‘Indirect disaster effects cost the world nearly $2 trillion per year’

From 1970 until 2000, the costs of disasters averaged $70 to $80 billion. Those mainly preventable costs doubled this century to average $180 to $200 billion annually, according to a recent report published by the UN Office for Disaster Risk Reduction (UNDRR).  

Most of the exorbitant costs of disaster are preventable with proper funding and planning —one of the main messages for this year’s International Day for Disaster Risk Reduction, themed Fund Resilience, Not Disasters, observed on Monday.

“Every dollar invested in resilience saves many more in avoided losses and protects the dignity of those most at risk. The choice is ours. We can continue to fund disaster response, or we can invest in resilience,” said Amy Pope, chief of the International Organisation for Migration (IOM).

In 2024 alone, nearly 46 million people were displaced by disasters, the highest number ever recorded, but disaster risk reduction efforts remain severely underfunded, according to the IOM. 

Preventable disaster costs

“As the climate crisis accelerates, disasters are multiplying and amplifying – devastating lives and livelihoods, erasing decades of development gains in an instant,” said UN Secretary-General António Guterres in his message to mark the Day. 

“The cost to the global economy is staggering: an estimated $2 trillion every year, when indirect costs are taken into account.”

Indirect costs include the wider social and ecosystem losses that come as a result of natural catastrophes. Earthquakes, floods, storms, droughts and heatwaves made up 95 per cent of direct costs in the past two decades, according to the report. 

“Wildfires in Europe and the Americas, and devastating earthquakes in Myanmar and Afghanistan prove that no country is immune, but the heaviest toll falls on communities already struggling with conflict, poverty, and hunger,” said Pope.

Different natural catastrophes affect different regions in the world. In South Sudan, annual floods can submerge houses, farmland and schools, forcing people to flee their homes and increasing food insecurity. 

As a disaster prevention measure, dykes have been constructed in South Sudan with the support of the IOM, protecting farmland and restoring livelihoods. 

Promoting disaster reduction 

The International Day for Disaster Risk Reduction was established in 1989 to foster a global culture of risk-awareness and celebrate how communities around the world are reducing their exposure to disasters. 

“The impact of disasters depends in large part on the choices we make, how strong our infrastructure is, how much we invest in prevention, and how well we protect the most vulnerable,” said Pope.

With planning and funding, the negative impacts of disasters can be reduced. Accordingly, this year’s Day call is for an increase in disaster risk funding and for the development of risk-adapted and resilient private investment. 

Guterres stressed that for every decision they make, the public and private sectors must take risk into account to minimise exposure and vulnerability to hazards. 

“On this Day, let’s commit to meet surging risk with a surge in funds, and build a safer and more equitable future for all,” he said. – UN