2022
The invisible toll of disasters
The estimated insured losses from disasters are a staggering US $120 billion — but they represent just the tip of the iceberg.
Economic shockwaves
In its assessment of disaster losses for 2022, Munich Re reports that Hurricane Ian was the most expensive single event, costing the USA a total of US $100 billion, $60 billion of which was covered by insurance.
Australia suffered more than $6.6 billion in losses from floods in February and March, $4 billion of which were insured. At the same time, winter storms in Europe claimed $4.3 billion in insured damages.
These costs, however, are purely based on direct, insurable losses. Richer countries have suffered the greatest financial impacts of disasters, as they have higher-value assets in monetary terms – and tend to have insurance cover. But poorer countries invariably suffer much greater losses as a proportion of their overall economic wealth:
“While dollar value losses are often greater in high income countries, it is the poorest countries that sustain the highest relative loss. Low-income and lower middle-income countries lose on average 0.8–1% of their national GDP to disasters per year, compared to 0.1% and 0.3% in high-income and upper middle-income countries, respectively.” GAR2022
Poorer countries almost always have the greatest losses in terms of lives lost and disrupted.
This can be seen from the two most expensive disasters last year: Hurricane Ian, 2022’s most expensive disaster, caused 130 deaths and displaced 40,000 people in the USA.
Floods in Pakistan, causing direct damages estimated at more than $15 billion, killed more than 1,700 people and displaced 8 million people, and will cause long-term economic hardship:
“The disaster will have profound impact on lives and livelihoods. Preliminary estimates of the PDNA suggest that the national poverty rate will increase by 3.7 to 4.0 percentage points, pushing between 8.4 and 9.1 million people into poverty, as a direct consequence of the floods.”
Those with the least resources are the most vulnerable, and have reduced capacity to recover. They are also often overlooked when the toll of disasters is calculated.
“Adding to the long-term impacts of disasters is the lack of insurance to aid in recovery efforts to build back better. Since 1980, just 40 percent of disaster-related losses were insured while insurance coverage rates in developing countries were often below 10 percent, and sometimes close to zero.” UNDRR, 2022 - Humanity’s broken risk perception is reversing global progress in a ‘spiral of self-destruction’, finds new UN report
Disasters impact development prospects
How the flooding in Pakistan impacted progress towards the Sustainable Development Goals by 2030:
People pushed into poverty
Additional people facing food insecurity
Women and children at greater risk of preventable diseases
Women and girls at risk of Gender Based Violence
People with job loss/disruption
Invisible losses from slow-onset and small-scale events
Not all disasters make front-page news, and many – perhaps most – are not included in calculating the global financial tolls levied by climate-related hazards.
Rising sea levels, glacial melts, desertification, degradation of fertile soils, droughts– all may unravel at a pace that that is barely perceptible, yet inflict enormous damages.
Droughts, for example, account for 15% of natural hazard-related disasters, but resulted in 650,000 deaths between 1970-2019, according to a report from United Nations Convention to Combat Desertification.
“From 1998 to 2017, droughts caused global economic losses of roughly USD 124 billion. In 2022, more than 2.3 billion people face water stress; almost 160 million children are exposed to severe and prolonged droughts,” says the report.
Small-scale disasters also may go uncounted.
These events may be dramatic and fast-paced, but only impact on a small number of people – a flash flood in a sparsely populated rural area, for example, would be devastating for local residents in the flood plain, but losses may never be recorded because of its small scale.
But the accumulation of small-scale disasters, often precipitated by climatic events, collectively have a hugely damaging effect on economies and individual lives and livelihoods.
“A staggering 99.7% of all disaster events between 1990 and 2013 were smaller disasters involving fewer than 30 deaths or fewer than 5,000 houses destroyed…. Thousands of these smaller-scale events are unreported every year because they do not generate high impacts at the national or international levels; however, they do bring a constant stream of local losses.” GAR2022
Broken supply chains
The indirect costs of disasters can also be felt through their cascading impact on supply chains.
The heatwaves in India, Pakistan and Bangladesh had a knock-on effect that went far beyond the region, causing disruptions around the world.
“In 2022, the early onset of heatwaves in South Asia was a unique example of compounding and cascading risks in this interconnected world,” notes a report from the United Nations Economic and Social Commission for Asia and the Pacific.
The extreme heat in mid-March devastated India’s wheat production, reducing yields by 10 to 15 percent.
“Food security risks and the sudden spike in global wheat prices due to a shortage in supplies led the Indian government to ban wheat exports to a large extent... Furthermore, the conflict between Russia and Ukraine has also disrupted wheat exports from the Black Sea region,” the report says.
As a result of these converging upheavals – compounded by the effects of droughts, floods and other disasters – markets across the globe face shortages of a staple food. This has contributed to 2022 becoming what the World Food Programme describes as “a year of unprecedented hunger.”
Other breakdowns in supply chains and transportation were the direct result of climate-related hazards in 2022, with a range of disasters causing sharp fluctuations in the availability of important commodities from food staples and electronic components to automobiles, lumber and coal.
With more extreme weather events, and especially with rising sea levels impacting major ports and shipping channels, such disruptions could become more frequent. Airports too are threatened, with more than 100 coastal airports projected to be below sea level by the year 2100, and more than 350 facing risk of regular flooding.
“As the ripple effects of what are likely to be ever-increasing and intensifying climate-related disruptions spread through the global economy, price increases and shortages of all kinds of goods— from agricultural commodities to cutting-edge electronics— are probable consequences,” reports an article published by the Yale School of the Environment.
“The leap in the cost of shipping a container across the Pacific Ocean as a result of the pandemic — from $2,000 to $15,000 or $20,000 — may suggest what’s in store.”
A study from the Potsdam Institute for Climate Impact Research using dynamic economic modelling showed that the knock-on effects of predicted climate-related flooding in China could result in global economic losses of around $600 billion during the coming decades, with severe consequences for commerce and industry in Europe, the Americas, and elsewhere.
“Not only local industries will be affected by these climate impacts…. Through supply shortages, changes in demand and associated price signals, economic losses might be down-streamed along the global trade and supply network affecting other economies on a global scale” said researcher Sven Willner.
Severed connections
While societies rely on a network of suppliers, distribution points and transport for food and other essential commodities, we also depend on less tangible networks for information, keeping us connected to the rest of the world.
In January, when Tonga was struck by a cluster of disasters resulting from a volcanic eruption – including a tsunami and volcanic ashfall – it also had its communications severed as the shockwaves damaged the undersea fibre-optic cable that connects the island to the rest of the world.
“The force of the volcanic blast shattered satellite connectivity as it sent a huge plume of ash and debris hurtling into the atmosphere…. Then Tonga went silent. The undersea communications cable connecting Tonga to the rest of the world, and its own islands, was severed in two places during the eruption,” reported Sanjay Srivastava, for the United Nations Economic and Social Commission for Asia and the Pacific.
Lost connectivity not only disrupts economic activity, at a financial cost, but also takes its toll on societies. Disasters routinely sever communications just at a time where those affected, their loved ones, and those tasked with their care, most need to be in touch – to ask for assistance, to report on their situation, and to provide human contact.
Losses in productivity
The economic losses from disasters also result from lost productivity.
2022 saw devastating heatwaves across the world, in Africa, North America, Europe, and South Asia, and with serious impacts on economic productivity. With extreme heat comes reduced productivity.
A study from University of California, Davis , found that economic growth in at least 22% of countries has been affected by extreme temperatures, ranging from crop damage to cooling failures at data centres providing cloud-based computing services. While some of these effects could be temporary, it is likely that many will accumulate, resulting in ongoing economic losses.
Conservative estimates by the International Labour Organisation in 2019 – assuming a 1.5°C global temperature rise by the end of the century – showed a loss in productivity from heat stress equivalent to 80 million full-time jobs by the year 2030, at an economic cost of US$2,400 billion.
“When heat is combined with humidity, it can create deadly temperatures beyond which the body can no longer cool itself,” explains a paper by researchers at Stanford University . Under such conditions, work is simply not possible.
It likely that with more frequent extreme heat episodes affecting more regions, more sectors will suffer lost productivity – expanding from those involving outdoor manual labour (such as agricultural production or construction) to other types of work, the study notes.
There are also increased safety concerns: jobs involving operating dangerous machinery or working at heights become more dangerous at temperatures.
A burden on health and resilience
When counting the human cost of disasters, statistics focus on the dead and injured, often ignoring the broader health impacts.
In addition to restricting access to health care, the hazards themselves can be vectors spreading diseases – according to one study , 58% of all diseases affecting humans will be worsened by climate change.
“Flooding, for example, can spread hepatitis. Rising temperatures can expand the life of mosquitoes carrying malaria. Droughts can bring rodents infected with hantavirus into communities as they search for food,” the researchers explained. Other research found that exposure to smoke from wildfires not only provokes respiratory conditions like asthma, but can also even change DNA in children.
“Pregnant people exposed to wildfire smoke have a greater risk of premature birth , and workers in occupations with high exposure such as firefighters suffer high mortality rates from lung cancer and cardiovascular disease,” say the University of Toronto researchers.
A US study calculated the health costs of just ten localised climate-related events – including extreme weather, a hurricane, wildfires, ozone air pollution, extreme heat, allergenic oak pollen, harmful algal blooms, and tick-borne Lyme disease and mosquito-borne West Nile Virus outbreaks:
“Those events resulted in at least $10 billion in health-related costs from about 900 deaths, 21,000 hospitalizations, 18,000 emergency room visits, and 37,000 outpatient encounters.”
A legacy of anxiety and despair
Disasters take a heavy toll on the mental health of those affected – and poorer and marginalised communities are especially vulnerable.
In the aftermath of floods in Australia, research found that disadvantaged groups were the worst affected, and were more likely to suffer lingering psychological repercussions.
“These socio-economically marginalised communities –including people living with a disability, Aboriginal and Torres Strait Islander peoples, LGBTIQ+, and/or those in receipt of income support – were more likely to be evacuated, displaced for long periods and suffered worse mental-health and wellbeing outcomes than other respondent groups,” the University of Sydney researchers observed .
“Respondents with a stronger sense of belonging, optimism and feelings of inclusiveness with community reported lower levels of probable PTSD, anxiety and depression. Marginalised respondents were among those reporting lower levels of belonging and optimism about the future, eroding the protective effect these have against adverse mental health and wellbeing outcomes.”
Similarly, studies in the US and the UK found that ethnic minorities had poorer mental health outcomes resulting from the Covid-19 pandemic.
Repeated exposure to hazards has a cumulative impact on mental health, with those exposed to multiple disasters showing poor mental health scores, as found by researchers surveying survivors of a series of emergencies in Texas including hurricanes, cold waves, drought, flooding, explosions and chemical releases.
Researchers in Australia warn of a looming epidemic of “mental health related disorders such as eco-anxiety, climate disaster-related post-traumatic stress disorder (PTSD), and future-orientated despair.”
“During the pandemic’s first wave in 2020, we collected nationwide data from 5,483 adults across Australia on how climate change affects their mental health,” they wrote. “While Australians are concerned about COVID-19, they were almost three times more concerned about climate change.”
Globally, young people seem particularly susceptible to climate-related anxiety about an uncertain and disaster-prone future.
“This ‘eco-anxiety’ has a negative impact on respondents’ daily lives… and is partly caused by the feeling that governments aren’t doing enough to avoid a climate catastrophe,” noted a report in Nature , drawing on a survey of 10,000 youth in 10 countries.
Disrupted young lives
The impacts of disasters on children have devastating and enduring consequences for societies.
The sobering 2022 Global Report on Internal Displacement found that 2022 was the year with the highest ever recorded number of internally displaced people – nearly 60 million – of which 25.2 million were children under the age of 18. Many of these displacements were caused by climate-related hazards.
“Displacement’s impacts on children and youth are not felt equally, and they vary by individual, family and community. Neither are they felt only locally or in the moment, they have wider repercussions for years to come,” the report notes.
By keeping young people out of education, or affecting their ability to learn, disasters erode their future prospects. OECD research found that the impacts of educational gaps caused by school closures in 2020 during the Covid-19 pandemic could reduce future income of affected students by 3 percent over their lifetimes, and result in lower long-term growth for countries – decreasing annual GDPs by 1.5 percent for the next 80 years.
“Worldwide, the climate crisis is impacting the education of 40 million children every year. Globally, 222 million vulnerable girls and boys are impacted by conflict, climate-induced disasters, forced displacement and protracted crises and are in need of urgent education support,” stated a paper drafted for the United Kingdom Foreign, Commonwealth and Development Office.
The situation for girls is often worse, as reported by the United Nations Framework Convention on Climate Change: “…extreme weather events due to climate change disproportionately affect women and girls and their ability to perform their everyday tasks, which partly explains why some girls are forced to drop out of school.”
“Child marriage, which is considered an act of gender-based violence, has been observed in various communities as a means of coping in the event of disaster,” the report says.
An urgent need to take stock
Disasters tear apart communities, and devastate the lives and futures of individuals.
These few examples of some uncounted and undercounted costs of disasters, which won’t show in damage estimates of insurers and economic planners, are just a small sample, not taking into account the toll on the environment, on cultural heritage, on lost developmental gains.
In 2022 UNDRR published the Global Assessment Report (GAR2022) which calls for us to “measure what we value” – explaining that “systemic risk governance needs to recognize complex causal structures, dynamic evolutions and cascading or compound impacts.” The GAR2022 advocates for financial systems that account for the real costs of risk, particularly long-term risks.
But we can’t manage the risks that we don’t see. This is why we need better data accounting for losses and damages from hazardous events. To strengthen countries capacity in this area, UNDRR is working with the UN Development Programme (UNDP) and the World Meteorological Organization (WMO) to develop a new tracking system.
By accounting for the true costs of disasters, we can better plan to reduce risks and improve resilience, for everyone, and move towards a world with zero climate disasters.
