The growing cost of disasters

The Economist ran a fascinating piece in its January 14 edition on the growing cost of disasters.   Five of the ten most expensive disasters in history have happened in the last four years, and a leading reinsurer, Munich Re, reckoned 2011 was the most costly year in its history.

The most expensive disaster ever is last year’s Japanese tsunami, followed by Japan’s Kobe earthquake of 1995, and Hurricane Katrina in 2005.   Most expensive does not mean highest number of casualties.      The Japanese tsunami cost fewer than 16,000 lives, Kobe 6,400 and Katrina 1,300, compared with a quarter of a million killed in the Boxing Day tsunami of 2004, and perhaps a similar number in the Haiti earthquake of 2010.

One reason for the growing cost of disasters is that there are more and more human beings around to suffer losses.   The population of hurricane-belt state Florida, for example, has risen from 2.8m in 1950 to 19m now.

And overall human beings are getting richer so there are more things to be destroyed, while sometimes not enough thought is given to where development takes place.   Thailand’s growing industries, for instance, have been located in areas known to be vulnerable to flooding.