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Private Sector Help Needed to Curb “Out of Control” Economic Losses From Disasters: UN

new yorK, ny, united states

Economic losses due to natural disasters are “out of control” and will continue to rise if disaster risk management does not become a fundamental aspect of government and business investment strategies, according to a new report from the United Nations.

"Governments bear the responsibility for disaster risk reduction. But the level of risk is also related to the where and the how of investment by the private sector, which is responsible for 70 to 85 percent of worldwide investment in new buildings, industry and critical infrastructure,” UN Secretary-General Ban Ki-moon said at the launch of the report this week.

“We have carried out a review of disaster losses in 56 countries. Our startling finding is that direct losses from floods, earthquakes and drought have been underestimated by at least 50 percent. So far this century, direct losses from disasters are in the range of $2.5 trillion USD. This is unacceptable when we have the knowledge to reduce the losses and benefit from the gains.”

He urged that the international community to “not shy away” from these large numbers, because losses can be reduced through “partnership with the private sector.”

“For too long, markets have placed greater value on short-term returns than on sustainability and resilience. At long last, we are coming to understand that reducing exposure to disaster risk is not a cost but an opportunity to make that investment more attractive in the long term," he concluded.

Andrew Maskrey, the lead author of the assessment report, said the private sector should take the lead where local governments are unable or unwilling.

“We can’t blame ill preparedness on mother nature and earthquakes,” Maskrey said. “Disaster-proof investments will have decades of impact for both the private and public sectors.”

The “Global Assessment Report on Disaster Risk Reduction 2013” highlighted Peru as a leader in disaster risk reduction. In 2010, Peru made risk reduction measures a condition for funding major public projects, which was held up as a development policy that could easily be emulated by other nations facing real disaster risks.

It has already spread to other Latin American countries, according to the UN Office for Disaster Risk Reduction.

“It’s important for us to have these types of tools,” the Miami Herald quoted Victor Munoz, an official responsible for sustainable development with Peru’s U.N. delegation, as saying.

“We do not need to be aligned to a particular ideology to be aware of the importance of taking action on disaster risk reduction,” Munoz said. “Most of us [in the region] will not contest this approach.”

The report can be found here.