Tairāwhiti – Economic losses, including mortality and injury, can be measured in dollar terms after events such as cyclone Gabrielle, but this does not mean that damage that costs the same in different areas and countries is equivalent.
The series of earthquakes that struck Canterbury in 2010/11 were the costliest ever natural disasters in Aotearoa. Insurance companies and the public sector funded two-thirds of the costs.
The national disaster fund, which had accumulated a total value of $6.1 billion, was completely depleted following the earthquakes.
According to the Reserve Bank’s estimates, total claim costs were around $38 billion. The fund is currently projected to reach $1.75 billion by 2030, in the absence of further large natural disasters.
Recovery is influenced by how easy it is for communities to access the money needed to rebuild. For some communities that have high political visibility this might be trivial, but for others, such as those in developing countries or hard-to-reach communities, accessing the capital needed to get back to normality can be an enormous undertaking.
Deeper impacts to social bonds, such as psychological trauma, community displacement, and ongoing stress across day-to-day life, can be even more damaging to communities than economic impacts.
Unfortunately, it is the vulnerable or marginalised communities who are also most at risk of the consequences of climate change, economic forecaster Berl says.
According to the OECD, we lose an estimated 0.47 percent of GDP, on average, each year, to natural disasters. That’s nearly as much as the entire dairy product manufacturing industry. And even this is considered to be an underestimation.
Although, on the face of it, economic indicators such as GDP and incomes seemed to have improved, as the rebuild supported increased economic activity, this should not be seen as a sign of social improvement. Over a hundred lives were lost and significant infrastructure was damaged.
Many of the impacts above will be similar for the Upper North Island following the flooding and Cyclone Gabrielle. Tourism will be heavily impacted, as will building and labour costs.
As was the case following the Canterbury earthquakes, migration may need to increase to meet the labour demand for construction workers. In addition, the flooding has also heavily impacted local industries such as horticulture and forestry. At this stage, it is impossible to estimate the total costs of the event.
Given the huge cost of these events, and the fact that risks are generally well-known to homeowners and insurance companies, the companies are less likely to insure the most vulnerable properties in the future. Therefore, the need for long-term planning and risk management has never been more urgent.
