The Costs of Disasters

Are Natural Disasters Increasing?

It seems like every time you turn on the news, there is another report of a natural disaster. The 24-hour news cycle may be responsible for some of this: more reporting means being more aware of the natural disasters that were already occurring. However, many scientists are reporting an uptick in the number of natural disasters per year, regardless of media coverage.

The United Nations, according to The Economist, keeps a running tally of official natural disasters: "earthquakes, storms, floods and heatwaves that either cause at least ten deaths, affect more than 100 people or prompt the declaration of a national emergency." There is a rising trend of smaller events as well. Munich Re, an international insurance company, says we're seeing "six times more hydrological events now than in 1980," with 2017 being the leading year for number of these events.

Increasing Costs

Not only is the number of natural disasters increasing, but the financial cost of these disasters is climbing too, says a CBS News article titled, "Natural Disasters Cost U.S. a Record $306 Billion Last Year." Data compiled by the U.S. National Oceanic and Atmospheric Administration shows a steady increase in the number of natural disasters that caused at least $1 billion in damages. That number has gone from one U.S. natural disaster in 1988 to 16 natural disasters in both 2016 and 2017.

The financial cost of each of these disasters adds up, too; in 2017 alone, natural disasters cost the economy a record-breaking $306 billion. This figure is well above the second-highest cost for natural disasters, occurring in 2005 with Hurricanes Katrina and Rita. The year's "eight severe storms, three tropical cyclones, two flooding events, one wildfire event, one drought and one freeze event" led to costs that blew past the previous $215 billion figure.

Hurricanes accounted for the lion's share of the damage costs, and 2017 saw three deadly hurricanes on U.S. soil. According to the same report by CBS, "Hurricane Harvey cost $125 billion, second only to 2005's Katrina, while Hurricane Maria, which slammed Puerto Rico, cost $90 billion, ranking third, the NOAA said. Irma was a $50 billion storm, the fifth most expensive hurricane in U.S. history." Adding to the damage caused by Harvey, Maria and Irma was the $18 billion tab from western wildfires.

Who Pays?

With all of these devastating financial losses, who ends up footing the bill for the destruction? The answer is a bit more complex than it used to be, actually. According to CNBC, prior to 2005, 57 percent of the financial costs of natural disasters was shouldered by insurance companies. Back then, the federal government only covered around 26 percent of the bill, with the remaining costs being paid by private businesses, charities, state governments and citizens. With Hurricane Katrina, though, that all changed.

The federal government now pays the majority of costs associated with natural disasters. Peter J. Beshar, writing for CNBC, says, "The federal government has become the de facto insurer of last resort." Unfortunately, that means the costs of natural disasters fall back on taxpayers. However, many governments are experimenting with new types of disaster funding, such as catastrophe bonds. These bonds offset the costs to taxpayers by offering an ROI to investors, shifting the burden to the private sector.

Disaster Science

Fortunately, with the rise in natural disasters comes a complementary shift in education: disaster science. Given the massive impact of natural disasters on our economy, it makes sense to systematically approach these problems. More and more universities, such as LSU of Alexandria, are offering general studies degrees focused on emergency management and disaster science.

In these courses, students are exposed to the broad range of topics touched by disasters -- government organizations and structures, social responses, technological advances, climate science, and the like. Students take courses such as Disasters in History, exploring past responses to and impacts from disasters. Classes cover both American and international historical sources, comparing how different cultures react to different disasters.

The costs associated with natural disasters are expected to increase, given the increase in occurrences. The cycles of severe weather do not seem to be subsiding, and the future will most certainly bring more natural disasters. Fortunately, higher education has risen to the challenge to provide some relief and address these events. Learning from past disasters and experimenting with new approaches will hopefully lead to an eventual decrease in costs to our economy.

Learn more about LSUA's online Bachelor of General Studies in Disaster Science & Emergency Management.


Sources:

The Economist: Weather-Related Disasters Are Increasing

CBS News: Natural Disasters Cost U.S. a Record $306 Billion Last Year

CNBC: Who Pays for Catastrophes?

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