How Disasters in Asia Affect the Economy

Typhoon Ketsana (Ondoy) dropped 455mm of rain in Metro Manila in a span of 24 hours on 26 September 2009. A month’s worth of rainfall in a single day washed away homes and flooded large areas, killing hundreds and stranding thousands in the city and nearby provinces. Photo: ADB
Typhoon Ketsana (Ondoy) dropped 455mm of rain in Metro Manila in a span of 24 hours on 26 September 2009. A month’s worth of rainfall in a single day washed away homes and flooded large areas, killing hundreds and stranding thousands in the city and nearby provinces. Photo: ADB

By Vinod Thomas

Asia and the Pacific accounts for half of the estimated economic cost of disasters over the past 20 years. 

“We’ve never seen anything like this” is the refrain increasingly heard in every corner of the world in the wake of natural disasters. Indeed, intense natural disasters have increased nearly fourfold over the past four decades, with floods and storms representing 70% of the increase. Asia and the Pacific has been the worst hit region. Yet, the response to hazards of nature has been mostly to react when they strike. The upshot I see is this: unless prevention takes center stage, disasters will likely unravel progress.

To see why this is so, consider three factors behind the rising tide of floods and storms.

  • First, the exposure of populations to hazards has been on the rise. Asia and the Pacific is by far the most world’s populous region, and growing numbers of people have been locating in harm’s way—along coastlines, low-lying areas and hill sides.
  • Second, people are more vulnerable because of high-population densities and the limited capacity of the poor to withstand the risks. The five most vulnerable cities in the world are in Asia: Dhaka, Manila, Bangkok, Yangon, and Jakarta.
  • Third, climate change is aggravating the impacts. Sea level temperatures and precipitation during intense events have been increasing, both connected to a sharp rise in greenhouse gases in the atmosphere.

If these episodes were once considered purely acts of nature, they now seem shaped by human action as well. So it will no longer be enough to mop up after a flood; we also need to turn off the tap. That means disaster prevention measures—early warning, zoning and location decisions, building codes, and environmental control—must increasingly feature in development strategies.

The challenge for countries and international financial institutions going forward is to revise the objectives of disaster intervention and deliver on a new disaster agenda.

In addition, climate action needs to be added as a crucial dimension of disaster prevention, not only with respect to the measures just cited that help adaptation, but also climate change mitigation to reduce greenhouse gases in the atmosphere. Yet only in a minority of instances do strategies of disaster-prone countries where ADB or the World Bank has been involved factor in disasters, let alone their prevention. The reasons vary: prevention may be less visible than reconstruction, benefits might only be realized over time, and the gains could accrue to other constituencies as well; all of which might be out of sync with the political cycle and calculus.

But I sense that things are likely to change, even if for an unfortunate reason. The growing crisis of natural disasters and their rising costs are political motivations to act. The deadly floods in Thailand in 2011 inflicted an estimated $46.5 billion in costs to the economy, or nearly 13% of GDP. The total cost of natural disasters in Asia and the Pacific last year was an estimated $276 billion, representing 75% of the total global damage. In the past 15 years, ADB invested some $10 billion for disaster response in Asia and the Pacific, as reviewed in a new evaluation, ADB’s Response to Natural Disasters and Disaster Risks. The projects have mostly delivered on their main objective of rehabilitation and rebuilding.

The challenge for countries and international financial institutions going forward is to revise the objectives of disaster intervention and deliver on a new disaster agenda. Such an agenda must stress planning, preparation and prevention, including the use of new financial instruments to accelerate resource mobilization and deployment. Above all, it needs to foster a change in our mind set—from treating natural disasters as bolts from the blue that interrupt development to recognizing them as a growing and systematic menace made worse by the hand of man.