Global Assessment Report on Disaster Risk Reduction 2011
Revealing Risk, Redefining Development
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2.2.4 Tropical cyclone and flood economic loss risk is increasing

In contrast to mortality risk, estimated economic loss risk associated with floods and tropical cyclones is increasing in all regions. As with mortality risk, as countries develop they strengthen their risk governance capacities and reduce their vulnerabilities. However, these improvements have failed to offset the very rapid increase in exposure fuelled by rapid economic growth. Increases in such capacities do not immediately reduce the vulnerability of existing fixed assets, such as buildings and infrastructure, which are often used beyond their expected lifespan. Similarly, as will be further explored in Chapter 6, instruments such as land use planning and building regulation have struggled to reduce vulnerability, particularly in rapidly urbanizing areas.

In the case of floods, economic loss risk is increasing faster in OECD and high-income countries than in other geographic and income regions, even though exposure in these countries is increasing at a far slower rate than elsewhere, for example Latin America and the Caribbean (Figure 2.16). As the 2011 floods in Germany and Australia illustrate, even highincome countries struggle to manage increasing exposure. Although GDP exposure to floods (Table 2.4) is increasing faster than GDP per capita in all regions, the risk of economic damage is only growing faster than GDP per capita in high-income countries.

Figure 2.16
Percentage change in economic loss risk, exposure and vulnerability to floods in the OECD and in Latin America and the Caribbean as modelled, 1990–2010 (compared to baseline year 1990)
Figure 2.16
Table 2.4 Average annual global GDP exposed to floods as modelled (in billion 2000 US$)

Region 1970-1979 1980-1989 1990-1999 2000-2009
East Asia and the Pacific (EAP) 2.8 5.1 10.2 21.5
Europe and Central Asia (ECA) 2.2 2.7 2.7 3.1
Latin America and the Caribbean (LAC) 2.5 3.2 3.9 5.4
Middle East and North Africa (MENA) 0.3 0.4 0.6 0.9
OECD countries (OECD) 24.1 32.8 43.5 52.9
South Asia (SAS) 3.9 5.4 8.7 15.4
Sub-Saharan Africa (SSA) 0.4 0.5 0.6 0.9
World 36.2 50.0 70.2 100.1

Table 2.5 Average annual global GDP exposed to cyclones from observed events (in billion 2000 US$)13 

Region 1970-1979 1980-1989 1990-1999 2000-2009
East Asia and the Pacific (EAP) 16.0 25.3 39.5 90.2
Latin America and the Caribbean (LAC) 2.3 4.9 3.7 24.3
Middle East and North Africa (MENA) 0.0 0.0 0.0 1.0
OECD countries (OECD) 506.6 665.1 1,247.1 1,455.0
South Asia (SAS) 0.3 2.6 4.2 4.3
Sub-Saharan Africa (SSA) 0.5 1.1 1.3 1.7
World 525.7 699.0 1,295.8 1,576.5

The proportion of the world’s GDP exposed to tropical cyclones increased from 3.6 percent in the 1970s to 4.3 percent in the first decade of the 2000s. During that time, the absolute value of global GDP exposed to tropical cyclones tripled, from US$525.7 billion to US$1.6 trillion (Table 2.5).12  GDP exposure increased rapidly in the OECD in the 1990s, and in East Asia and the Pacific and in Latin America and the Caribbean in 2000–2009. In East Asia and the Pacific in 2009, the GDP exposed was nearly six times greater than in 1970. In contrast, although most of the exposed global GDP is concentrated in OECD countries, it was only three times greater in 2009 than it was in 1970.

Economic loss risk for cyclones is increasing in all regions. It has almost quadrupled (increasing by 265 percent) since 1980 in the OECD, almost tripled in sub-Saharan Africa (181 percent), and is more than two-and-a-half times greater in other regions (over 150 percent higher). In East Asia and the Pacific, and South Asia, risk is increasing because reductions in vulnerability are not offsetting rapidly increasing exposure (Figure 2.17). In terms of income regions economic loss risk has almost quadrupled (increasing by 262 percent) in high-income countries, and is more than two-and-a-half times greater in upper-middle-income countries (165 percent), lower-middle-income countries (152 percent) and low-income countries (155 percent). Thus economic strength has failed to reduce economic loss risk, even in the OECD.

Figure 2.17
Percentage change in economic loss risk, exposure and vulnerability to tropical cyclones in East Asia and the Pacific, South Asia, Latin America andthe Caribbean, and OECD countries as modelled, 1980–2010 (compared to baseline year 1980)
Figure 2.17

GDP per capita has grown by more than eight times (703 percent) in East Asia and the Pacific and has almost quadrupled (increasing by 293 percent) in South Asia, outpacing the growth in exposure in both regions. As such, estimated risk has fallen relative to GDP per capita. In all other regions, however, both exposure and the estimated risk of economic loss are growing faster than GDP per capita. Thus the risk of losing wealth in disasters associated with tropical cyclones is increasing faster than wealth itself is increasing.

2.2.5 Countries that are falling behind in their development achievements have less resilience to disaster loss

Disaster losses must be put into perspective. Economic losses due to floods in South Asia are in absolute terms far smaller than those in the OECD. Relative to the size of South Asia’s GDP, however, flood losses there are approximately 15 times greater than losses in the OECD. Thus, although economic loss risk in the OECD may be increasing faster, such losses threaten OECD countries’ economies far less than they do those of most low- and middle-income countries.

Low-income countries have less capacity to absorb and recover from flood-inflicted economic losses. Similarly, larger economies are more able to absorb losses than smaller ones (including many Small Island Developing States). Larger economies tend to be more diverse geographically and economically, and are thus better able to compensate for losses in any one region or sector (GAR 11 paperCorrales, 2010


GAR11 Corrales Leal, W. 2010. Overcoming trade and development limitations associated to climate change and disaster risk. Background paper prepared for the 2011 Global Assessment Report on Disaster Risk Reduction. Geneva, Switzerland: UNISDR.

Click here to view this GAR paper.
). Furthermore, they can better absorb migration and are more likely to be able to counter the longer-term economic effects of severe loss of productive assets, interrupted supply chains or distorted markets after a disaster. The ability to withstand losses is not solely dependent on a country’s share in world trade or on trade volumes, but also on the diversity of its products and trade partners. Limitations in both make a country more vulnerable to disaster-induced trade shocks and disruptions.

As Figure 2.18 shows, over the last 30 years, the gap in development achievements between many lower-income countries and the OECD has grown and is likely to widen further as a result of climate change.14  Although GDP per capita, human development, capital formation and competitiveness of some low- and middle-income countries has approached those of the OECD, others have fallen further behind both their low- and middle-income counterparts and the OECD. Some of these divergent economies may be experiencing ‘resilience traps’, where disaster losses and impacts cause negative feedback into slow development and structural poverty. Climate change may further test the resilience of many of these countries.

Figure 2.18
Development achievements 1980–2010
Figure 2.18

12 In constant 2000 US$.

13 The analysis of tropical cyclone exposure does not include other high-income economy (OHIE) countries due to limited exposure, which is insufficient for robust modelling.

14 Expected impacts of climate change were studied considering three factors: expected reduction in agricultural productivity, rise in sea level, and scarcity of fresh water. Almost all countries with high or very high vulnerability, food insecurity and extreme trade limitations were expected to suffer severe reductions in agricultural productivity. All Small Island Developing States would be severely affected by sea-level rise and almost all African countries would be strongly affected by water scarcity, coastal flooding and other extreme weather-related events.

GAR 11 Background documents

GAR11GAR 2011 Contributing Papers

Cepeda, J., Smebye, H., Vangelsten, B., Nadim, F. and Muslim, D. 2010. Landslide risk in Indonesia. . Prepared by the International Centre for Geohazards, Norwegian Geotechnical Institute. [View]

Corrales Leal, W. 2010. Overcoming trade and development limitations associated to climate change and disaster risk. . [View]

ERN-AL, 2011. Probabilistic modelling of disaster risk at global level: Development of a methodology and implementation of case studies. Phase 1A: Colombia, Mexico, Nepal. Prepared by the Consortium Evaluación de Riesgos Naturales – América Latina. [View]

Freire, C. 2011. Extensive Risk of the Impact of Disasters. Prepared by Macroeconomic Policy and Development Division Economic and Social Commission for Asia and the Pacific (ESCAP)[View]

Gupta, M. 2011. Filling the governance ‘gap’ in disaster risk reduction. Background Paper prepared by the Asian Disaster Reduction and Response Network (ADRRN). [View]

Herold C.; Pedduzzi P., 2011. Testing the GAR risk methodology at the national level : the case of earthquakes in Indonesia. Prepared by the Global Change & Vulnerability Unit UNEP/GRID-Europe[View]

Hobbs, C. 2010. Current and future risks posed by unprotected radioactive waste sites in Central Asia. [View]

IDMC (Internal Displacement Monitoring Centre). 2010. Using disaster data to monitor disaster-induced displacement. . [View]

Kent, R. 2010a. Disaster risk reduction and changing dimensions and dynamics of future crisis drivers. [View]

Mansilla, E. 2010. Riesgo urbano y políticas públicas en America Latina: La irregularidad y el acceso al suelo. [View]

Moreno, A. and Cardona, O.D. 2011. Efectos de los desastres naturales sobre el crecimiento, el desempleo, la inflación y la distribución del ingreso: Una evaluación de los casos de Colombia y México. [View]

Nhu, O.L, Thuy N. T. T., Wilderspin, I. andd Coulier, M. 2011 A preliminary analysis of flood and storm disaster data in Viet Nam. UNDP CO, Hanoi, Viet Nam.[View]

O'Donnell, I. 2010. Addressing the grand challenges of disaster risk: A systems approach to disaster risk management. [View]

OSSO (Southwestern Seismological Observatory). 2011b. Análisis de manifestaciones de riesgo en America Latina: Patrones y tendencias de las manifestaciones intensivas y extensivas de riesgo. . [View]

OSSO (Southwestern Seismological Observatory). 2011a. Extensive risk analysis for the 2011a Global Assessment Report on Disaster Risk Reduction: Metodología para la identification de Umbrales. [View]

Serje, J. 2010a. Extensive and intensive risk in the USA: A comparative with developing economies. [View]

Serje, J. 2010b. Preliminary extensive risk analysis for the Global Assessment Report 2011. [View]

Sparks, S., 2011. Global Volcanic Risk. Bristol University, UK. [View]

Tarazona, M. and Gallegos, J. Children and disasters: Understanding differentiated risk and enabling child-centered agency. Brighton, UK: Children in a Changing Climate Research. [View]

Tonini, M., Vega Orozco, C., Charrière, M., and Tapia, R. 2010. Relation between disaster losses and environmental degradation in the Peruvian Amazon. Lausanne, Switzerland:Institute of Geomatics and Risk Analysis, University of Lausanne. [View]
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