Major natural disasters can have severe negative economic impacts both in the short and long-term through damage to assets, declines in production and GDP, unemployment, and increasing costs for businesses and governments. However, the full economic costs of disasters are often underreported globally. While direct costs include property damage and losses, indirect costs include reduced investment, productivity, and tax revenue. In the long-run, disasters can undermine development progress by diverting resources from planned investments and reducing growth. Strengthening disaster risk management is important for protecting development gains.

1. Impact of Natural Disasters
Globally

2. Course outline
• Impact of Natural Calamites on economics and
development

3. Natural Disaster
• From economic perspective natural disaster as
an natural event that causes or perturbation to
the functioning of the economic system, with a
significant negative impact on assets,
employment or consumption.
• Cost of disaster: complex to define, country
wise analysis different, all its impacts
(damages and losses), highly problematic

4. Natural Disasters
• Market looses: goods and services that are
market priced. E.g. physical destruction of
building, goods
• Non-market looses: price can not be easily
determined. E.g. loss of human life, natural
ecosystem

5. Economics
• Economics is a social science concerned with the production,
distribution, and consumption of goods and services
• Microeconomics looks at the behavior of individuals and
firms.
• Macroeconomics looks at regional, national, or global
aggregates.
• Macroeconomics studies the overall economy. This can
include a distinct geographical region, a country, a continent or
even the whole world.

6. Economics Indicators
• Gross Domestic Product (GDP)
 monetary value of all the finished goods and services produced
within a country's borders in a specific time period.
 GDP includes all private and public consumption, government
outlays, investments, additions to private inventories, paid-in
construction costs and the foreign balance of
trade (exports are added, imports are subtracted).
 It includes expenditures, production, or incomes.

8. • Gross national product (GNP)
 is an estimate of total value of all the final products
and services turned out in a given period by the means
of production owned by a country's residents.
 GNP is commonly calculated by taking the sum of
personal consumption expenditures, private domestic
investment, government expenditure, net exports and
any income earned by residents from overseas
investments, minus income earned within the domestic
economy by foreign residents.
 Value of all good and services produced Plus imported
goods minus exported.

10. Top 10 countries based on absolute losses

16. Under-reporting by Africa, where economic cost calculations are
available for 14% of all disasters.
Europe, Asia and the Americas reported losses for less than half of
all of their climate-related disasters.
Even in Oceania, which records losses for 51% of climate-related
events, the cost of nearly half of all storms, droughts, floods etc.
remains unknown
With the adoption of the Sendai Framework, UNISDR is actively
supporting 100 countries, including 30 in Africa, in the
development and maintenance of national disaster loss databases

21. • Major natural disasters do have
Severe negative short-run economic impacts.
longer-term consequences for economic
growth, development and poverty reduction.
Negative impacts are not inevitable.
Vulnerability is shifting quickly: in countries
experiencing economic transformation - rapid
growth, urbanization and related technical and
social changes.

22. • The direct economic costs of disasters have
been systematically under-reported worldwide
for decades, both in wealthier countries and,
most especially, in poorer ones.
• Throughout the period 1998-2017, economic
losses data only exist for 37% of disasters; the
direct cost of the majority of disasters (63%) is
unknown or not well documented

23. Economic Impact
Direct Impact
• Damage to tangible assets:
buildings, equipment
• Human Capital
• Stocks
• Production capacity: short
run: increase cost
• Bankruptcy and close down

24. Impact of social and economic
development
• Employment, housing,
factors of production and
income
• Reallocation of expenditure
that occurs following
disaster
• Depriving of resources

25. Economic Impact
Indirect Impact
• Loss of investment
• Loss of earnings and
unemployment
• Increase expenses
• Loss of productivity due to
illness, injuries
• Increase in operational cost
• Cost of alternative provision
good and services
Secondary Impact/Long term
• Gross Domestic Production
growth: decrease
• State of public finance:
decline in tax
• Increases of prices and
inflation
• Balance of payments-deficit

26. Economic Impact
Long term Impact
• Disruption of infrastructure
and market
• Government driven
resources away from
planned investment to fund
relief and rehabilitation that
disrupt long term investment
plan
• Economic instability due to
deterring potential
investeros
Long term Impact
• Future debit: public
reconstruction efforts
funded through domestic or
external borrowing
• Public revenue affected: due
to low economic activity
• Additional burden to
government and extra
budgetary pressure

27. Disaster a Development Issue
• Potential declines in revenue
• Act as a disincentive to new
investors
• Reduce government’s ability
to invest in developmental
projects
• Serious threats to long term
development due to
reallocation of expenditure
following disaster
• Undermines budgetary
planning
• Undermines investment
confidence
• Interrupts ongoing projects
• Reduce abilities of
communities and
governments to pursue long
term development goals

36. References
• https://www.odi.org/sites/odi.org.uk/files/odi-
assets/publications-opinion-files/6149.pdf
• https://ourworldindata.org/grapher/economic-losses-from-
disasters-share-gdp?time=1990..2017
• Charlotte Benson and Edward Clay, 2003. Economic and
Financial Impacts of Natural Disasters: an Assessment of Their
Effects and Options for Mitigation: Synthesis Report
• UNISDR, economic looses, Poverty and Disaster 1998-2017
• National Strategy For Disaster Risk Management, 2017, draft