Natural Disasters Cost Global Economy $2.5 Trillion Since 2000: UN

Global natural disasters have caused nearly $2.5 trillion in economic losses since the turn of the century, said a United Nations report on Wednesday, warning that the cost to the global economy will only continue to escalate unless businesses incorporated disaster risk management into their investment strategies.

Global natural disasters have caused nearly $2.5 trillion in economic losses since the turn of the century, said a United Nations report on Wednesday, warning that the cost to the global economy will only continue to escalate unless businesses incorporated disaster risk management into their investment strategies.

The 2013 Global Assessment Report (GAR), prepared by the UN Office for Disaster Risk Reduction (UNISDR), found that the most countries had underreported the damage from natural disasters over the last two decades and the actual losses may be far higher than previously estimated.

[quote]”If you add in all the nationally-reported disasters, which don’t get into the international media and the international databases, our impression is that losses are about 50 percent higher than is currently being reported, and losses are going up rapidly,” said Andrew Maskrey, author of the GAR.[/quote]

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Speaking at the launch of the GAR, UN Secretary-General Ban Ki-moon added that the report clearly demonstrated how “economic losses from disasters are out of control”, urging the private sector to collaborate with governments in order to reduce the risks.

“Disaster risk is increasing with every passing day,” said Ban, according to the press release. “Poverty, rapid urbanization, climate change – these and other factors are leaving people and communities ever more exposed.”

“Governments bear the primary responsibility for disaster risk reduction… But the level of risk is also related to the where and how of investment by the private sector, which is responsible for 70 to 85 per cent of worldwide investment in new buildings, industry and critical infrastructure,” he noted.

[quote]“For too long, markets have placed greater value on short-term returns than on sustainability and resilience… Business can no longer afford a ‘blind spot’ to disaster risk, which is largely ignored in economic forecasts and growth projections,” he said.[/quote]

The report highlighted recent major disasters such as Hurricane Sandy in 2012, the 2011 floods in Thailand and the 2011 Japanese earthquake and tsunami as examples of the growing impact of disasters on the private sector.

Toyota for instance lost $1.2 billion in product revenue from the Japanese quake, while surveys of 1,300 small and medium-sized businesses in the Americas found that three-quarters had suffered business disruptions related to damaged or destroyed power, telecommunications and water utilities.

On the other hand, Orion New Zealand Limited, one of the largest electricity distribution companies in the country, managed to save $65 million after investing $6 million in seismic protection before the 2010 and 2011 earthquakes, the report said. In addition, preventive investments by fishermen in Mexico saved each individual entrepreneur $35,000 during Hurricane Wilma in 2005, the GAR noted.

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[quote]”The beginnings of changing attitudes in the private sector now need to transform into a more systematic approach to disaster risk management in partnership with the public sector to make the world a safer place,” said UNISDR Chief, Margareta Wahlström. “This will be a major focus of next week’s Global Platform on Disaster Risk Reduction in Geneva,” she added.[/quote]