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This is a joint post with Christian Meyer. 

As government workers and international humanitarian aid agencies scramble to respond to super-typhoon Haiyan, the devastation in the Philippines serves as a reminder about the disproportionately high costs of disasters—natural and man-made—for poor people in poor countries.

Let us put two things into perspective: the human costs of disaster, and the costs of recovery and prevention.

Around the world, poor people are especially vulnerable to disasters. Even a minor shock can destroy lives and economic assets, pushing already poor households into even deeper poverty. In the Philippines, median household consumption expenditure per person is just above $2.50 a day – which means that half of the population, or 45 million people, live on less than that. In rural Indonesia, the country hardest hit by the deadly 2004 Indian Ocean tsunami, median daily consumption per person is about the same. Compare this to the New York City area, hit by Superstorm Sandy one year ago. The median New Yorker has an income that is about 25 times higher—and that’s after taking into account differences in living costs. 

Vast differences in incomes mean vastly different capacities of individuals and communities to withstand disaster: In Indonesia’s Aceh province alone, the 2004 tsunami killed more than 220,000 people. In the Philippines, thousands of people have been confirmed dead and the official death toll is certain to rise as more information becomes available. In the United States, Hurricane Sandy, while displacing thousands and causing significant damage, killed 72 people.

At about $2.50 per day, a disaster may not only wipe out livelihoods in the short-term, but also leave households more vulnerable in the long-term. Over the last three decades, the Philippines recorded 268 disasters, from earthquakes and tsunamis to volcanic eruptions and landslides—and all evidence points to a further increase in extreme weather events and natural hazards as a result of climate change, particularly in already vulnerable regions. As the result of natural hazards, the Philippines already faces estimated economic losses of about 0.8 percent of GDP, every year.

What can be done? The 2004 tsunami increased awareness within the development community of the importance of preparation: the relevant buzzwords are resilience and disaster risk reduction. But the costs of disaster preparedness and recovery are high, and the ability of the affected countries to finance these needs is limited.

In 2011 the Philippine government allocated just $625 million for disaster risk reduction. The Indonesian government and international donors spent almost $7 billion on reconstruction activity after the 2004 tsunami. The US federal government aid package following Superstorm Sandy was $60 billion (With climate change in mind, former mayor Bloomberg proposed spending an initial $20 billion to prepare New York City for extreme weather events.)

The World Bank estimates that developing countries will need to invest a trillion dollars between now and 2025 to adapt to climate change. More than 1.3 billion people live in the rich world, which has the money to reconstruct, build resilience, and adapt to climate change. We worry about the other 5.7 billion.

Disclaimer

CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.