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1.5 Global trends in losses of tangible assets due to
natural disasters
Contrary to the trend in loss of human life, a significant increase in economic
damages caused by natural disasters can be observed in recent decades. However,
the property damages experienced, rising in absolute terms and expressed in monetary
units, may reflect a real growth of damages, or a rising living standard with
mounting property values, or an inflation-induced increase. To take this into
account, the Munich Re (Münchener Rück - a German-based reinsurance company)
has calculated both the inflation-induced increase and the increase in property
values owing to rising standards of living since the early 1970s. It chose the gross
domestic product (GDP) to roughly approximate the changed standard of living. The
Munich Re concludes that regarding the increase of losses triggered by major natural
events, inflation and a general accretion of value during the years 1970 to 1998
play an important role. But the insurance company goes on to reason that damages
are clearly on the rise in real terms. According to the Munich Re, GDP-adjusted economic
damage amounted to US$ 315 billion in 1970-79, US$ 283 billion in
1980-1989 and US$ 636 billion in 1990-1999. The damage figures provide clear
evidence of an increase in the 1990s compared to the 1980s. According to the
Munich Re (1998, 2000a, 2000b), the economic losses are distributed relatively
evenly: storms, floods and earthquakes each make up 30 % of the recorded losses,
while other hazards account for the remaining 10 %.
We thus perceive two contrasting trends: a decrease in loss of human life over the
past century and increasing economic damages, at least during the last decade. As a
working hypothesis to account for this picture we assume that the coping capacity
to deal with natural disasters has increased. It is difficult to determine how much
this is thanks to international organisations and how much credit should go to
national and local ones. In political, organisational and logistical terms, international
relief agencies at inter-governmental, governmental, and NGO level have certainly
learnt enormously in terms of how to react to major disasters. Compared to 50 years
ago, they nowadays dispose of much higher capacities and resources for interventions
in ongoing disasters.
Effects of a volcano
eruption, Pinatubo,
Philippines
Essay
As far as natural disasters are
concerned, two contrasting
trends have been observed.
While there was a decrease in
loss of human life over the last
century, economic damage has
been on the increase over the
last decade.
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