Turkey earthquake: How are the true costs calculated?

A report published by the Turkish Enterprise and Business Confederation has put the cost of the earthquake in eastern Turkey at $84 billion (€80 billion), about 10% of Turkey's gross domestic product. About $70.8 billion is from the damage to homes, $10.4 billion from the loss of national income and $2.9 billion from the loss of working days. 

US data analytics firm Verisk put the economic losses at a minimum of $20 billion, while several other estimates lie in between. Assessing the damage caused by the earthquake in Syria will likely take longer. The scale of destruction may be of a similar magnitude but result in a far lower cost.

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There are generally two approaches to calculating the economic effects of such disasters, according to Melanie Gall from Arizona State University's Spatial Hazards Events and Losses Database for the United States (SHELDUS).

One is direct impacts, that is those immediately caused by the event such as damage to homes and injuries. Direct losses may be assessed by professional assessors hired by insurance companies, Gall told DW.

Indirect impacts are those that emanate from secondary or tertiary effects such as business losses during shutdowns, loss of income for workers, and people suffering from post-traumatic stress disorder (PTSD) — a mental condition that is triggered by a terrifying event. Such losses are usually calculated using economic models.

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