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The unexpected aftermath of the natural disaster

Several studies suggest that disasters can boost GDP in the medium or long term, but only if they are not very severe and occur in countries with responsiveness

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The unexpected aftermath of the natural disaster

First re was hurricane Harvey, which at end of August left a trail of destruction through eastern Caribbean and souastern USA. Hundreds of thousands of homes were flooded and over 30,000 people had to be evacuated. Worse still was presented with Irma, who a few weeks slammed against coast of Florida. Despite fact that damages were lower than initially anticipated, seven-million people, a third of State's population, were left without power. The total expenditure for mitigating effects of hurricane may be around 175,000 million dollars, as calculated by former head of Federal Agency for Emergencies of united States. Almost at same time, souast of Mexico shook with largest earthquake in country in a century, that left a hundred dead and countless ruins.

Analysts and services studies attempt to quantify damage of se and or natural disasters. But, although short-term impact on activity is without a doubt negative, final balance is not so clear.

recovery is more difficult in poor countries, who often suffer furr damage

a number of economists have spent years analyzing what happens when nature loses control; and consider that, under certain circumstances, disasters can even serve as a stimulus in GDP. As synsized, Mark Skidmore, one of experts who has written about this, “natural disasters play an important role in macroeconomic activity”. But, added to or side of phone with a tone something naughty, “not always in way one would expect”.

Skidmore, professor in Department of Agriculture and Resource economics from University of Michigan, insists on differentiating initial effects and those who take a few years to arrive. Nothing more catastrophe, consequences are undoubtedly negative. Floods, earthquakes, or hurricanes force you to close business and paralyzing a large part of economy. “But in medium and long term, re are factors that can be beneficial: reconstruction, funds that y provide insurers and state aid can generate a positive effect,” says Skidmore, co-author of articles such as economic Development and impact of natural disasters.

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The research offers surprising results. As trust between members of a community tends to increase after traumatic experience of a natural disaster: a challenge of this caliber forces people to cooperate. Or that countries with high probability of disasters tend to invest more in human capital formation and technology. A successful example is Greensburg, a small town in Kansas after suffering in 2007, a tornado that wiped out 95% of its buildings has been transformed into a leader in green building.

The constraints are many. And economists who explore conflicting relationship between disasters and growth-established many requirements to convert a negative impact into positive. The first is magnitude of what happened. The experts consulted agree that disaster is extremely severe never generate sufficient stimuli as for balance, although it relates exclusively to economy, be beneficial.

After being destroyed to 95%, a people of Kansas is a leader in green building

it is Also determinant for development of affected area. The poorest countries have least capacity to mobilize resources, so that recovery is much more difficult. Ilan Noy, head of department of Economy and Disasters at University of new zealand Victoria, ensures that in most vulnerable places level of destruction is usually much larger in relative terms. And to do this it compares effects of 2010 earthquake in Haiti and tsunami in Fukushima a year later. “The catastrophe in Haiti destroyed properties valued at 120% of its GDP, while that in Japan remained at about 4% or 5%,” he explains. Seven years later, Haiti, one of poorest countries of America, it still has not been recovered.

Victims of monsoon

And all this without forgetting more dramatic consequences of child development: loss of human lives, that in poorest countries to shoot. As we are reminded by professor Noy, flooding linked to monsoon in souast asia this year multiply by ten number of deaths of Irma and Harvey, that so much attention y have garnered in media, mainly by affecting a rich country. Finally, to assess final effect is that study type of government response.

it Is too early to know final impact of Harvey and Irma. Eduardo Cavallo, lead economist of inter-American Development Bank, led a research that analyzed consequences of disasters that occurred in 196 countries from 1970 to 2008. Their conclusion was that only most severe caused significant regressions of GDP. Asked about key to avoiding an accident natural to translate into an economic downturn permanent, Cavallo insists on importance of good governance and foresight. And he gives as an example to Chile. “When in February 2010 he suffered a strong earthquake and a tsunami, country was prepared. There were more than 500 deaths and losses of almost 19 per cent of its GDP. But thanks to that we had prepared, Chile managed to recover relatively quickly,” he concludes.

New Orleans has still not recovered from Katrina

hurricane Katrina, which are fattened with city of New Orleans in 2005, will be remembered for scenes of a crowd of americans, vast majority of black people, abandoned to ir fate; and by much-criticized management that did Administration of George W. Bush. 12 years after arrival of hurricane-deadliest in U.S. history, situation remains very difficult.

As I wrote last year in an article in specialist Ilan Noy, “ hurricane had a profound impact and permanent in population of New Orleans”. Many of houses n evacuated remain empty, and local population is still between 15% and 20% lower than before disaster. “The return has been especially for low-income families. These differences also have a component of racial: african americans are less likely to return,” adds Noy, professor of University of new zealand of Victory.

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