Natural Disasters Economic Impact

The economic impact of natural disasters can be witnessed on a global scale. These disasters often set in motion a variety of chain reactions, negatively impacting and in some cases decimating sectors of the global economy. "In 2014, 72 percent of global losses classified as "disasters" were caused by extreme weather events: hailstorms in Europe, drought and severe winter weather in the U.S., hurricane damage in Mexico to typhoon damage in the Philippines, and disastrous flooding in the U.K., India, Pakistan, and Afghanistan." 

These are some of the most infamous natural disasters with respect to their economic repercussions:

1.       In March 2011, the Tohoku earthquake and tsunami struck the Fukushima Daiichi Nuclear Power Plant in northeast Japan. The aftermath was one of the worst nuclear disasters since Chernobyl in 1986, as the combination of earthquake and tsunami inflicted an estimated 221.6 billion dollars in economic loss (of which only 40 billion was insured). This event has been recognized as the most expensive natural disaster in history to this day.

2.       In January 1995, southern Japan was devastated by the Great Hanshin earthquake. More commonly known as Kobe, this earthquake measured at a 6.8 magnitude on the Richter scale. The economic cost for clearing and repairing dismantled areas was roughly 160.8 billion dollars, approximately 2.5% of Japan’s GDP at the time. The Kobe earthquake left more than 300,000 people homeless, and millions lost electricity and running water. It was the worst earthquake to hit Japan since Tokyo-Yokohama earthquake in 1923, where the death role was in excess of 140,000.

3.       Hurricane Sandy caused extensive economic loss in the United States in 2012. This destructive natural disaster forcefully hit the east coast of the U.S., causing a gargantuan economic disruption in both New York and New Jersey. Although Hurricane Sandy's economic impact was deemed only "short term", two prominent industries were decimated: Travel and Tourism, and Construction. In total, approximately 73.2 billion dollars were spent repairing the destruction of Hurricane Sandy along the east coast of the United States.