Tiempo Climate Cyberlibrary

Can Disasters Help to Improve a Country's Economy?


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The Asia Pacific Mountain Network, the Asia-Pacific node of Mountain Forum, ran an e-discussion in July 2008 on whether or not natural disasters can improve a national economy. This is the synthesis report.

The e-discussion "Can disasters help to improve a country's economy?" was organized by the Asia Pacific Mountain Network in response to an article by Drake Bennett, which appeared on the Boston Globe website in July 2008. The article was entitled "How disasters help: Natural disasters can give a boost to the countries where they occur - and sometimes, the more the better." A total of 32 contributions were received from Asia Pacific Mountain Network/Mountain Forum members from July 7-18th 2008, sharing valuable information and ideas. Contributions came from a wide range of professionals from research institutions, academia, development and rehabilitation organizations, non-governmental organizations (NGOs) and civil society.

The article by Bennett suggests that the earthquake that hit Sichuan Province in China in May 2008, leaving more than 80,000 dead and causing widespread devastation, has also helped the country’s economy. According to a state information centre, the funds allocated to rebuilding far outweigh the economic loss caused by the quake, enough to raise national economic growth by 0.3 per cent. A lively e-discussion developed around this theme and is summarized in this report.

The position of discussants can be grouped broadly into three categories.

  • People who believe that disasters are unnecessary, but unavoidable and, if tackled properly, can actually help to boost a country’s economy. Of these, some considered that gains were only short-term. This position was supported mainly by academicians and researchers and partly by economists and ecologists.
  • People who believe disasters are a natural, necessary and acceptable part of the mechanism maintaining the Earth’s life support system (homeostasis). This position was supported mainly by ecologists and economists.
  • People who believe disasters are an unnecessary evil, hindering human development activities, killing, destroying structures and placing human civilization at risk. This position was supported mainly by development and rehabilitation workers, NGOs, and civil society.

Disasters are unnecessary, but if tackled properly can boost the economy

Disasters can provide an opportunity to bring technological solutions, economic development and other benefits to a country, particularly to disaster-affected areas. The 1991 eruption of Mt Pinatubo in the Philippines severely affected the American Clark Air Base and the Subic Naval Base. Post eruption, after the Americans left, financial resources, investment and infrastructure poured into the area, turning Luzon into an economic hub. Another example is the Bhuj earthquake in India in 2001, which brought about the complete destruction of the city of Bhuj. This disaster provided an opportunity for the city to be rebuilt in a planned manner.

Asia-Pacific Mountain Network

© Ajaya Mani Dixit/ICIMOD

Supporting this line of thought, one discussant provided the example of the 2004 tsunami, after which the Indonesian Government was able to make a peace agreement with the separatist group who were fighting against the Indonesian Government to establish a free nation. Now the peace process is going well.

This school of thought is considered to be a deviation from conventional thinking and popular perceptions of disasters, however. A few discussants agreed about the economic facts and figures, but cautioned that this does not imply that disasters are something we should look for. Economic development does not necessarily equate to development overall. There is also no direct correlation between disasters and economic growth. In many countries, economic growth has widened income inequality, even while pulling a significant percentage of the population out of poverty. To many, economic growth is a mixed blessing.

The Shock Doctrine by Naomi Klein, referred to by some discussants, emphasizes that disasters that result in development do not necessarily improve the lives of the poor. Natural disasters can provide an opportunity to rapidly introduce structural adjustment policies and free market reforms. An example of this is the reconstruction of the Sri Lankan and Thai coastlines after the tsunami in 2005. Smallholders and fishing families have been forcibly displaced in favour of large tourism projects. This indicates that a short-term rise in regional and national economic indicators following a natural disaster is not necessarily a good sign and is certainly not evidence of development for the people worst affected.

Some discussants argued that, although in the short-term disasters may give rise to opportunities to improve the economy, in the long-term, these gains are not sustainable. Pakistan’s 2005 earthquake killed thousands of people and wiped out a whole generation of mountain people and communities. International donors invested large sums of money in relief and rehabilitation. Even though there were efforts to manage and channel the funds, a lot of money is alleged to be unaccounted for. The lesson is that proper transparent mechanisms are needed to manage funds invested by international donors to benefit affected communities and ensure sustainable economic improvement.

Discussants argued that disasters cause a lot of discomfort and suffering and that, although there may be some initial benefits from reconstruction, which may be perceived to be development, it is mainly the development workers, such as building contractors and NGOs, that stand to benefit.

Disasters maintain the balance of nature

One of the discussants argued that disasters of a low intensity are beneficial in helping to maintain the balance of nature, referring to the Malthusian Theory, which proposes that continuous rapid increases in population need to be checked by natural disasters. Others noted that natural disasters such as floods, landslides, forest fires and so on contribute to ecological niches and help the survival and perpetuation of the species inhabiting the area. Natural disasters are perceived as a crucial tool by which nature maintains its dynamics. Another discussant brought in the Hindu mythological ideas of destruction and reconstruction, referring to the Pralaya Mahapralaya theory.

Disasters cause loss and should not be viewed as an opportunity

The majority of discussants considered that disasters are essentially about loss and should not be seen as an opportunity. Some expressed concern that the argument that disasters present an opportunity may lead to the same logic as "war is good". Disaster impacts are multifaceted and not entirely manifest or visible. Economic impact is just one dimension of a disaster and closely linked to this are the social, environmental, health and human dimensions, which make up the integrated impact of a disaster. To say that disasters help the economy is a materialistic view.

Facing the Humanitarian Challenge: Towards a Culture of Prevention

More effective prevention strategies would save not only tens of billions of dollars, but save tens of thousands of lives. Funds currently spent on intervention and relief could be devoted to enhancing equitable and sustainable development instead, which would further reduce the risk of war and disaster. Building a culture of prevention is not easy. While the costs of prevention have to be paid in the present, its benefits lie in a distant future. Moreover, the benefits are not tangible; they are the disasters that did not happen.

Kofi Annan, United Nations Secretary-General, United Nations General Assembly, 1999

As one of the discussants argued, as well as loss of life, disasters entail a loss of investment in those who are killed and have a long-term psychological impact on those who survive, affecting their capacities and capabilities and resulting in a loss of productivity, opportunity costs and more. Therefore, the indirect cost of a disaster is much larger than the direct cost. A loss is a loss and cannot be turned into an investment and produce income or benefits. In addition, losses are not limited to lives, materials and animals, but also include traditional wisdom and knowledge, making future settlements more prone to natural disasters.

It was pointed out by one of the discussants that today’s settlements are not planned considering the environment or geological stability, but instead are based on economic factors, which makes them highly vulnerable to disasters. The discussants encouraged planned, geofriendly settlements to avert disasters and help improve economies.

OXFAM International’s report, Rethinking Disasters, states that disasters not only cause immediate suffering, but hold back long-term development. About two to six per cent of South Asia’s gross domestic product (GDP) is lost to disasters every year and poor people are the worst affected. For example, in Sindh, Pakistan, in 2006, farmers lost 60 per cent of their annual income just because of damage to their cash crops.


The factors that turn natural events into a human disaster are generally the result of human action and inaction. Loss due to natural disasters is largely caused by human activities. Climate change has increased human vulnerability to disasters, especially the vulnerability of the poor. Inappropriate policies, weak infrastructure, poor governance and corruption, ineffective monitoring and communication, bad development decisions, injustice, and discrimination are some of the human factors that aggravate disasters.

Learning from past disasters, better preparedness and planning and mainstreaming disaster risk reduction into development planning are needed to minimize the adverse impacts of disasters. Preparedness should be oriented towards increasing the awareness of authorities about the long-lasting effects of disasters on all people, especially the poor and on the environment and the Earth as a whole.


The e-discussion was moderated by Mandira S Shrestha, Tek Jung Mahat and Daan Boom. Discussants included Agha Iqrar Haroon, Basu Dev Regmi, Benedicto Q Sánchez, Bhubaneswor Dhakal, Brian MacCall, C S Silori, Emman Maceda, Ganga Nakarmi, Gehendra Gurung, Gobinda Palit, Him Lal Shrestha, Ishara Mahat, Jahangir Meher, Kishor Pradhan, Krishna Dhakal, Kundan Dhakal, Mandira S Shrestha, Mayumi Yamada, Mohinder Slariya, Neel Kamal Chapagain, Nishant Alag, P C Joshi, Rajendra K C, Ritesh Arya, Shanker Raj Barsila, Shirish S Garud, Sreedhar Ramamurthi, Srabani Roy, Ujol Sherchan, Will Tuladhar-Douglas and Wolfgang Bayer.

Further information

Asia Pacific Mountain Network, c/o Daan Boom, Coordinator, or Tek Jung Mahat, Node Manager, International Centre for Integrated Mountain Development, GPO Box 3226, Kathmandu, Nepal. Fax: +977-1-5003299/5003277. Email: apmn@mtnforum.org. Web: www.icimod.org/?page=168.

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Updated: May 15th 2015