Japan earthquake could turn out as the most expensive natural disaster in history, say economists
Economists' calculators are already pounding on their keys to estimate the likely impact of the powerful quake and tsunami that shocked Japan on Friday even as actual human costs and property damages are only starting to unfold.
By any reckoning, analysts are anticipating overwhelming losses from the disaster, on the economic side and on the human casualties, which by last estimates could reach a high of 10,000 deaths if Japanese authorities were to be believed, who based their toll projections to the number of citizens yet to be accounted.
The most damning indication of great loss, experts said, is underscored by the damaged nuclear power plants in the Fukushima prefecture, where three explosions have been reported so far as of Tuesday.
As Japanese authorities struggle to contain the possible meltdown of its power plants, close to five million households have been without power since the massive earthquake struck and the best solution that the government could offer to date is to issue advisory that the country needs to conserve electricity while the disaster is being dealt with.
Those sacrifices would be inevitably followed by economic aftershocks as analysts pointed to the fact that financial bleeding would be big time and across the board and the daunting estimates are only initial estimates, experts stressed.
Disaster modeling firm Eqecat has projected that total losses from the disaster could reach a high of $100 billion, which mainly comprises of infrastructure and community losses while the insurance industry is expected to absorb losses of up to $35 billion, according to AIR Worldwide, which has yet to factor in costs from losses brought by the tsunami inundation and the possible nuclear fallout.
While AIR has reckoned that insurance losses from both the business and community sectors could reach only a high of 17 percent, the firm stressed that the overall economic impact would be significantly higher.
The Kobe quake in 1995 led to financial losses of about $100 billion while insurance impacts merely hit $3 billion. On the other hand, the 1994 Northridge, California quake was given a total price tag of, inflation-adjusted, $22.7 billion.
Both disasters, however, were expected to be dwarfed by the anticipated economic impact of the earthquake and tsunami in Japan last week, according to the Insurance Information Institute, which yet to furnish specific number but maintained that the catastrophe would eventually turn out as the most expensive quake in modern history.