Plow moving rubble in Hatay Turkey after earthquake. Credit: Çağlar Oskay, Unsplash
By Maximilian Malawista
NEW YORK, Jun 16 2025 – Floods, earthquakes, and droughts are striking the wallets of the world harder than any other time in history. According to the Global Assessment Report on Disaster Risk Reduction, the cost of disasters is only growing, with annual expenditures exceeding 2.3$ trillion; accounting for over 2% of global GDP, and if represented as a nation, it would have the seventh largest GDP.
The $2.3 trillion expenditure accounts for indirect and ecosystem impacts. While direct costs are $180 – 200 billion on average annually during 2001 to 2020, which represents a 153% increase from the $70 – 80 billion between 1970 and 2000.
The report mentioned that “a national debt of just $300 billion was enough to trigger the European sovereign debt crisis.” displaying a financial threat on global stability, if left unchecked.
In the report, regions with higher economic stability directly transferred to a nation’s ability to be resilient to disasters, as when North America incurred $69.57 billion in losses during 2023, it only had an impact of .23% on its GDP. On the other hand, Micronesia, a subregion of oceania made up of 2,000 small islands, incurred a loss of $4.3 billion, which represented a 46.1% impact on its nominal $1.43 billion GDP.
Developed nations have the ability to bounce back, but developing nations with less capital have to choose between continuing economic expansion, or rebuilding from the rubble. Now there seems to be a solution.
In Pakistan, floods and storms have posed a continuing threat to the development of further economic growth, among sustainable infrastructure. To smartly invest, Pakistan looked at mangroves, an industry which brings economic stability but also storm protection. This protection ensures safety for their new industries, as the industries surround the mangroves, the mangroves become Pakistan’s insurance against disasters.
According to the IUCN, Pakistan made a “20 fold return”, revealing that mangroves were not only a defence mechanism, but also a foster for large economic returns bringing sustainable development among stability through offering habitats for fish and animals, protecting coasts against storms, and even storing “3 to 4 times more carbon then tropical forests”.
Makkio Yashiro, regional ecosystems coordinator for UNEP, says “Mangroves are an important tool in the fight against climate change. They reduce carbon in the atmosphere and they also make financial sense. Restoring mangroves is five times more cost effective than building ‘grey infrastructure’ such as flood walls, which also don’t help with climate change,”
UNEP also found that “for every dollar invested in mangrove restoration there is a benefit of four dollars” evaluating it as an investment with no cons.
The Three Harmful Cycles
Structural engineers in disaster relief training in earthquake ruins. Credit:This is engineering, Unsplash
Aromar Revi, Director of the Indian Institute for Human settlements (IIHS), identified three spirals commonly associated with the risk of disasters.
First, he said the rise in debt along with falling income. Adding that “Many companies carry hidden disaster risks because they are underinsured,” this underinsurance makes companies “vulnerable to disasters facing not only supply chain disruptions, but also wider financial instability”
Second, according to Theodora Antonakaki, Director of Bank of Greece’s Climate Change and Sustainability Centre (CCSC), is “a decrease in insurability.” adding that “traditional risk transfer methods are failing to keep up.”
For the third cycle, Ronald Jackson, Head of Disaster Risk Reduction, Recovery and Resilience Building Team, UNDP, noted an over reliance on costly humanitarian aid. He argued this reliance “weakens resilience” and underscores the crucial need for “disaster financing strategies,” specifically “budget tracking systems” to address regionally specific risks.
While many countries remain stuck in these harmful cycles, Japan, like Pakistan, has taken steps towards a proactive future through disaster risk reduction (DRR). Through investing in mitigation strategies, identifying key risks, and implementing sustainable devices, they have protected their economies and infrastructure, reducing all three cycles.
Japan, which frequently faces tsunamis and earthquakes, has adapted to disasters by using “seismic safety” measures. One of these technologies has been seismic isolation bearings, which allow buildings to have horizontal movement during earthquakes, minimizing any possible damage. For Tsunamis, Japan has employed seawalls and coastal forests, which either block or displace water, both strategies which have been effective in reducing damage.
The report argues that disasters themselves are not necessarily becoming more frequent or stronger, but rather things are getting more expensive to replace, raising economic tolls. A major reason for this is the lack of safe and resilient housing catered to regional risks. With estimates of “Approximately 1.2 billion people are expected to be living in cities by 2050 compared to 2020.”, urban densities must be built with DRR methods at the forefront of construction. Without such measures, infrastructure investments would risk being entirely lost. Research has consistently displayed that “disaster losses are already considerably larger than mitigation costs,” making preventionary DRR measures not only proactive and wise, but economically necessary.
United Nations Secretary General, António Guterres stated “This report clearly shows that investing in disaster risk reduction saves money, saves lives, and lays the foundation for a safe and prosperous future for us all. I urge all leaders to heed that call.”
IPS UN Bureau Report
