Economic Impacts of Natural Disasters

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ECONOMIC IMPACTS OF NATURAL DISASTERS
ABSTRACT:
Disasters of both natural and technological origin have a considerable impact on communities. The effects of disasters in India are significantly reduced by well established counter disaster arrangements at all three levels of government. These arrangements comprise comprehensive plans of prevention, preparedness, response and recovery and in more recent times, of mitigation. The economic effects of disasters can be devastating and widespread. When disasters strike houses, businesses and community infrastructure get damaged or destroyed and people’s livelihoods are temporarily and sometimes permanently disrupted. Physical damage is the most visible economic impact of disasters. Major natural disasters can and do have severe negative short-run economic impacts. Disasters also appear to have adverse longer-term consequences for economic growth, development and poverty reduction. But, negative impacts are not inevitable. Vulnerability is shifting quickly, especially in countries experiencing economic transformation - rapid growth, urbanization and related technical and social changes. In the Caribbean and Bangladesh there is evidence of both declining sensitivity to tropical storms and floods and increased resilience resulting from both economic transformation and public actions for disaster reduction. The largest concentration of high risk countries, increasingly vulnerable to climatic hazards, is in Sub-Saharan Africa. Risks emanating from geophysical hazards need to be better recognized in highly exposed urban areas across the world because their potential costs are rising exponentially with economic development. Natural disasters cause significant budgetary pressures, with both narrowly fiscal short-term impacts and wider long-term development implications. Reallocation is the primary fiscal response to disaster. Disasters have little impact on trends in total aid flows. Keywords:

Disaster Impacts, Direct Economic Impacts, Indirect Economic Impacts, Intangible Economic Impacts.

Submitted by:
Dr.A.PADMAVATHI, Guest Faculty, Department of MCA, S.V.U.C.C.M&C.S., S.V.University, Tirupati-517502. Introduction:
The economic effects of disasters are mostly seen as physical damage to infrastructure. More often than not loss of income through loss of trading activity and the time taken to re-establish such activity, particularly for agricultural industries, is overlooked. The consequences of extended periods of trading or production down-time can result in bankruptcy, forced sale, business closure, loss of experienced workers, a depleted customer base and population shrinkage. These consequences are exacerbated by community losses resulting in a reduction in disposable income. The flow-on through the disaster affected community has been likened to the domino effect. It addresses the economic consequences of disasters on communities and includes a framework of economic recovery principles as well as strategies to implement those principles. In this publication the term “economic” is used with respect to the costs to the community caused by the disaster while “financial” is used with respect to those schemes aimed at providing monetary sources to assist recovery. The range of economic effects and consequences on a disaster affected community is relative to the specific nature of the event and the economic demographics of the affected community Economic Consequences of Disasters:

The economic effects of disasters can be devastating and widespread. When disasters strike houses, businesses and community infrastructure get damaged or destroyed and people’s livelihoods are temporarily and sometimes permanently disrupted. Physical damage is the most visible economic impact of disasters. However, the less visible impacts such as lost income through being unable to trade are just as significant and the consequences often last longer than the physical damage (for example,...
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