and continuous environmental damage is making humankind more vulnerable to such natural hazards and the economic factor comes into play when they destroy people’s homes and livelihoods. The severity of the disasters experienced by societies have compelled further studies and efforts to reduce loss of life, damage to property and disruption to social and economic environments by such likely disasters in the future. The building of disaster resilient communities, more aware about the importance of disaster reduction measures is being promoted as an integral part for maintaining risk-free sustainable lifestyles that could cope better with disaster eventualities. (http://www.who.int/bulletin/volumes/84/1/news10106/en/index.html)
Global warming and climate changes have become undeniable facts, which are causing increased and stronger numbers of hurricanes, typhoons and tornadoes, additionally the rising sea levels have become a source serious concern to the people living on coastlines in substandard housing. All these factors would raise the levels of crisis to new heights if disasters were to strike and essential infrastructures such as roadways and other transportation systems would be submerged and rendered useless for reaching high ground levels to safety.
The aftermath of most natural disaster is scenes of utter horror, pestilence and destruction and the immediate effects on the local economies of areas hit are catastrophic. Homes, belongings, businesses and jobs are lost with some never recoverable. Traditional patterns of conducting business are torn apart as the demand and supply balance structure gets unmanageable. Consumers spending power gets deflated yet basic necessities have to be procured as emergency requirements at whatever exorbitant costs charged due to their short supply. The reasons for local economies suffering so badly is because of the affected people going through the different stages of grief like; denial, anger, rationalisation, depression and eventual recovery.
“The Center for Health and Global Environment at the Harvard Medical School had published a report entitled, Climate change futures: health ecological and economic dimensions, published in November 2005 which assesses the risks generated by climate change. Amongst several scenarios one suggests that major disaster can involve blows to the world economy with sufficiently severity so as to cripple the resilience that enables affluent countries to respond to such catastrophes”.(http://www.who.int/bulletin/volumes/84/1/news10106/en/index.html)
Specific Effects on Economy in an “Indian Ocean Tsunami” Type Scenario
The overall geographical scale of the Indian Ocean tsunami was unprecedented with the levels of physical damage and loss of lives very significant. Its disastrous effects are complicated because of the widespread areas the tsunami waves hit. Factually, this disaster was a two pronged as initially a very severe earthquake struck and in reaction to that the tsunami wave gathered strength and wrecked havoc. (Hall and Corral, 2005)
Natural disasters on this scale at times have critical wide-ranging economical effects because they directly affect the macro-economics of the region where disasters strike. The impact with particularity in countries like Indonesia was on its productive sectors such as fishing and tourism. These sectors generate businesses and different types of jobs in cottage industries and production industries, and also contribute towards bringing in foreign exchange and tax revenues. During disasters besides the immediate damage to life and properties, jobs and businesses suffer or are lost and the economy comes to a standstill. In such situations the government has to divert funds from other sources to meet the crisis of providing humanitarian assistance and at the same time rebuilding the damaged infrastructure.
The secondary impacts on economies depend upon how resilient it is and fast the restructuring process is implemented. The effects can be severe on any economy when other sectors are dependent on the affected areas such as hotels, markets, tourism spots, food markets, handcraft industries etc. In such times of crisis, the governments have to ensure that they do not overspend and that they manage their finances properly so as to have control over the overall economy. In general when we analyze economies of different countries we find that the economies of well-developed countries are more resilient that those of less developed ones.
While the macro-economic can improve with rapidity after natural disasters, research studies indicate that usually there is not much decrease in national incomes or major drop in growth rates from the impacts of tropical storms, tsunamis or earthquakes etc. In fact at times disaster requires increased expenditures for rehabilitation and for the rebuilding of infrastructure and creative a positive effect.
However, communities which have been hit the hardest and where families have lost homes, businesses, and equipment and face debts and where the tourism industry has suffered are the long term serious effects of natural disasters, especially when family breadwinners are also lost in such tragedies.
If the economies are smaller and remotely located, the challenges are greater because it has to be ensured that chaotic situations do not arise and that the poor living on the margins of directly affected areas are helped to recover. It is only after they have fully recovered from their personal crisis that they can once again start being involved in a constructive way of living and contribute once again in rebuilding the economy.
Natural disaster need immediate new money for rehabilitation purposes in the form of aid, but research studies show that instead, money is switched over to meet the crisis from other usage areas. At such times, the new money should be additional money and not switched over from other sources from where they can not be spared. In this regard, even the EU Development Commission has emphasized for the need of a seamless link to long-term rehabilitation problems and the WHO has emphasized for aid for health and sanitation.
Natural disaster teach us the lessons for our futures the international community must collectively invest for the monitoring of natural hazards through advance warning systems and invest in the protection of lives and livelihoods of people who could be affected by disasters. It is indeed unfortunate that the most vulnerable to disasters are the poor. (http://www.who.int/bulletin/volumes/84/1/news10106/en/index.html)
Some statistics of the natural disaster which have stuck around the world in the last three decades are as follows:
The period between 1993 and 2005 was the deadliest by far as approximately 275,000 people were killed by natural disasters, with the probability of this figure being a grossly underestimated. In comparison to other natural or technological disasters combined together, floods affected approximately 140 million people per year on average across the globe. While weather related disaster rose from averages of 200 between 1993 and 1997 to averages of 331 between 1998 and 2002, with approximately 75% of the worlds population living in areas affected by droughts, floods, tropical storms or earthquakes between 1980 and 2000.More natural disaster were reported in 2002 than in any of the previous ten years but fortunately these disasters were not as deadly in comparison to the decades average of 62,000 deaths per year, as reported killed were 24,500 people. But the people affected were almost three times more in comparison to averages for the period between 1992 and 2000, which stood at approximately 608 million people in 2002. Only 6% of the 24,500 people killed in 2002 lived in well-developed countries, while the remaining 94 % killed were from the worlds’ poorest countries.
The year 2005 is likely to be considered as the year of natural disasters because earthquakes, typhoons, hurricanes, tsunamis and even locusts struck in this year. In October the Asian earthquake killed 73,000 people and injured another 70,000 people. (http://www.who.int/bulletin/volumes/84/1/news10106/en/index.html)
The beginning of 2005 also saw the aftermath of the 26th December of 2004 earthquake that triggered the most devastating tsunami that wrecked unimaginable destruction and deaths in Asia, with the tsunami waves reaching as far as the shores of east Africa where deaths and destruction were also reported from.
Notably, Hurricane Katrina also struck in 2005 and flooded the United States City of New Orleans causing unimaginable destruction. Unnoticed in this year of disasters, the Ilamatepec volcano erupted in El Salvador displacing thousands and after a few days Hurricane Stan struck and caused floods and mudslides killing 70 people. As if this was not enough, Niger faced famine after locusts destroyed crops in the same year.
Keeping in view the various ways the most vulnerable countries in particularity are affected by natural disaster, it is important to have closer coordination and co-operation among the regional organisations, governments and the United Nations to develop disaster management strategies. These include setting up of early warning systems, with contingency planning, which should be inclusive of people’s participation, all available government machinery, resources and expertise to cope with disasters.
Internationally, the major industrial countries should forcefully be obliged to stop further degradation of the echo systems as per the Kyoto Protocol and other similar conventions. As otherwise, the helpless silent majority of the world will have to keep pleading to save the earth from a gasping or drowning death. The Intergovernmental Panel on Climate Change should be strengthened to continue keep assessing the adverse effects of climate change on the socio-economic and natural disaster systems in the hope that these might some day make the major powers realise that they too would die when mother earth dies.
Through out the ages there have been disasters with which the world has had to cope, the bubonic plague in the 1300s wiped out more than 25 million people, which was 37% of Europe’s population at those times. In recent times, the flu pandemic killed between 20 million and 40 million people all over the world between 1918 and 1919.
Amongst the earliest recorded disaster is the eruption of Mount Vesuvius, which killed 10,000 people and buried the ancient Roman city of Pompeii in 79 AD. In present times, around 2 million people live within the proximity of Mount Vesuvius. This in some ways illustrates the magnitude of destruction and disaster if the same number of people had been living in and around Pompeii in 79 AD.
Notwithstanding the facts that populations had not blown out of proportions and there was no ecological damage being caused due to deforestation, industrialisation or any of human influenced degradation of the environment, some experts in our modern times argue that there is almost always a man-made element in natural disasters. These arguments carry a lot of weight but history tells us that nature has its own designs. Therefore, it can be argued that in most present day disasters there is a human element, but not necessarily in all natural disasters. The factors behind disasters are complex and intertwined and the best approach perhaps should be to reduce the risks as far as possible and reduce the factors behind these risks to save the earth.
On the other hand, natural disaster do not always create human tragedies, many earthquakes with higher magnitudes have struck in South America, yet the one that struck Pakistan and parts of India were much more devastating because of the population factor. Similarly many tsunamis have struck but they did not cause as much damage as the one in the last week of 2004. For the human and economic factors to suffer, it all comes down to how and where natural disaster strikes. (http://en.wikipedia.org/wiki/2005_Kashmir_earthquake)
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