Impact of natural disasters on economy and how to mitigate their economic consequences

4 mins read

Any natural occurrence that results in significant property damage or fatalities is a natural disaster. There are various types of natural disasters such as they can Geophysical (Earthquakes, Volcanoes), Biological (Infectious Diseases), Meteorological (Tornadoes), Hydrological (Flood, Hailstorm), and Climatological (Heat Wave, Cold Wave, Drought, Forest Fire), which interrupt supply chains, devastate infrastructure and also cause loss of lives.

If we talk about natural disasters in recent times, we find that Pakistan faced a flood catastrophe recently, it was a natural hydrological catastrophe that caused havoc in the country, and 33 million people got affected by it, out of which 8 million are facing a severe health crisis. Nearly 1740 lost their lives. The most substantial losses were in the housing, agriculture, livestock, transportation, and communications sectors, at USD 5.6 billion, USD 3.7 billion, and USD 3.3 billion, respectively. Balochistan, Khyber Pakhtunkhwa, and Punjab are the following worst-affected provinces, accounting for close to 70% of all damages and losses. Sindh is the worst-affected province overall.

It is anticipated that the floods would have a direct negative impact on GDP loss of about 2.2 percent of FY22 GDP. At 0.9 percent of GDP, the agriculture sector is predicted to experience the greatest decline. The industrial, foreign commerce, and services sectors would all be impacted by the harm and losses in agriculture. The PDNA (Post-Disaster-Needs-Assessment) lays the foundation for a plan for rehabilitation and reconstruction that aims to give Pakistan’s most vulnerable citizens a better future. The study projects that total economic losses would be close to USD 15.2 billion and that total damages would exceed USD 14.9 billion. At least USD 16.3 billion is estimated to be required for restoration and reconstruction in a resilient manner in this regard. The government is working to guarantee macroeconomic stability and fiscal sustainability while providing immediate help to the affected communities and fostering an early recovery.

Like the flood, there was another disaster, a global pandemic (Covid-19) it was a biological disaster that damaged property, and the economy and has also taken 6.71 million lives till 11 January around the globe respectively. The numbers of losses in sectors differ from the flood but the damage is to great extent. The impacts are the same such as loss of infrastructure and capital assets. Losses in life, the exodus of skilled laborers, and the disruption of education caused by the destruction of educational infrastructure all reduce human capital.

To mitigate the economic effects of natural catastrophes, investing in risk reduction and disaster preparedness initiatives is essential. This can be achieved by building infrastructure that is more resilient to natural disasters, such as flood-prevention sea walls or earthquake-resistant structures. Governments and groups from the business sector can also spend money on early warning and emergency response systems to decrease the effects of natural catastrophes

Because after a natural disaster, it is essential to provide financial and logistical support to help businesses and communities recover. This may entail repairing damaged infrastructure, assisting with the company and home relocation, and providing temporary housing, food, and medical attention to those impacted. Governments may also implement initiatives like tax incentives or grants to help businesses and communities recover.

To reduce the economic effects of natural disasters, it is essential to engage in prevention and preparedness measures as well as provide aid to those affected after a disaster so that any country thus faces less economic consequences and the economy of the country stand firm.

Mirza Muhammad Abubakar Naeem is a university student.

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