US and China Face ‘High Risk’ of Economic Losses from Natural Disasters

New research identifying Haiti and Mozambique as the countries most vulnerable to economic losses from natural disasters also classifies a number of industrialised economies, including Italy, Japan, China, US, Spain and France, as ‘high risk’ environments for investors, insurers and business.

The Natural Disasters Economic Loss Index (NDELI), released by risk intelligence and ratings company Maplecroft, evaluates the economic impact of earthquakes, volcanic eruptions, tsunamis, storms, flooding, drought, landslides, extreme temperatures and epidemics between 1980 and 2010.

The index measures the risk of economic losses from damage costs and deaths caused by natural disasters to reflect both the direct economic impact of natural disasters on property and infrastructure, plus the indirect economic impacts on populations. To provide an accurate picture of the global situation the NDELI has been split into two rankings: one measuring the risks to the 87 countries that suffer a high frequency of natural disasters; the other evaluating the 116 countries that experience less than one event per year.

Seven countries are rated at ‘extreme risk’ in the high frequency index, with Haiti (1), Mozambique (2), Honduras (3), Vanuatu (4), Zimbabwe (5), El Salvador (6) and Nicaragua (7) topping the ranking. However, the industrialised economies of Italy (18), Japan (23), China (25), US (29), Spain (37) and France (48) are all in the ‘high risk’ category, while India (51), UK (53), Germany (54) and Canada (55) are rated ‘medium risk’.

“When economic losses are taken as absolute figures, it is predominantly the industrialised countries, such as US and China, that shoulder the greatest costs,” explained Maplecroft environmental analyst, Dr Anna Moss. “However, when losses are calculated as a percentage of GDP, it is developing countries that are most exposed. For example, the US’s losses from the 1997-1998 El Niño were US$1.96bn, or 0.03% of GDP, whereas in Ecuador, economic losses were US$2.9bn, or 14.6% of GDP.”

Swiss Reinsurance estimates that the cost of natural disasters to the insurance industry in 2010 could reach US$110bn worldwide. The earthquake in Chile, on 27 February, is estimated to cost US$8bn alone, which is 3.53% of the country’s GDP, while Windstorm Xynthia in France may cost insurers as much as €2bn, equal to 0.13% of French GDP. This year’s Atlantic hurricane season is also set to be ‘extremely active’ according to the US National Oceanic and Atmospheric Administration, which is predicting 14 to 23 named storms.


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