The (billion-dollar) cost of droughts
A file photo of a farmer carrying a hoe as he walks past a dried-up pond in Shilin Yi Autonomous County of Kunming, Yunnan province in February 2013. China's drought relief authority said about 600,000 people are facing shortage of drinking water amid severe drought that hit southwest China's Yunnan Province for the fourth straight year
Droughts are an underestimated natural hazard, warns a Munich-based insurance company. In a paper released on Thursday, Munich RE said data indicates that droughts develop gradually, often creeping up unnoticed until they trigger a famine.
“Droughts can cause crop failures costing billions, severe bushfires as well as economic losses by restricting shipping or the generation of electricity,” said the paper.
There were around 10 loss-producing droughts in the world each year in the early 80s but the number has been twice as high in recent years.
The Intergovernmental Panel on Climate Change (IPCC) expects “heatwaves and droughts to increase in many regions of the world over the coming decades, in the course of which droughts will become one of the most destructive natural catastrophes,” said Prof. Peter Höppe, head of Geo Risks Research at Munich Re.
In 2012, the corn-belt in the US Midwest was hit by a drought such as occurs only about once in every 40 years or so. In recent years, droughts in Texas and Russia have also drastically reduced crop yields, said the paper. A drought in Somalia in 2011 triggered a nationwide famine that led to the death of hundreds.
Munich GE said that in all, about 900 natural catastrophes occurred in 2012 and caused economic losses of US $170 billion. Of those losses, only about US $70 billion were insured.
Raveena Aulakh is the Toronto Star's environment reporter. She is intrigued by climate change and its impact, now and long-term. Follow her on Twitter @raveenaaulakh