Natural Disasters' Economic Impact
Natural Disasters Are a Bigger Threat Than Terrorism
Natural disasters are damaging events that include extreme weather such as blizzards, droughts, floods, heat waves, hurricanes, lightning strikes, tornadoes, and tsunamis. They also include non-weather events such as earthquakes, mudslides, volcanoes, and wildfires. In the short term, they cost homeowners and insurance companies billions. They raise food and gas prices.
2018 was the fourth-costliest year for natural disasters in history, according to MunichRe. They cost $160 billion, of which only half was insured. The worst damage came from U.S. Hurricanes Michael and Florence and Asian Typhoons Jebi, Signal 10 Mangkhut, and Trami. They cost $57 billion, of which $29 billion was insured. California wildfires cost $24 billion with insured losses of $18 billion. There were 29 events that cost at least $1 billion each. In May 2019, Congress passed a $19.1 billion disaster aid package.
The 2017 natural disaster season was worse. They cost the U.S. economy a record $307 billion. There were 16 events that cost more than $1 billion each.Both years were above the inflation-adjusted overall loss average of $140 billion and $41 billion in insured losses.
In the long term, the largest disasters slow regional economic growth for decades. Bridges, roads, and utilities are destroyed. Homeowners who aren't covered by insurance go bankrupt. Many can't rebuild and must move elsewhere.
The U.S. president can declare a state of emergency for communities overwhelmed by a natural disaster. That action releases a wide range of federal aid to individuals, nonprofit organizations, and public agencies. Each type of disaster triggers different kinds of federal assistance.
Global warming increases natural disasters. The United Nations Refugee Agency found that the number of natural disasters has doubled in the last 20 years. The impact on productivity can last decades after an event. One reason is that between 30% and 60% of disaster survivors experience post-traumatic stress disorder.
Here are the 20 most destructive natural disasters.
Japan's Earthquake and Tsunami - $360 Billion
Japan's economy was dealt a devastating blow by the 9-magnitude earthquake and tsunami that pummeled the country on March 11, 2011. An estimated 28,000 died and 500,000 were displaced. It cost $360 billion.
It damaged the Fukushima nuclear power plant. It leaked radiation into the Pacific Ocean, raising levels to 4,000 times the legal limit. Radiation showed up in local milk and vegetables, and briefly appeared in Tokyo's drinking water.
Hurricane Katrina - $160 Billion to $250 Billion
The National Hurricane Center estimated Hurricane Katrina's damage at $125 billion, with $80 billion in insured losses. That's $160 billion when adjusted for inflation.
Half of these losses were a result of flooding in New Orleans. University of North Texas Professor Bernard Weinstein estimated the total economic impact at $250 billion.
Hurricane Maria - $90 Billion
Hurricane Irma - $50 Billion
Hurricane Irma was the most powerful Atlantic hurricane in recorded history. It was a Category 5 storm when it made landfall on Barbuda on September 6, 2017. Its winds were 185 miles per hour for 37 hours. That's longer than any storm ever recorded. It hit southern Florida on September 10, inflicting $50 billion in damage. If it had hit Miami instead, the damage would have totaled $300 billion
Hurricane Sandy - $65 Billion
Most of the damage was because of 12 1/2 foot storm surges. It damaged or destroyed more than 650,000 homes and eight million customers lost power. It closed the New York Stock Exchange for the first time in 27 years. The storm killed 159 people.
Hurricane Ike - $30 Billion
Hurricane Ike cost $30 billion or $34.8 billion in 2018 dollars. It damaged pipelines in the Gulf of Mexico and destroyed 10 offshore oil rigs. All 22 Texas land-based oil refineries were shut down. It contributes 24% of U.S. crude oil production. Gas prices spiked to $5 a gallon, prompting the government to open the Strategic Petroleum Reserves.
Hurricanes Andrew Through Allison
Hurricane Andrew was a Category 5 storm that hit Florida in 1992. It destroyed $26.5 billion in property or $47.8 billion in 2018 dollars. Its record 16.9-foot storm tide flooded Biscayne Bay.
Hurricane Ivan hit Alabama and Florida in 2004. This Category 3 storm caused $20.5 billion in damage.
Hurricane Wilma was a Category 3 storm that did $24.3 billion in damage in today's dollars. It pummeled Florida in 2005 with winds as high as 120 miles per hour.
Hurricane Rita hit Louisiana and Texas in 2005. The Category 3 storm damaged $18.5 billion in property.
Hurricane Charley was a Category 4 storm when it hit Florida in 2004. It damaged $16 billion in property.
Hurricane Irene was a Category 2 storm when it hit North Carolina on August 26, 2011. Irene killed at least 20 people and left 4.5 million people without power. Property damage was $13.8 billion. University of Maryland economist Peter Morici estimated total economic impact at $45 billion.
Hurricane Matthew left $10 billion in damage when it hit in 2016. It was a Category 1 storm that hit the southeastern United States.
Hurricane Frances was a Category 2 storm that left $9.8 billion in damage. It hit Florida in 2004.
Haiti Earthquake - $8.5 Billion
Between 200,000 and 250,000 people were killed by the 7.3 magnitude earthquake that ravaged Haiti in January 2010. That was 2% 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 made the country's gross domestic product shrink 5.1%.
Tornado Outbreak - $5 Billion
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.
Researchers at National Aeronautics Space Administration found that global warming is creating more tornado activity. It increases the number of strong updrafts that incubate tornadoes. Most researchers agree that once temperatures exceed the Paris Climate Agreement's goal of 2 degrees Celsius, tornadoes will definitely worsen.
Iceland Volcano - $5 Billion
Iceland's volcanic eruptions threaten the travel industry. It contributes $1 trillion to the European Union economy annually. When air traffic in Europe slows, it threatens more than just passengers. Up to 40% 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.
Iceland's Grimsvotn volcanic eruption threatened air traffic in Scotland, Ireland, and France. The 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. It cost the travel industry up to $10 billion a week.
U.S. Wildfires - $2.5 Billion
In 2018, more than 58,083,000 wildfires burned 8.8 million acres. The Camp Fire in Northern California wiped out the town of Paradise. It killed 85 people, making it the deadliest in California history. Another 11 people are reported missing. The fire is also the most destructive. It burned 153,336 acres and destroyed 18,733 buildings. It was the costliest natural disaster in the world causing $16.5 billion in damage. The U.S. Forest Service spent a record $3.1 billion fighting the 2018 fires.
Mississippi River Flood - $2 Billion
The 2011 Mississippi River flood was the worst in history. The Army Corps of Engineers estimated it would cost $2 billion to repair the damage.
Between 1980 and 2013, U.S. floods created more than $260 billion in damages. They are responsible for 90% of all U.S. natural disasters declared by the president. There are 2,500 chemical sites located in America's flood zones. Of those, 1,400 are in areas at high risk. These don't even count the Superfund sites.
The Dust Bowl - $1 Billion
The Dust Bowl was the worst drought in North America in 1,000 years. It devastated the Midwest in the 1930s, worsening the Great Depression. Unsustainable farming practices worsened the drought’s effect.
The drought killed the crops that kept the soil in place. Winds raised clouds of dust that deposited mounds of dirt on everything. It covered houses, killed livestock, and caused pneumonia in children. At its worst, the storm blew dust to Washington, D.C.
The 1918 influenza pandemic killed 50 million people worldwide in a year. One out of five or 500 million people got sick. In the United States, one out of four got sick. Of those, 675,000 died, or 0.9% of the population. It hit young men the worst, causing the loss of breadwinners. Scientists had not yet discovered viruses, so there was no prevention or treatment.
In some cities, like Philadelphia, bodies lay along the streets and in morgues for days. In cities like Little Rock, commerce declined 40% to 70%. Mines and factories closed due to a shortage of able workers.
Only the Black Death killed more people. Over 10 years, 60 million people died from Bubonic Plague. The death of one third of the population changed the European economy from one based on feudalism to monarchies.
The influenza spread was caused by World War I’s massive troop movements and close living quarters. The H1N1 virus continued to circulate as a seasonal virus worldwide for the next 38 years.
According to the World Bank, a recurrence today would cost $800 billion and kill many more people. One reason is that a greater percentage of people live in urban areas, facilitating the flu’s spread. Such a pandemic could kill 1.9 million Americans, according to the U.S. Department of Health and Human Services.
How Global Warming Increases Natural Disasters
Global warming is increasing the frequency and severity of natural disasters. Between 1956-2005, the Earth's average temperature rose 0.13 degrees Celsius each decade. This might not seem like much, but that's double the rate for the 100 years between 1906 and 2005.
Antarctic 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 drought, wildfires, and deforestation. The result? More frequent and severe natural disasters.