Risk management in a world of larger disasters

Written by Ashwin Rattan Sunday, 15 April 2012 09:30
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Stéphane Hallegatte
Economist and Lead Climate Change Specialist, World Bank, CIRED, and Météo-France


Writing for VoxEu:

Earlier this week, much of Southeast Asia was stunned by an earthquake that for a moment brought back memories of the devastating tsunami of 2004. The cost of such natural disasters has been on the rise in recent years due to an increase in the number of people living and working in high-risk areas. This column explores some of the reasons behind this increase.

It is widely recognised that economic losses due to natural disasters have been increasing exponentially in the last decades.

The main drivers of this trend are the increase in population and the growth in wealth per capita. With more and richer people, it is not surprising to find an increase in disaster losses.

More surprising is the fact that, in spite of growing investments in risk reduction, the growth in losses has been as fast as economic growth (eg Miller et al 2008), or even faster than economic growth (eg Bouwer et al 2007).

Anthropogenic climate change does not seem to play a significant role in these evolutions (Bouwer 2011). In the US, the trend in hurricane losses relative to wealth can be almost completely explained by the fact that people take more and more risks, by moving and investing more and more in at-risk areas (Pielke et al 2008). What are the reasons behind this trend? This column proposes an alternative to the ‘usual suspects’.

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Last modified on Sunday, 15 April 2012 09:41

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