Warren Buffett said that natural disasters have a greater economic impact than terrorism. They include hurricanes, earthquakes, tornadoes, floods, droughts and tsunamis and can cost the insurance industry billions, slow economic growth for decades, and can raise food and gas prices. According to the U.S. Department of Commerce “Natural disasters do more than wipe out homes; they can wipe out businesses and decimate local economies.”
Asia is the most disaster-prone region in the world and this region has borne the brunt of the physical and economic damages of natural disasters. Japan's 2011 earthquake/tsunami caused a 4% loss to its annual gross domestic product (GDP).
The region occupies 30% of the world's land mass, but 40% of the world's disasters occurred in the region in the past decade, resulting in a disproportionate 80% of the world's disaster deaths. More than 2,200 natural disasters struck Asia in the past 20 years, claiming close to one million lives, with the following six mega-disasters accounting for three-quarters of fatalities.
In China, 2.7% of annual GDP is lost to disasters, while poorer countries, particularly small islands, can see a 10-15% decline in GDP from a single disaster. The share of the global economy at direct risk from floods has doubled since 1990, and Asia is home to 75% of the world's at-risk population for floods.
Economic impact is defined and measured in terms of percent reduction in real GDP, yearly costs in billions, reduction in tourist industries, insurance industry in billions, costs for repair and recovery in billions, production loss, and other economic indicators. Flow analysis models can be utilized by emergency management and policy makers to grasp the size and extent of disaster effects within a short period of time. Our data sources include the Association of Southeast Asian Nations (ASEAN), United Nations Statistics Division, Asian Development Bank, UN Economic & Social Commission for Asia & the Pacific, International Monetary Fund, and the World Bank.
Reliable results of the economic impact of natural disasters will help policy makers develop and improve strategies to prepare for economic impacts of natural disasters in Asia and before, during, and after they occur.