Increasing Number of Natural Disasters Are Causing Significant Hike in Repair Expenses
By David E. Hubler
Contributor, EDM Digest
As difficult as it is to predict the path of hurricanes, it’s equally difficult to put a precise cost on the damage they do.
We do know, however, that natural disasters such as hurricanes are on the rise and so are the monetary costs of the damage they cause. That’s the conclusion of “Facts & Figures on Natural Disasters,” a research study compiled by the World Bank’s Independent Evaluation Group.
The IEG study’s findings include:
- There were fewer than 100 natural disasters in 1975, compared to more than 400 in 2005.
- Approximately 2.6 billion people were affected by natural disasters during the past 10 years, compared to 1.6 billion the previous decade.
- Repair costs are now 15 times higher than they were in the 1950s.
Hurricane Katrina is a recent example of the accelerating costs of natural disasters. CNN Money reported that “the estimated costs for Hurricane Katrina ranged between $108 and $250 billion; other estimates put the combined cost of the 2005 hurricane season, which included Katrina, Rita, and Wilma, at nearly $200 billion in 2017 dollars.”
Initial Assessments of Hurricane Harvey’s Destruction Ranged between $100 and $190 Billion
The Guardian’s Zoe Wood reported last month that “The insurance industry is still assessing the cost of Hurricane Harvey, which caused severe flooding in parts of Texas” in August. She said initial estimates suggest the final bill could be as much as $100 billion. The National Oceanographic and Atmospheric Administration estimates Harvey’s cost at $190 billion, “the costliest weather disaster in U.S. history so far.”
Even before Hurricane Irma struck southern Florida in September, historical models “suggest that Irma's price tag could reach $125 billion should a Category 4 Hurricane strike Miami directly,” according to CNBC. It’s too early to put a price tag on the devastation Hurricane Maria caused in Puerto Rico.
Even without Maria, Harvey and Irma are estimated to cost more than the three 2005 hurricanes combined.
World Bank Loans for Indian Earthquake Aid Nearly Doubled in Less than 10 Years
Natural disasters are not limited to the United States, however. Nor are hurricanes the only source of massive outlays for reconstruction.
According to the IEG study, the World Bank in 1994 loaned India $261 million for the Maharashtra Emergency Earthquake Rehabilitation project. For the Gujarat Emergency Earthquake Rehabilitation Project in 2002, the World Bank loaned India $443 million.
The two projects were different and required funds for individual needs. Nevertheless, the World Bank loans nearly doubled in less than 10 years.
The percentage of the World Bank’s Natural Disaster Lending Portfolio rose from six percent between 1984 and 1988 to 14 percent between 1999 and 2003. During the past 20 years, the Bank’s Disaster Lending Portfolio has committed $42.5 billion to 528 disaster projects.
More than 80 percent of that money has gone for floods, earthquakes and fires.