Tuesday, October 30, 2012

Hurricane Sandy: The hidden costs

Kate Dalley in the BBC: The full impact from the huge storm Sandy, which was downgraded from a hurricane late on Monday, is yet to be known, and the full financial cost may be difficult to calculate. Damage totalling $10bn to $20bn (£6bn-£12bn). That's how much some analysts expect Sandy, the so-called "Frankenstorm" currently charging up the US East Coast, to cost when all is said and done.

But that number - large as it is - underplays the full economic impact of Sandy's wrath, ignoring both the human and government costs and the unexpected economic boom that major storms can bring. "The costs are generally calculated as damages to houses, structures, and other assets. For the US, they are calculated by taking the insured losses and multiplying by two, under the assumption that half of losses are insured," says William Nordhaus, a professor of economics at Yale University.

"It does not generally include losses such as lost work, time spent preparing and taping up your windows, losses from worrying, or (in the case of Yale) the lost learning from cancelling classes," he adds.

….Make no mistake - the storm will lead to historic levels of financial damage, not to mention dozens of lives lost. It has claimed 69 lives in the Caribbean.

Apart from the physical destruction of property, there are additional costs to governments, businesses and individuals. These are often more about the human cost and less to do with the physical wealth destroyed by a storm….

From NASA, a view of Sandy showing the entire earth

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