Economic Impacts of Natural Disasters on the United States - Research Paper Example

TITTLE: NATURAL DISASTERS AS AN ISSUE AFFECTING UNITED STATES’ ECONOMY NAME INSTITUTION DATE OF SUBMISSION Introduction Natural disasters are normally classified into climatological, meteorological, hydrological and geophysical. Major natural disasters like tornados, floods, tsunamis and hurricane in United States do have severe negative effects on the economic activities. Natural disasters seem to develop long-term effects that will in turn affect economic growth and development thus letting United States vulnerable to poverty. Disasters also appear to lead the country to economic transformation where people will be shifting to urban areas as well as social changes. Natural disasters in United States appear to be becoming widespread. According to the statement by the United States President in 2011, America had experienced more than 89 different types of disasters in 2011 (Educating the world about finance, 2013). This was the greatest number experience in American history. Warm winter may not appear much to be a kind of disaster. However, when you are in an activity that needs healthy dosage of cold, then a persistent warm winter would definitely affect your activities. Also Colorado fires and summer drought are other natural disasters that affect the economic development of the country. It appears that as the time goes by natural disasters in America is increasing. People have different explanation on this. Some say it is due to climate change others believe that as the country becomes more populated, regional economies are overstretched. Generally, natural disasters have negative effects on the financial sector. The purpose of the paper The purpose of this paper is to explore different types of natural disasters affecting United States’ economy and drawing ways to address these disasters which is the main issue. The paper will also examine the risks associated with the identified natural disasters. Background Different researches over the last several years have tried to conceptualize the apparent costs of natural disasters in the economy. According to Albala-Betrand (1993), the destruction caused by a disaster affects directly the physical intensity of the event. These events include economic and social activities in the country. The occurrences of natural disasters lead to loss of property and infrastructure. These are normally the initial impacts and are normally trailed by subsequent effects particularly on changing aspects of domestic production. Horwich (2000) argues that the level of wealth when it comes to disaster response strategy is a critical factor. On the other hand, Wildavsky (1988) had a similar thought that when people are safe, the market economy appear to be growing. United States did not experience any of the mega-disasters in 2012 which reflect a lower number of fatalities (Ferris, Petz & Stark, 2013, pg 1). Focusing on the other economic indicators, the destruction of material goods such as infrastructure and livestock as well as social capital during the same year by floods and hurricanes was minimal compared to the preceding years. In one of the qualified support of Jaramillo (2009) to the conclusion of Toya and Skidmore (2002) that stated large natural catastrophes have an average damaging effect on short term United States’ economic growth. Addressing Natural Disasters in the United States Addressing the effects of natural disasters in United States would perhaps need data from the research. Therefore, when focusing on methods of addressing natural disasters, it is important first to look at the determinants of direct impact of catastrophe. This means that data needs to be collected from the people who are directly affected by natural disasters. Methods of collecting data The research will use survey as the primary data collection method. The survey method will incorporate other collection procedures like use of questionnaires (direct questions to the recipients) and observations. The purpose of conducting a cross-sectional survey is that it will help the research in differentiating the short and long-run impacts of the natural disasters through the data collected. There are other aspects to deliberate on particularly during the survey process. Study area should be determined and study group should be identified. The study group will be people in the united states that are affected by floods, hurricanes, warm winters, fires among other natural disasters. Procedure to follow during the survey process 1. Determination of the study area: The study are of this is United States, 2. Identification of the study group: The study group in this case is the people around the area of disaster occurrence. 3. Presentation of questionnaires to the study group and observation through researcher’s eyes. 4. Gathering back the questionnaires for analysis. Almost all data on disasters relies on available Emergency Events Database (EM-DAT. http://www.emdat.be/) (Cavallo, 2010). These are compiled sources of NGO’s, United Nations Agencies, research institutions and press agencies. Results and Findings The following were the results from the survey and observation process of data collection. It was found that the mega-disasters affecting economic activities in United States are floods, hurricanes, tornado winds and earthquakes. The pie chart below presents findings from the literature of how the natural disasters affected the American economy over the last decade. Figure 1 showing economic losses due to natural disasters Adapted from Eos, Transactions, American Geophysicacal Union, 1998, Pages 533-537. Figure 1 show that the economic losses are increasing which means mitigation strategies towards these disasters have however succeeded in decreasing loss of life but not the costs. From the figure above, floods had 26%, hurricanes 37%, earthquakes 18%, tornadoes 1% and others natural disasters 18% destruction cost. From the interview during survey process, it was found that most of the people who are affected by these natural disasters have taken insurance cover for the catastrophes. This was reflected as insurance losses since the insurer suffered a loss and was recorded in the Emergency Defense Database (EM-DAT). From the results during the interview, most of the people in United States took a cover on hurricanes and tornado winds. The reason is that the two natural disasters frequently occur therefore the risk of losing either life, property or infrastructure by the two catastrophes is high. Insurance loss table Year Insured loss (USD) Catastrophe 2011 74,700 Hurricane 2010 8,200 Earthquake 2011 7,300 Tornadoes Figure 2. Source: Swiss Re, Guy Carpenter & Company, LLC. The following table shows the lost economic activities during the occurrence of natural disasters in United States. Firgure 3 Figure 3 summirises the impact of the main issue to the United States economy. From the research and has been reflected in figure 3, meteoroligal disasters affected most of the economic activities. Disasters that result from meteorlogy include floods and hurricanes. Therefore, the economic loss from the two disasters was high in the United States. Strategies to Address the Issue Putting more Property/Assets in Harm’s Way: According to the revenue accounts of the United States, an increase in catastrophe costs has a correlation with the changes in in the population of the United States and wealth too. Therefore, people who should move to the disaster prone regions should have higher wealth to form a wealthy society. At the sema time, the country will eperience a pronounced growth on the economic activities. Establishment of a more Resilience Society: The system will enhance provision incentive by major stakeholders like the government, NGO’s and the wealth community hich might have been greated during that time. The society will be having a system that will be effeciently projecting the disaster happenings at the same time. The system will be efffective in a manner that it will intergrate expertise knowledge from intitutions, professsionals as well as other relevant disciplines. The main concern in the resilience society will be legislated insurance and government aid program that will allow people be committed and responsible for any economic endeavor. Conclusion In conclusion, the magnitude of physical impacts by natural disasters can be reduced by participating in risk/hazard mitigation and emergency preparedness practices. In regions with economic benefits, practices that minimize occupants danger should be adopted as well emergency preparedness practices like evacuation should be put in place. This will help to avoid casualties from environmental events that their intensity cannot be assured. However, the adoption of these practices is hardly accepted by low-income households in the high risk area. Therefore, community education on the effect of natural disasters needs to be conducted to protect the life of unconscious households in the region. The paper has focused on the findings and results of the impacts of natural disasters which was an important aspect in coming up with the two strategies on how to address the issue affecting United States’ economy in the 21st century. Reference 4 Natural Disasters Affecting The American Economy. (n.d.). Investopedia - Educating the world about finance. Retrieved August 20, 2013, from http://www.investopedia.com/financial-edge/0812/4-natural-disasters-affecting-the-american-economy.aspx Albala-Betrand, J,. M. (1993). Political economy of large natural disasters. Oxford: Clarendon Press. Cavallo, E. (2010). The economics of natural disasters. New York: Inter-America Development Bank Department. Ferris, E., Petz, D. & Stark, C. (2013). The year of recurring disasters, A review of natural disasters in 2012, London School of Economics. Skidmore, M. & Toya, H. (2002). Do natural disasters promote long-run growth? Economic Inquiry, 40: pgs 663-690. Wildavsky, A. (1988). Searching for Safety, New Brunswick, N.J: Transaction Books. Read More