Cost of natural disasters on the rise

The direct costs of past disasters are likely to be at least 50% higher than previously reported, according to the 2013 global assessment report on disaster risk reduction (GAR13)

Financial costs this century from natural disasters, such as earthquakes, floods and storms, already top $2.5 trillion.

GAR13 estimates that total global annual average cost for earthquakes is more than $100 billion, while the bill for tropical cyclone wind damage is put at more than $80 billion.

The scale of the financial costs is greater because of globalisation, with companies outsourcing operations to cyclone-prone coastlines, flood-prone river basins and earthquake-prone cities, says the report.

It also cites examples of the potential impacts of a disaster on supply chains.

The damage wrought by the 2011 Japanese earthquake on one producer of microchips, for example, resulted in 150,000 fewer Toyota automobiles being built in the US.