Cost of Natural Disasters: Damage Statistics and Economic Effect

The Cost of Hurricanes, Floods, Tornadoes and Earthquakes

Financial guru Warren Buffett said that natural disasters, such as Hurricane Katrina and Japan's earthquake, have a greater economic impact than terrorism. These disasters, as well as tornadoes, floods, and tsunamis, cost the insurance industry billions. If large enough, they can slow economic growth for decades.  Global warming, according to a UN study, causes increased natural disasters. Perhaps the Sage of Omaha would agree that a war on global warming would be a better use of Federal funds than the War on Terror.

1
Japan's Earthquake and Tsunami - $235 Billion

Japanese Rescue Workers (Photo:Kiyoshi Ota/Getty Images)

Japan's economy was dealt a devastating blow by the 9-magnitude earthquake and tsunami that pummeled the country on March 11. An estimated 28,000 died, and 500,000 were displaced. It damaged the Fukushima nuclear power plant, which leaked radiation into the Pacific Ocean, raising levels to 4,000 times the legal limit. It could take months to stop the leak. Radiation has shown up in local milk and vegetables, and briefly appeared in Tokyo's drinking water. The World Bank estimated that Japan's disaster could cost $235 billion, and take five years to rebuild. More

2
Hurricane Katrina - $108 Billion

woman with dog after Hurricane Katrina
Lana Seymour and her dog Fifi peer out from their house to survey the damage in the French Quarter after Hurricane Katrina blew through the area early on August 29, 2005 in New Orleans, Louisiana. Photo by Chris Graythen/Getty Images

The National Hurricane Center estimated Hurricane Katrina's damage at $108 billion, with $80 billion in insured losses. Half of these losses were a result of flooding in New Orleans. University of North Texas Profession Bernard Weinstein put the total economic impact at $250 billion. More

3
Hurricane Sandy - $50 Billion

Superstorm Sandy destruction
Six weeks after Super Storm Sandy hit Union Beach, New Jersey, half of a house still stands in the waning light of a clear day with a hopeful holiday wreath hanging on the front door - December 19, 2012. Photo: Keith Getter/Getty Images

Hurricane Sandy was called a Frankenstorm by the National Weather Service. Why? It combined a 990-foot wide hurricane with a cold front and another storm, as well as high tides from a full moon. It damaged or destroyed more than 650,000 homes, 8 million customers lost power, and it cost $50 billion.  More

4
Hurricane Ike - $29.5 Billion

Hurricane Ike
An intersection of the Woodland Heights remains flooded from Hurricane Ike September 14, 2008 in Houston, Texas. Photo by Chris Graythen/Getty Images

Hurricane Ike was the third most destructive storm in U.S. history. It cost $29.5 billion. It damaged pipelines in the Gulf of Mexico and destroyed 10 Gulf offshore oil rigs. All 22 Texas land-based oil refineries were shut down. This part of Texas is home to a quarter of U.S. crude oil and refinery production. As a result, gas prices spiked to $5 a gallon, prompting the government to open the Strategic Petroleum Reserves. More

5
Hurricane Irene - $15.8 Billion

Hurricane Irene Damage
Billy Stinson (L) comforts his wife Sandra Stinson (C) and daughter Erin Stinson as they sit on the steps where their cottage once stood before it was destroyed by Hurricane Irene August 28, 2011 in Nags Head, North Carolina. Photo by Scott Olson/Getty Images

Hurricane Irene hit the Outer Banks of North Carolina on August 26, 2011. It was a Category 3 when it was out to sea, but was downgraded to a Category 2 by the time it made landfall. The last storm to hit North Carolina was Hurricane Floyd in 1999. It was a Category 2 storm and cost $7 billion.

Hurricanes lose power as they travel over land, so Irene became a Category 1 by the time it reached New York on August 27, and a tropical storm by the time it arrived in New England on Sunday. Irene was the first hurricane to hit the Boston area since 1991.

Hurricanes in the Mid-Atlantic states are rare, but often very destructive. That's because they travel over such a densely populated area. Irene killed at least 20 people and left 4.5 million people without power. Property damage was $15.8 billion. According to University of Maryland economist Peter Morici, total impact to the economy could be as much as $45 billion.

6
Haiti Earthquake - $8.5 Billion

haiti-girl.jpg
Rosena Favecal, earthquake survivor, at the Red Cross medical observation tent inside General Hospital on February 8, 2010 in Port-au-Prince, Haiti. Rosena Favecal, earthquake survivor, at the Red Cross medical observation tent inside General Hospital on February 8, 2010 in Port-au-Prince, Haiti. (Photo by Kim Badawi/Getty Images)

Between 200,000-250,000 people were killed by the 7.3 magnitude earthquake that ravaged Haiti in January 2010. That was 2 percent of the total Haitian population of 10 million. The Inter-American Development Bank estimated that it cost $8.5 billion in damage to Haiti's economy. The earthquake caused the country's GDP to contract 5.1 percent that year. More

7
Tornado Outbreak - $5 Billion

tornado
Rare double tornado touches ground. Photo: Rui Almeida Fotografia/Getty Images

The largest tornado outbreak in U.S. history occurred April 25-27, 2011. In that week, 305 twisters damaged the Southeast, breaking the 1974 record of 267 tornadoes. The outbreak caused $5 billion in damage.  One single tornado in 1999 cost $1 billion alone. Although experts disagree, there is reason to believe these expensive outbreaks will get worse. More

8
Iceland Volcano - $5 Billion

Iceland's volcano. (Photo: AFP)

Volcanic clouds and ash from the May 21, 2011, eruption in Iceland threatened air traffic in Scotland, Ireland, France and other hubs in the northern European Union. Even though the Grimsvotn volcanic eruption was bigger than the previous year's, it wasn't as destructive economically. That's because the ash wasn't as dense, and dispersed more easily.

Iceland's 2010 Eyjafjallajökull volcano eruption closed European airports for six days, costing airlines $200 million a day. They were not insured for this type of loss.

Iceland's volcanic eruptions threatens the travel industry. It contributes $1 trillion to the European economy annually. The 2010 eruption cost the travel industry $5 billion to $10 billion a week. When air traffic in Europe slows, it threatens more than just passengers. Up to 40 percent of the world's goods by value moves by air. Drug companies, time-sensitive high-tech imports, and premium products such as fine Scotch whiskeys all sit on the tarmacs when airports are closed.

9
Mississippi River Floods - $2 Billion

flooded car

The 2011 Mississippi River flood was a 500-year event. Total economic damage could reach several billion. Why? The Mississippi River runs past farmlands and cities in six states. The flood's greatest damage could come when it empties in New Orleans, still recovering from Hurricane Katrina. More

10
The Dust Bowl Drought - $1 Billion

Dust Bowl
A dust storm rolls into Elkhart, Kansas, on May 21, 1937. Photo by Library Of Congress/Getty Images

The Dust Bowl was an area in the Midwest demolished by a 1930s drought. It was the worst drought in North America in 300 years. 

Weather patterns over the Atlantic and Pacific Oceans had shifted. The Pacific grew cooler and the Atlantic became warmer. That weakened and changed the direction of the jet stream. When the jet stream moved south, rain from the Gulf of Mexico never reached the Great Plains.

The resultant drought killed crops that normally kept the soil in place. Winds blew raised enormous clouds of dust. It deposited mounds of dirt on everything, even covering houses. The dust destroyed a large part of U.S. agricultural production. That worsened the Great Depression More

11
Does Global Warming Increase Natural Disasters?

Polar bear
United States, Alaska, Arctic National Wildlife Refuge, Kaktovik, polar bear (Ursus maritimus). Photo: CORDIER Sylvain / hemis.fr/Getty Images

Between 1956-2005, the Earth's average temperature rose .13°C each decade. This might not seem like much, but that's double the rate for the 100 years between 1906 to 2005. Antartic glaciers are losing mass at an "unusually rapid" rate. Satellite pictures taken between 1992 and 1996 showed that the Pine Island Glacier was losing mass at a rate 42 times faster than the average over the preceding 5,000 years. Higher temperatures are causing loss of timber (thanks to the bark beetle), and more chaotic weather patterns. The result? More frequent and severe natural disasters. More