Estimation of disasters' economic impact in 1990-2007
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Material Information

Title:
Estimation of disasters' economic impact in 1990-2007 global perspectives
Creator:
Sahin, Sebnem
Place of Publication:
Washington, DC
Publisher:
World Bank
Publication Date:
Copyright Date:
2011
Language:
English

Subjects

Subjects / Keywords:
Natural disasters -- Economic impact
Genre:
non-fiction ( marcgt )

Notes

Summary:
According to the UNISDR, the frequency of disasters is increasing globally, with an average of 78 disasters per year in the 1970s rising precipitously to 351 in the 2000s. More than 60% of the total damages caused by these disasters occurred in high-income countries, but damages were a greater proportion of the GDP of less developed countries. The aim of this document is to estimate the global and regional economic impacts of the major disasters that occurred from 1990 to 2007 using a worldwide analytical framework. Using the Computable General Equilibrium (CGE) model, the author selects 171 major disasters based on the size of economic damages caused using data from the EM-DAT and NatCat databases. The losses and total impact of these disasters are estimated for concurrent events in consecutive years. The author defines damages as the destruction of physical and human capital; losses as business interruptions in terms of production and/or consumption; and higher-order effects as the systemic impact of disasters due to inter-industry dynamics. The CGE model provides a comprehensive analysis of a disaster’s impact by specifying its affects on flows and stocks, while including macro-economic variables in the base year and post-disaster periods that allow for comparative analysis. In the current paper, disasters are simulated through shocks implemented on the initial economic equilibrium in the benchmark year. The study finds that the economic losses produced by the Global CGE model exceed the total of individual country loss statistics for each simulation year, which means that the economic losses caused by natural disasters are not limited to the region where the disaster occurred. Through trade linkages, impacts on prices and wages, disasters cause new global economic realities in the short to medium term that may not be accounted for in traditional considerations of disasters’ economic impacts that focus solely on particular country or regional losses. A new global economic equilibrium is determined by the disaster’s effect on terms of trade, on sectoral competitiveness, the particular country’s importance in the world economy, and the type of goods in which it has a comparative advantage. When imports from the disaster-affected country can be adequately replaced by other producers at a similar price and quality, the global effects of disaster are generally minimal. When disasters occur in net exporter countries of intermediate goods, the impact on the global economy is much more dramatic than the cases when they occur in net importers of intermediate goods. ( English,English,English )
Subject:
Disasters and Economics
Scope and Content:
1. Introduction p. 2; 2. Major natural disasters in the world p. 2; 3. Framework and terminology p. 3; 4. The CGTE method p. 5; 5. Synthesis of the preliminaty results p. 11; 6. References p. 12; Appendices: Appendix 1. List of simulated disaster events; Appendix 2. GTAP sectors/ commodities; Figures: Figure 1. Number of disasters registered in EMDAT; Figure 2. Disaster impact and economic losses p. 8; Figure 3. Balance of trade - Rest of the world (no disaster) p. 9; Figure 4. Disaster affected countries' demand for imports p. 10; Tables: Table 1. Most damaging disaster events between 1990 and 2007 p. 3; Table 2. ECLAC terminology p. 4; Table 3. Disaster impact (% world GDP, 2007) p. 7
Citation/Reference:
Sahin, S. (2011). Estimation of disasters’ economic impact in 1990-2007: global perspectives. The World Bank.
General Note:
Draft version
General Note:
"February 13th, 2011"

Record Information

Source Institution:
Florida International University
Rights Management:
The World Bank: The World Bank authorizes the use of this material subject to the terms and conditions on its website, http://www.worldbank.org/terms
Resource Identifier:
FI13010973

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Aggregations:
Disaster Risk Reduction