Costing the impacts:extreme events 181disasters amount to approximately 0.2% of global world product (GWP)
and vary from about 0.3% of aggregate GDPs for the North and Central
American and the Asian regions to less than 0.1% for Africa (Table 7.2).
These average figures hide big regional and temporal variations. For in-
stance, the annual loss in China from natural disasters from 1989 to 1996
is estimated to range from three to six per cent of GDP, averaging nearly
four per cent^63 – over ten times the world average. The reason why the
percentage for Africa is so low is not because there are no disasters there –
Africa on the whole has more than its fair share – but because most of the
damage in African disasters is not realised in economic terms, nor does
it appear in economic statistics. Further such averaged numbers hide the
severe impact of disasters on individual countries or regions which, as
we mention below with the exampleof Hurricane Mitch, can prove to
be very large indeed.
The percentages we have quoted are conservative in that they do not
represent all relevant costs. They relate to direct economic costs only and
do not include associated or knock-on costs of disasters. This means, for
instance, that the damage due to droughts is seriously underestimated.
Droughts tend to happen slowly and many of the losses may not be
recorded or borne by those not directly affected. Another reason for
treating the information in thebox with caution is because of the large
disparities between different parts of the world and countries regarding
per capita wealth, standard of living and degree of insurance cover. For
instance, probably the most damaging hurricane ever, Hurricane Mitch,
that hit Central America in 1998 does not appear in Table 7.3 as the total
insured losses were less than one billion dollars. In that storm, 600 mm
of rainfall fell in forty-eight hours, there were 9000 deaths and economic
losses estimated at over six billion dollars. The losses in Honduras and
Nicaragua amounted to about seventy and forty-five percent respectively
of their annual gross national product (GNP). Another example that does
not appear in Table 7.3 for the same reason is the floods in central Europe
in 1997 that caused the evacuation of 162 000 people and over five billion
dollars of economic damage.
How about the likely costs of extreme events in the future? To es-
timate those we need much more quantitative information about their
likely future incidence and intensity. Very few such estimates exist.One
was mentioned in Chapter 6 (Figure 6.8) – a possible factor of five
in extreme precipitation events in Europe under doubled pre-industrial
carbon dioxide concentration. A speculative but probably conservative
calculation of a global average figure for the future might be obtained as
follows. Beginning with the 0.2% or 0.3% of GDP from the insurance
companies’ estimate of the current average costs due to weather-related