Global Assessment Report on Disaster Risk Reduction 2015
Making development sustainable: The future of disaster risk management

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However, although investments in risk reduction and regulation have enabled a reduction of extensive risks, the value of assets in hazardprone areas has grown, generating an increase in intensive risks. For example, investing in risk reduction measures to protect a floodplain against a 1-in-20-year flood may encourage additional development on the floodplain in a way that actually increases the risks associated with a 1-in-200-year flood.
This relationship is not linear. For example, the way in which losses increase with wealth may depend on the level of hazard exposure (Schumacher and Strobl, 2008

Schumacher, Ingmar and Eric Strobl. 2008,Economic Development and Losses due to Natural Disasters: The Role of Risk, Ecole Polytechnique, Cahier No. 2008-32, December 2008.. .
). In countries with low hazard exposure, losses seem to rise rapidly along with economic development and subsequently fall; in contrast, in countries with high hazard exposure, losses seem to rise faster in higher-income countries than in middle-income countries. This probably reflects the fact that in countries exposed to extreme hazards and with high levels of intensive risk, vulnerability reduction is less effective in reducing risk than in countries with more extensive risks.
The trend of increased hazard exposure leading to increased economic loss risk was modelled in GAR11 (UNISDR, 2011a

UNISDR. 2011a,Global Assessment Report on Disaster Risk Reduction: Revealing Risk, Redefining Development, Geneva, Switzerland: UNISDR.. .
). For example, economic loss risk from cyclones was estimated to have increased by 265 per cent in the OECD, by 181 per cent in sub-Saharan Africa and by 150 per cent in all other regions since 1980. The increase was considered to be higher (262 per cent) in highincome countries than in upper middle-income countries (165 per cent), lower middle-income countries (152 per cent) and low-income countries (155 per cent).
These modelled trends would seem to be confirmed by historical loss data. In absolute terms, over 60 per cent of internationally reported economic losses are concentrated in OECD and other high-income countries, reflecting the concentration of economic assets (Figure 2.6).
According to Munich Reinsurance (Munich Re, 2013), both overall and insured losses have been increasing steadily since 1980, reaching an annual average of US$200 billion in 2012 (Figure 2.7). This is consistent with figures from Swiss Reinsurance (Swiss Re, 2014a), which also show economic losses from disasters trending up to an annual average of around US$200 billion.
In 2013, below-average economic losses from disasters were recorded, with estimates ranging from US$140 billion (Swiss Re, 2014a) to US$190 billion (Aon Benfield, 2013

Aon Benfield. 2013,Annual Global Climate and Catastrophe Report, Impact forecasting 2013. Chicago, Illinois.. .
). The disasters with the largest economic impacts in 2013 were the Central European floods in May and June with an estimated total economic loss of US$22 billion (Box 2.2), an earthquake in China in April with US$14 billion, and Typhoon Haiyan in November with US$13 billion.
While economic loss is rising in absolute terms, it mirrors increases in GDP (Neumayer and Barthel, 2010

Neumayer, Eric and Fabian Barthel. 2010,Normalizing economic loss from natural disasters: a global analysis, Centre for Climate Change Economics and Policy Working Paper No. 41. Munich Re Programme Technical Paper No. 6. Grantham Research Institute on Climate Change and the Environment Working Paper No. 31. November 2010.. .
). This confirms results from other studies (UNISDR, 2009a

UNISDR. 2009a,Global Assessment Report on Disaster Risk Reduction: Risk and Poverty in a Changing Climate, Geneva, Switzerland: UNISDR.. .
), which show that when adjusted for inflation and expressed as a proportion of global GDP, the global increase in economic loss
(Source: UNISDR with data from EM-DAT.)
Figure 2.6 Economic losses from disasters by income group, 1990-2013
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