Super Typhoon Haiyan Aftermath

Super Typhoon Haiyan is estimated to have been strongest storm ever to ever make landfall. The Philippines, as a nation of 7000 islands, experiences an average of nine cyclones coming ashore each year. But even with experience and relative preparedness for serious tropical storms, no nation could withstand the fury of a storm that reach 230 mile per hour winds. There are approximately 2500 Philippine dead, 20,000 injured and 90% of the structures wiped out across a 500-square-mile area. Natural disasters have huge economic impacts, but their aftermath has long-term social, economic and political ramifications.

The Philippines annually spends an estimated half a percent of its total GDP on earthquakes, volcanos, storms, and other natural disasters. Over the last 30 years, the ongoing annual loss to the $250 billion economy is estimated at 2% of GDP annually. Despite the fact that the storm came ashore in the poor region of the Eastern Visayas, which contribute only about 2-3% of Philippine GDP each year, almost all the economic output of the region is gone. Reports indicate that coconut production, a major Philippine export, will take years to recover and that there is heightened risk that the recent boom in manufacturing and mining may wither if the government cannot handle reconstruction.

Each year droughts in Africa, flooding in Pakistan and Australia, and tropical cyclones in Southeast Asia and the Gulf of Mexico, earthquakes in Turkey, Haiti, and Japan undermine prosperity and challenge political stability around the globe. According to Stratfor Global Intelligence, The Center for Research on the Epidemiology of Disasters estimates that anywhere from 3-12% of the world population each year are affected by natural disasters and the global costs can range from $50 billion to $350 billion.

Disasters obviously have a disproportionate impact on richer and poorer states. The direct cost of Japan's triple disaster in 2011 of earthquake, tsunami, and nuclear meltdown is estimated at $240 billion, but that is only 4% of Japan's $6 trillion economy. Whereas the cost of the 2010 earthquake in Haiti was only $10 billion, but that amounted to over 120% of the island's total GDP.

Due to higher quality infrastructure, forecasting and early warning systems, response capabilities and insurance coverage, rebuilding businesses and reviving agriculture activity usually happens quickly in Japan, Europe, the United States, and other developed countries. But trauma in undeveloped countries from a natural disaster can take decades to rebuild and often drives away any hope of attracting foreign investment and jobs.

But even in the rich countries, natural disasters can threaten sociopolitical stability and have long-term economic growth implications. Japan's nuclear energy sector has not recovered from the Fukushima crisis, and its energy profile may be permanently changed due to domestic opposition to restarting Japan's 44 other nuclear reactors. Prior to the earthquake and tsunami of March 2011, nuclear reactors generated 30% of Japan's electrical power, with plans to raise this to over 50% in the next twenty years. As a nation that imports almost all its oil or natural gas, Japan saw nuclear energy as a strategic priority in maintaining competitiveness for its industry. This despite concerns about the ability of Japan's nuclear plants to withstand seismic activity after the Kashiwazaki-Kariwa Nuclear Power Plant was completely shut down for 21 months following an earthquake in 2007.

Since the Tsunami, Japan has increased consumption taxes, run its national debt up to 150% of GDP, forced down the exchange rate of its currency and begun an offensive military buildup. All of this threatens a big jump in inflation, but the Japanese national government is under extreme pressure to demonstrate its responsiveness to the economic crisis caused by the loss of cheap nuclear energy in the short run and its ability to mitigate future natural disasters in the long run.

The Philippines has been promised assistance from the United States, the United Kingdom, Canada, Australia, Japan, and many others to address immediate humanitarian and economic concerns. But providing aid also allows pursuit of political objectives. The U.S. assistance that is pouring into the Philippines may help generate public goodwill at a time when the two allies are negotiating expanding U.S. military port visitation rights to the former U.S. naval base at Subic Bay. Japan's contribution to the relief effort is symbolic from a nation that invaded the Philippines during World War II, but now wants the Philippines as an ally to contain China's effort to dominate the South China Sea.

Over time, the direct damage from natural disasters will fade, but there often are substantial long-term social, economic and political ramifications. The Philippine economy grew at an impressive 6.6% last year and was expected to continue to grow at similar rates this year and next year. But before super typhoon Haiyan's came ashore, the nation 107 million people already suffered from an unemployment rate of 20% and a poverty rate of 28%. Given the scale of storm's devastation, a collapse in Philippine economic growthin the aftermath of super typhoon Haiyan may be a formula for political chaos and popular rebellion.

Super Typhoon Haiyan is estimated to have been strongest storm ever to ever make landfall. The Philippines, as a nation of 7000 islands, experiences an average of nine cyclones coming ashore each year. But even with experience and relative preparedness for serious tropical storms, no nation could withstand the fury of a storm that reach 230 mile per hour winds. There are approximately 2500 Philippine dead, 20,000 injured and 90% of the structures wiped out across a 500-square-mile area. Natural disasters have huge economic impacts, but their aftermath has long-term social, economic and political ramifications.

The Philippines annually spends an estimated half a percent of its total GDP on earthquakes, volcanos, storms, and other natural disasters. Over the last 30 years, the ongoing annual loss to the $250 billion economy is estimated at 2% of GDP annually. Despite the fact that the storm came ashore in the poor region of the Eastern Visayas, which contribute only about 2-3% of Philippine GDP each year, almost all the economic output of the region is gone. Reports indicate that coconut production, a major Philippine export, will take years to recover and that there is heightened risk that the recent boom in manufacturing and mining may wither if the government cannot handle reconstruction.

Each year droughts in Africa, flooding in Pakistan and Australia, and tropical cyclones in Southeast Asia and the Gulf of Mexico, earthquakes in Turkey, Haiti, and Japan undermine prosperity and challenge political stability around the globe. According to Stratfor Global Intelligence, The Center for Research on the Epidemiology of Disasters estimates that anywhere from 3-12% of the world population each year are affected by natural disasters and the global costs can range from $50 billion to $350 billion.

Disasters obviously have a disproportionate impact on richer and poorer states. The direct cost of Japan's triple disaster in 2011 of earthquake, tsunami, and nuclear meltdown is estimated at $240 billion, but that is only 4% of Japan's $6 trillion economy. Whereas the cost of the 2010 earthquake in Haiti was only $10 billion, but that amounted to over 120% of the island's total GDP.

Due to higher quality infrastructure, forecasting and early warning systems, response capabilities and insurance coverage, rebuilding businesses and reviving agriculture activity usually happens quickly in Japan, Europe, the United States, and other developed countries. But trauma in undeveloped countries from a natural disaster can take decades to rebuild and often drives away any hope of attracting foreign investment and jobs.

But even in the rich countries, natural disasters can threaten sociopolitical stability and have long-term economic growth implications. Japan's nuclear energy sector has not recovered from the Fukushima crisis, and its energy profile may be permanently changed due to domestic opposition to restarting Japan's 44 other nuclear reactors. Prior to the earthquake and tsunami of March 2011, nuclear reactors generated 30% of Japan's electrical power, with plans to raise this to over 50% in the next twenty years. As a nation that imports almost all its oil or natural gas, Japan saw nuclear energy as a strategic priority in maintaining competitiveness for its industry. This despite concerns about the ability of Japan's nuclear plants to withstand seismic activity after the Kashiwazaki-Kariwa Nuclear Power Plant was completely shut down for 21 months following an earthquake in 2007.

Since the Tsunami, Japan has increased consumption taxes, run its national debt up to 150% of GDP, forced down the exchange rate of its currency and begun an offensive military buildup. All of this threatens a big jump in inflation, but the Japanese national government is under extreme pressure to demonstrate its responsiveness to the economic crisis caused by the loss of cheap nuclear energy in the short run and its ability to mitigate future natural disasters in the long run.

The Philippines has been promised assistance from the United States, the United Kingdom, Canada, Australia, Japan, and many others to address immediate humanitarian and economic concerns. But providing aid also allows pursuit of political objectives. The U.S. assistance that is pouring into the Philippines may help generate public goodwill at a time when the two allies are negotiating expanding U.S. military port visitation rights to the former U.S. naval base at Subic Bay. Japan's contribution to the relief effort is symbolic from a nation that invaded the Philippines during World War II, but now wants the Philippines as an ally to contain China's effort to dominate the South China Sea.

Over time, the direct damage from natural disasters will fade, but there often are substantial long-term social, economic and political ramifications. The Philippine economy grew at an impressive 6.6% last year and was expected to continue to grow at similar rates this year and next year. But before super typhoon Haiyan's came ashore, the nation 107 million people already suffered from an unemployment rate of 20% and a poverty rate of 28%. Given the scale of storm's devastation, a collapse in Philippine economic growthin the aftermath of super typhoon Haiyan may be a formula for political chaos and popular rebellion.