The Impact of Natural Disasters Relates to Economic Vulnerability

The Economics of Natural Disasters

by Elaine Schwartz    •    Oct 31, 2012    •    1702 Views

With Hurricane Sandy having just blown through my NJ neighborhood, our streets are covered with wires, leaves, branches and several huge trees. During the storm, Consolidated Edison darkened large swaths of NYC and the New York Stock Exchange suspended trading for 2 days. With schools, offices, bridges, tunnels and malls closed, I’ve been reading about the economics of natural disasters.


After its 2010 earthquake, Haiti suffered more than 200,000 fatalities and economic devastation. Chile was hit by a more intense earthquake in a densely populated area but had many fewer deaths and much less of a GDP impact. Had the quake struck a deserted island, it would have been a non-event.

The difference from Haiti to Chile to that uninhabited island was vulnerability–a vulnerability that related directly to each country’s economy. Nobel laureate Amartya Sen expressed that economic vulnerability to natural disasters when he said,”Starvation is the characteristic of some people not having enough food to eat. It is not the characteristic of there being not enough food to eat.” (from Sen, 1981, in his economic history of famines)

The Inter-American Development Bank (IDB) 2010 paper that quoted Dr. Sen and started me thinking about disaster economics and vulnerability presented conclusions from other disaster studies that I wanted to share with you:

  • More unequal societies tend to have less allocated to disaster prevention.
  • In nations with stronger property rights, the impact of natural disasters tends to be weaker.
  • In India, more newspaper distribution meant less natural disaster impact. (Perhaps because the media exert political pressure.)
  • US politicians benefit more from disaster aid than prevention.
  • Autocratic regimes tend to have deadlier famines than democracies.


Where does this leave us? The economics of natural disasters are about more than prevention and response.

And finally…Thinking about a natural disaster, economics and vulnerability, I recommend seeing “Beasts of the Southern Wild.”

Sources and Resources: My facts and the graph below are primarily from an IDB Working Paper-124, “The Economics of Natural Disasters,” and a Nature article from 1/10/12.

From:  Inter-American Development Bank, WP-124

The Disproportionate Impact of Natural Disasters on Asian/Pacific Nations

Leave a Reply

Your email address will not be published. Required fields are marked *

« »