Study finds floods, storms and droughts cost global economy $520bn a year and highlights need to tackle climate change.

Floods, earthquakes, tsunamis and other extreme natural disasters push 26 million people into poverty each year and cost the global economy more than half a trillion dollars in lost consumption, the World Bank has said.

A bank study of 117 countries concluded that the full cost of natural disasters was $520bn (416bn) a year 60% higher than any previous estimate once the impact on poor people was taken into account.

The World Bank published its findings at the COP22 climate change conference in Marrakech and said the report underlined the need to protect the most vulnerable against the effects of global warming.

Jim Kim, the World Banks president, said: Severe climate shocks threaten to roll back decades of progress against poverty. Storms, floods, and droughts have dire human and economic consequences, with poor people often paying the heaviest price. Building resilience to disasters not only makes economic sense, it is a moral imperative.

The report cited evidence from the impact of Tropical Storm Agatha in 2010, which led to consumption per head falling by 5.5% and increased poverty by 14%.

Policies that made countries more resilient to extreme natural disasters and improved early warning systems could bring benefits of $100bn a year, the bank said.

It cited the examples of Kenya, where the countrys social protection system had provided help to vulnerable farmers well before the 2015 drought, and Pakistan, where a rapid response programme of cash grants after severe floods in 2010 had benefited 8 million people.

Stephane Hallegatte, who prepared the World Bank report, said: Countries are enduring a growing number of unexpected shocks as a result of climate change. Poor people need social and financial protection from disasters that cannot be avoided. With risk policies that we know to be effective, we have the opportunity to prevent millions of people from falling into poverty.

The banks research showed that previous studies had underestimated the impact of natural disasters because they had measured the cost by assessing damage to physical assets.

Costs were much higher when lost consumption of poor people who have fewer assets than the better off was taken into account.

It said $1 in losses did not mean the same to a rich person and poor person.

The same loss affects poor and marginalised people far more because their livelihoods depend on fewer assets, their consumption is closer to subsistence levels, they cannot rely on savings to smooth the impacts, their health and education are at greater risk, and they may need more time to recover and reconstruct.

A flood or an earthquake can be disastrous for poor people, but have a negligible impact on a countrys wealth or production if it affects people who own almost nothing and have very low incomes.

Read more: https://www.theguardian.com/business/2016/nov/14/natural-disasters-poverty-world-bank-climate-change

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