UN Chief: Indirect Disaster Costs Hit $2 Trillion Yearly

From 1970 to 2000, the cost of disasters averaged between $70 billion and $80 billion annually. Those largely preventable costs have more than doubled this century, reaching an average of $180 billion to $200 billion a year, according to a recent report by the UN Office for Disaster Risk Reduction (UNDRR).

Most of these exorbitant costs are preventable with proper funding and planning — one of the key messages for this year’s International Day for Disaster Risk Reduction, themed “Fund Resilience, Not Disasters,” observed on Monday.

“Every dollar invested in resilience saves many more in avoided losses and protects the dignity of those most at risk. The choice is ours. We can continue to fund disaster response, or we can invest in resilience,” said Amy Pope, Director General of the International Organization for Migration (IOM).

In 2024 alone, nearly 46 million people were displaced by disasters — the highest number ever recorded — yet disaster risk reduction efforts remain severely underfunded, according to the IOM.

“As the climate crisis accelerates, disasters are multiplying and intensifying – devastating lives and livelihoods, and erasing decades of development gains in an instant,” said UN Secretary-General António Guterres in his message to mark the Day.

“The cost to the global economy is staggering: an estimated $2 trillion every year when indirect costs are taken into account.”

Indirect costs include the wider social and ecosystem losses that follow natural catastrophes. Earthquakes, floods, storms, droughts, and heatwaves accounted for 95 per cent of direct costs in the past two decades, the report noted.

“Wildfires in Europe and the Americas, and devastating earthquakes in Myanmar and Afghanistan prove that no country is immune. But the heaviest toll falls on communities already struggling with conflict, poverty, and hunger,” Ms. Pope added.

Different natural catastrophes affect regions in various ways. In South Sudan, annual floods submerge houses, farmland, and schools, forcing people to flee their homes and worsening food insecurity.

As part of disaster prevention efforts, dykes have been built in South Sudan with IOM support, helping to protect farmland and restore livelihoods.

The International Day for Disaster Risk Reduction was established in 1989 to promote a global culture of risk awareness and recognise communities around the world working to reduce their vulnerability to disasters.

“The impact of disasters depends in large part on the choices we make — how strong our infrastructure is, how much we invest in prevention, and how well we protect the most vulnerable,” said Ms. Pope.

With proper planning and adequate funding, the negative effects of disasters can be significantly reduced. This year’s observance calls for increased disaster risk financing and greater development of risk-adapted and resilient private investments.

Mr. Guterres stressed that both public and private sectors must consider risk in every decision to minimise exposure and vulnerability to hazards.

“On this Day, let us commit to meeting surging risks with a surge in funds — and build a safer, more equitable future for all,” he said.