Economic Impacts of Natural Disasters on the US - Research Paper Example

Economic impacts of natural disasters on the United s and Paper Outline Outline Introduction 2. Background – Review of the relevant works on the subject. 3. Methodology 4. Results the findings from implementation of your selected methods. 5. Conclusions 6. References Introduction In the recent past, reports on natural disasters have been on the rise globally. In addition to the frequent discussions that have seen a number of different literature reviews carried out on the effects of global warming, it has turned out that natural disaster is another menace that is on the rise (Alexander, 2000). It should however be noted that natural disasters are not a thing of yesterday. The concept traces its route in the ancient world with the evidence of different encounters from one generation to another in the form of volcanic explosions, floods, hurricanes, earthquakes, droughts, and other natural calamities. Despite falling victims of such calamities for the last decades, efforts to perplex policy formulators have been evidenced. However, the policy makers are uncertain over what can be done to tackle the menace associated with the occurrence of the natural calamities (Yamamura, 2013). There has also been little guidance offered by academics, and this has greatly affected the bitty approaches employed in tackling the issue from a number of disciplines (Alexander). This paper seeks to analyze the economic impacts of natural disasters in the United States. From contemporary literature, the concept of natural disaster is used to refer to the geophysical events that are characterized by a substantial departure from the normal climatic conditions. For instance, the occurrence of a flood that signifies substantial departures from the mediocre rainfall level within a geographical region forms a typical natural calamity. In some instances, the occurrence of these calamities might be predictable and are known to follow some geographical and seasonal patterns as it happens for typhoons and hurricanes (Fang, 2012). Others show vast irregularity in their occurrence, as it takes the case of floods and earthquakes. It is trivial to distinguish between technological and natural hazards. Most technological hazards occur as a result of the activities of human beings. Other social hazards occur which too should be differentiated from natural calamities. Literature Review Natural calamities have impacted the economy of the United States either positively or negatively for the many instances of their occurrence. In some cases, occurrence of natural disasters leads to infrastructural improvements and the adoption of better and improved technologies in the event of their occurrence. For instance, in a study discussing the earthquake that took place in Alaska in 1964, which provided for a chance of modernization and upgrade of the infrastructure is an indication that natural calamities can lead to a positive impact to the economy. The earthquake in Northridge also led to the transition of the area from a helpless aerospace industry to a modernized land full of green manufacturing bio-system that led to the creation of opportunities to residents (International Economic Development Council, 2010). The 1676 Boston fire resulted to the creation of better space for commercial productivity and expansion. Finally, the 1871 Chicago fire resulted to Chicago growing into the fastest developing economy among the western states (Rozario, 2010). As such, it can be concluded that occurrence of natural disasters can lead to technological improvements. In the regional science, the study of the association between natural calamities and the economic growth is vital. On one side, economic growth and development are crucial in influencing the quality of environment such as the case of air and water quality (Cole et al., 2010). Rampant economic growth is associated with accelerated rates of industrial production and therefore emissions to the atmosphere which escalates global warming, a common resultant to most natural calamities. The growing occurrences of natural disasters can also be associated to the increasing susceptibility of households and locals of different countries. Previous socioeconomic vulnerabilities can be said to exacerbate the effects of natural calamities leading to efforts of recovering from such traumas more difficult to the locals (Vasta and Krimgold, 2000). The occurrence of such an event could therefore result in an immediate rise in deprivation and poverty among the victims. This will see the economy of a country suffering after the occurrence of a disaster as many residents are left homeless, and massive property gets destructed. Insurance companies spend a fortune recovering the insured property in the event of such an occurrence (Benson & Clay, 2003). In the long run, the occurrence of natural calamities is negative according to Benson and Clay. However, other Literatures argue that natural disasters might result to positive impacts in the event of their occurrence through aspects such as improved growth and also in terms of reduced returns on physical capital (Toya, 2002). The greatest percentage of the occurrence, however, impacts the nation negatively as it is evidenced in the hurricane attacks that reduce the economic growth in the United States. Natural disasters are also a tool for escalation of inequalities among the residents. In the event of an occurrence, the poor who in most cases are not insured against such disasters due to insufficient financial capabilities are in the aftermath of an occurrence left in absolute poverty. As a result, the occurrence of a disaster is said to have absolute consequences to various households which stand to be a threat to the economy of the United States (Xiao, 2011). There also exists a group of locals who are not so poor, but who are also not underwritten against such risks. In the event of an occurrence, they are too prone to falling into poverty thus increasing the disparity within the society that is a threat to economic growth. Vulnerability to natural calamities depends on the structure of the economy and the developmental stage, the prevailing socio-economic state of affairs, the frequency of disasters, the mechanisms employed to cope with their occurrence and the criteria employed in assessing the risks. The poor could be left without access to the basics, growth of human capital gets impacted and to some extent a rise in child labor and crime occur (Xiao, 2011). Different types of natural calamities can pose diverse effects on the economic growth of a country (Loayza et al., 2009). These scholars observe the intensity, in terms of the size of the population affected, with which major disasters have on the economic growth of the different sectors of the country’s economy. These are the agricultural, service and the manufacturing industries, all of which play a prominent role in the determination of the economic worth of a country. Drought has been listed as a major factor impacting the manufacturing and the agricultural sector, as well as the service industry. It contributes to a reduction of the GDP by up to an average of 0.6% annually. Floods on the hand impact these sectors positively through increments in food productivity, thereby increasing the GDP to around one percent annually. It is believed that the occurrence of floods and the disappearance of drought are advantageous to the economy as the supply of water impacts agricultural productivity and the generation of electricity, which significantly affects the industrial and production industries. Storms and earthquakes lack significant statistical data recording their impacts in the event of an occurrence. It can however be concluded that the occurrence of any natural disaster impacts the economic growth of a nation negatively. The reason for this hypothesis is the foundation that any severe calamity leads to total destruction of the infrastructure through which growth is based on. Methodology A number of methods were used to analyze the impacts of natural calamities to the economy of the United States of America. One of the methods used in this research was the review of the literature on the different occurrences of natural calamities. Others include such methods as personal observation and interviewing the affected communities. The united states of America have in the past witnessed a number of natural calamities in different parts, all which have been recorded. Some states have received subsequent menaces while others have never had an occurrence of any form of calamity. These factors gave an avenue for giving comparisons between the different occasions. It also provided an avenue for comparison of the extent to which the occurrence of a calamity can have to the economic growth of the state. Through observation of the different impacts caused by the occurrence of natural calamities, we drew conclusions of the possible effects that could result to the economy of the United States. Finally, interviews to the victims of the natural calamities were contacted one on one to determine the possible effects of the calamities to their economic performance. Results From the research, it was evident that the United States of America suffers severe losses as a result of natural calamity occurrences. Different fatalities that occurred within 2012 show that a number of lives are lost, property worth millions of dollars is destroyed, crops and other goodies also get destroyed most of which are owned by the locals and others by the government. The table below shows a summary of the different events, the fatalities involved, injuries caused, and the costs incurred as a result of their occurrence. Table 1: Fatalities, injuries and costs as a result of calamities (Adopted from: ) From the findings, it is clear that natural calamities contribute to great losses in terms of costs incurred, loss of lives and even displacement of populations, some of whom are left homeless. The economy is impacted negatively due to the destruction of property, loss of capital goods and increased poverty levels as the number of dependents increases as soon as a calamity hits. It was also found that the amount of damages that result from the fatalities of natural calamities are quite enormous and results to negative effects to the economy as illustrated in the graph below. Graph1: Amounts of damage in relation to the number of Events in the U.S. (Adopted from: ) Conclusion In the recent past, the occurrence of natural calamities has gained commonness especially in the United States. Debates on whether the occurrences of such events cause negative effects to the economy are on board. From our analysis, it is clear that the occurrence of natural calamities impact the state affected economically through a number of ways. Positively, after the occurrence of a natural disaster, restructuring of the destroyed facilities is performed using modernized technological designs and tools leading to improved infrastructure in the long run. Whenever an event takes place, a considerable number of individuals are affected with some ending up in absolute poverty. This leads to increased poverty levels and a reduction in the GDP of the country. When such disasters increase, their impacts are felt at large, and this makes the economic growth and development lag behind in an effort to recover from the menace. References Alexander, D. E. (2000). Confronting Catastrophe: New Perspectives on Natural Disasters: Oxford University Press. Benson, C., & Clay, E. J. (2004). Understanding the economic and financial impacts of natural disasters. Washington, DC: World Bank. Cole, Matthew A., Robert J.R. Elliott, and Jing Zhang. 2010. Growth, Foreign Direct Investment, and the Environment: Evidence from Chinese Cities,Journal of Regional Science, http://dx.doi.org/10.1111/j.1467-9787.2010.00674.x International Economic Development Council. (2010). Case: Economic Diversification in theSan Fernando Valley after the1994 Northridge Earthquake. n.c.: Author. Loayza, N., Olaberria, E., Rigolini, J., & Christiaensen, L. (2009). Natural Disasters and Growth: Going beyond the Averages.World Bank Policy Research Working PaperWPS4980. Rozario, K. (2010). Rising From the Ruins. The Wall Street Journal. Verner, D. (2010). Reducing Poverty, Protecting Livelihoods, and Building Assets in a Changing Climate Social Implications of Climate Change in Latin America and the Caribbean.Burlington, MA: World Bank Group. Xiao, Y. (2011). Local Economic Impacts of Natural Disasters. Journal of Regional Science, 51(4), 804-820. doi:10.1111/j.1467-9787.2011.00717.x Yamamura, E. (2013). Institution and decomposition of natural disaster impact on growth. Journal of Economic Studies, 40(6), 720-738. Doi: 10.1108/JES-01-2012-0006 Read More