Economic losses from natural disasters totaled $92 billion in 2015, and average annual losses have been estimated at more than $300 billion a year.” Policy makers, analysts, and others are used to such
statements, which measure the severity of disasters and their socioeconomic impacts using the value of the damages inflicted by disasters on buildings, infrastructure, equipment, and agricultural production.
Although these numbers are useful—they provide information on the trends and costs of disasters—they fail to detail how disasters affect people’s well-being.
Obviously, $1 in losses does not mean the same thing to a rich person and a poor person, and the severity of a $92 billion loss depends on who experiences it. The same loss affects poor and marginalized 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 earthquake can be disastrous for poor people, but have a negligible impact on a country’s aggregate wealth or production if it affects people who own almost nothing and have very low incomes.
By focusing on aggregate losses, the traditional approach examines how disasters affect people wealthy enough to have wealth to lose and so does not take into account most poor people.