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Economic analysis – The Economy of Natural Disasters
Published in AL HAYAT on 16 - 08 - 2010

The natural disasters afflicting several regions of the planet cannot be only listed among the direct effects of climate change, but can also be considered to be the continuation of the economic disasters that have marked the beginning of the third millennium. All in all, these have transformed the second half of the first decade, and the beginning of the second decade of the millennium's first century, to what resembles a series of crises affecting the world economy, threatening the entire future of humanity, and confirming the predictions regarding the quasi-periodic disasters that do not obey the natural balances of the planet.
For instance, China – the largest emerging economy that has all but become the world's second economy – has been beleaguered by floods and landslides that wiped out entire towns and villages and leveled homes, killing their residents and altering their features in the process. Floods also affected vast swathes of India and Pakistan, unleashing unprecedented devastation, and also affected the larger Central European countries where people have been floating in rivers and lakes that had previously been roads, plains and oases, while crops became damaged, livestock perished, and natural resources were depleted.
Meanwhile, wildfires are affecting the vast forests of Russia, Portugal, Spain and other parts of the world. Also, the largest oil spill witnessed by the world in the Gulf of Mexico cannot be overlooked, as its cleanup has so far cost six billion dollars, and may exceed 20 billion dollars with BP's commitment to an oil spill cleanup fund in the United States.
It is noted that the most severe natural disasters occur on both sides of the equator, in the Tropics of Capricorn and Cancer, respectively, while the polar ice caps are melting and the ice sheets the size of major cities are breaking.
In fact, the severity of natural disasters complement the financial and economic crises that have been plaguing the world since the food crisis in 2007, and the rising prices for agricultural crops and consequently, agricultural products. This crisis was then followed by the U.S subprime mortgage crisis which had a disastrous domino effect on the rest of the world, causing losses of a book value that exceeded 32 trillion dollars, a decline in the global GDP and in the volume of world trade by more than ten trillion dollars, in addition to banking losses of nearly 4 trillion dollars. These are approximate estimates, and the real value of the losses is perhaps much more if the missed growth rates and the losses in potential profits are factored in.
Nature's self-attacks are omens of central erosion then, as the planet responds to the humans' violence, devastation, and violations against it.
Natural changes will engender temperature rises that, by the end of the century, will raise sea and ocean water levels by 18 to 59 centimeters, threatening to displace millions of people, as 60 percent of the world's population live in areas not further than a hundred meters from the shores.
This will inevitably have its toll on agriculture and food production. Concerns in this regard justify the immediate consequences of the wildfires in Russia and the floods in China, India and Pakistan, for example, where cereal production fell, in particular wheat and feed grains, or where cattle herds were wiped out. As a result, Russia, which lost a quarter of its cereal production output, banned the export of wheat, while other producing countries held on to their wheat stockpiles to guarantee their food security, countries led by China (500 thousand hectares of crops were destroyed) and India. Both countries boast the world's top yields of wheat stocks which are equivalent to 44 percent of the world's total. This is while Pakistan's crops, especially rice crops, were partly destroyed (720 thousand hectares), in addition to cattle losses, something that may cause a hunger crisis in the flooded regions.
Moreover, climate change, which disrupts the equal distribution of rainfall levels, leads to drought and drinking water shortages, as evident from the fact that several major lakes across the world have dried up.
This affects living conditions in those countries which have now become lacking in irrigation and drinking waters, bearing in mind that world agriculture needs between 30 to 80 percent of the available water, depending on each country.
A consequence of this scarcity of water resources is the shrinking of fish stocks, which otherwise provide at least 20 percent of the world's protein needs. These fish stocks are also threatened by overfishing, which extracts nearly 70 million tons annually compared to 13 million six decades ago. This threatens to wipe out three-quarters of the fish stocks' volume, in addition to threatening coral reefs.
Meanwhile, a portrait of the world's forests shows some contradiction. While forests expanded in temperate zones by nearly 30 thousand square kilometers between 1990 and 2005, 130 thousand square kilometers of forest areas were felled in tropical regions.
The planet is now entering a sixth wave of biodiversity reduction, as it loses 17 thousand to 100 thousand species and subspecies each year.
Also, ocean currents and winds carry hazardous materials and other climate-affecting particulates, including 250 thousand tons of nuclear waste alone, produced by nuclear power plants. These are radioactive and harmful materials that take thousands of years to decay.
In addition to the physical damage incurred by the affected countries, which, depending on the final outcome of the disasters, may range between 300 and 550 billion dollars annually, there are the irreparable losses involved in the disappearance of entire inhabited areas when they are transformed into deserts or buried under landslides. This is not to mention human losses, and volcanic eruptions.
Will scientific progress and economic growth, then, fail to avert environmental suicide and the destruction of the planet?


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