A Lasting Aftershock
TimeWatch Editorial
May 3, 2016
One of the often overlooked consequences of catastrophic events in nature is the impact that these events have upon the economic strength and health of the region. When in the past this point has been raised, we immediately think of the cost of replacement and rebuilding. But there are other long term issues that quite often change forever the landscape and the societal structure. A careful examination reveals that quite apart from the difficulty experienced by those who lose homes or loved ones, is the immediate challenge to return to a semblance of normalcy. For those who are fortunate enough to have accumulated cash savings, the path to restoration, even though long and trying is still somewhat attainable. But even then, the assurance of availability of funds, the fulfilling of insurance claims, if they do exist, the actual reconstruction of the property and for that matter, the availability of further insurance for that property given the now established vulnerability of the area, causes great consternation and stress.
If those who are lucky enough to have accumulated cash savings and have insured property still experience the difficulties described above, imagine the experience of those who live from paycheck to paycheck, who are not prepared in advance for such a catastrophic event. There are so many who live in rental homes, or on property inherited from family members, but never having been properly documented, will have difficulty on establishing ownership. Then there are the complicated issues surrounding the attempt by insurance companies to avoid full payment on claims in an attempt to protect their profit margins. Remember, the actuarial calculation by these insurance companies is geared to protect their profit margins by reducing the actual payments promised in their original agreements. In fact if it were not for the intervention of private benevolent organizations, restoration in many cases would be impossible.
But there is even a greater impact that can result from many of these events. The economies of these lands that have experienced catastrophic events remain damaged for years to come. A great example of this is the repeat of events that took place in Texas during 2015. When you compare the anticipated outcome of similar events this year 2016 in the same area, we can see what might already be the impact of this year’s flooding.
“Compass economists estimate the economic impact of the severe rainfall that left many parts of the Houston metropolitan area underwater last month could range from $200 million to $550 million. The estimate includes damage to housing, structures and cars, as well as the total value of lost economic activity and sales tax revenues from May 25-26. Thousands of the city's structures were damaged as a result of the flooding, with parts of Southwest Houston receiving up to 11 inches of rain. The material cost of the recent flooding is significant, but the economic impact for Houston will be lower than Hurricane Ike and Tropical Storm Allison, which were around $154 billion and $6.7 billion respectively," Economic impact of Texas floods could be up to $550 million, BBVA Compass economists say. Jun 03, 2015
But the impact of the recent earthquakes in Japan and Ecuador reveal more of the same effects.
Ecuador is still reeling from the devastating 7.8 magnitude earthquake that struck last week, killing 654 people, injuring 16,600, and leaving 25,000 homeless. Additionally, 130 people are still missing. It was the worst quake to hit the Central American nation in over 30 years. Listen to Vice News says in their article: Aftershocks Rattle Ecuador's Economy after Devastating Earthquake Kills 654, By VICE News, April 24, 2016
"The country is in crisis," Ecuadorian President Rafael Correa said on Saturday, as he announced eight days of national mourning for the quake's victims. In the 36 hours following the first quake, there were over 200 aftershocks, some of which reached a magnitude of 6.1. Tremors and aftershocks are expected to continue for several more weeks. Eighty percent of Pedernales, the coastal epicenter of the quake, is in ruins, and close to 7,000 buildings across the country have been destroyed. "The tragedy is so huge that losing your house and everything you own isn't even the worst-case scenario," a writer for gkillcity.com, an Ecuadorian news site, said. With a hefty clean-up bill looming, the earthquake has exposed cracks in Ecuador's already fragile economy, which relies on exports of oil, shrimp, gold, and bananas.” Aftershocks Rattle Ecuador's Economy after Devastating Earthquake Kills 654, By VICE News, April 24, 2016
Finally, the impact of the earthquakes in Japan upon their already fragile economy is clearly evident.
“The world's biggest-selling automaker, Toyota Motor Corp has been forced to suspend much of its production at plants across Japan after earthquakes in the country's south led to shortages of parts. Other manufacturers have also extended stoppages due to damages to their factories. Two earthquakes hit southern Japan on 14 April and 16 April, killing at least 41 people. The first quake hit the Kyushu Island on 14 April leaving 1,000 people injured and 11 still missing. This was followed by another quake that rocked Kumamoto on 16 April. News agency Reuters noted that the earthquakes highlighted the vulnerability of Japanese companies to supply chain disruptions caused by natural disasters as well as the 'just in time' philosophy pioneered by Toyota and followed by many others in the manufacturing industry.” Rachel Middleton, Toyota, Honda and other major Japanese firms hit by quake damage suspend production, April 17, 2016, International Business Times.
It is clear then that the longer lasting aftershock may yet be felt.
Cameron A. Bowen
