Natural disasters in Latin America and the Caribbean cause nearly US$7 billion in material losses a year, with an average 4.5 million people suffering the consequences, according to the study “Economic impact of disasters: Evidence based on ECLAC assessments in Latin America and the Caribbean”, carried out by the Commission’s Disaster Assessment Unit.

The analysis of damages and losses as result of earthquakes, hurricanes, rains, flooding, droughts and eruptions allows for an assessment of the impact of these disasters on economic growth, living conditions and the environment. In a globalized world, the effect of these natural phenomena is further complicated by sanitary disasters such as the AH1N1 pandemic. Upon request of the Mexican government, ECLAC also assessed the economic consequences of the pandemic in that country.

“Thanks to the quantification we carry out and the greater awareness of government authorities that there is an economic impact that should be considered, countries in the region have improved their capabilities to address the menace of extreme natural disasters of all kinds,” said Ricardo Zapata, regional advisor to the unit.

The analysis of the impact of natural disasters on agriculture, industry, social sectors, housing, highways, telecommunications and environmental patrimony is based on a methodology that examines the gap between what existed prior to the disaster and what was destroyed.

“It is possible that due to a natural disaster, part of the population may lose income and fall below the poverty line,” stated Zapata.

For ECLAC, these disasters should not only be considered events that demand swift humanitarian assistance, but also factors that negatively affect a country’s potential development and sustainability, because they use up resources that could be allocated to closing the development gap that existed before the disaster.

The expert explained that the amount of resources a country needs to rebuild what a natural disaster destroyed is estimated using a methodology of socio-economic assessment of the impact of natural phenomena which ECLAC has been applying for the past 35 years.

“In addition to the costs of reconstruction or reparation, there is a loss in economic flows: production, employment, income,” said Zapata.

Measuring the environmental consequences is also vital for small countries with vulnerable economies that are highly dependent on their natural resources or nature-related activities such as tourism.

These assessments have also enabled a quantification of climate change-related impacts. “This allows for dimensioning the costs of adaptation that countries must cover to address the potential effects of this phenomenon,” stated Zapata.

With data on the economic costs of natural disasters, countries can consider taking measures of financial protection or risk reduction, designing planning instruments or funds for special compensation or post-disaster aid, he explains.

For ECLAC, risk management and adaptation to increasing risks should be part of a country’s development strategy. “A comprehensive, equal and participative development plan should be sustainable not only in the sense of protecting natural patrimony, but also avoiding losses frequently caused by disasters and that have been increasing over the past few decades,” said Zapata.