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Costs beyond measure

2011 March 24
by saraschonhardt

The costs of disaster don’t account for the psychological impacts, which are often the deepest and longest lasting

Elderly women wait for rice to be given out at an evacuation center on March 17 in Kensennuma. (Chris McGrath/Getty Images)

Weeks after Japan’s massive earthquake and tsunami, the largest in the country’s history, questions have turned to the costs of recovery. How will the disaster impact global markets? Will rising prices and supply chain bottlenecks stall the global recovery? Japan has the world’s third-largest economy, but it also had one of its largest debt burdens. How capable is the country of recovering from the triple traumas of earthquake, tsunami and possible nuclear fallout?

Economists use the 1995 Kobe earthquake as a precedent. The cost of that disaster has been estimated at around $100 billion, yet Japan bounced back relatively quickly. The World Bank is putting the price tag on the latest disaster at anywhere from $112 billion to $235 billion.

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Factories in the US and Europe that source supplies from Japan say they’re struggling to get the parts needed for assembly, while the prices of Japanese-made goods, such as computer data chips, are rising. But economists say the disaster’s long-term impact will be limited. It helps that Japan is a developed nation, they say, since that will ensure the recovery is faster and more efficient than in less developed ones.

Some draw parallels with Haiti, a nation whose low gross domestic product and poor governance was blamed for bungling the recovery after a January 2010 earthquake killed more 315,000 people.

The 2004 tsunami that swept across the Asia-Pacific, killing roughly 230,000 people, cost at most $15 billion, a pale comparison to Japan’s current tragedy, despite a death toll that the latest estimates put at more than 9,500 with up to 23,000 still missing.

The cost differential comes largely because economists calculate the costs according to measurable figures, such as infrastructure damage and loss of productivity. The measure is not perfect by any means, and while it aims to quantify the overall impact a disaster has on a country, it also overlooks an equally important factor in long-term rebuilding – psychology.

“In every disaster our first impression is always that the recovery will be a function of how much damage was done, the quality of governance and how much aid flows in,” said Daniel Aldrich, a professor at Purdue University specializing in post-disaster recovery. “In fact, those are really not the core engines of recovery. The most important factor has been social networks.”

A child's photograph sits on the underside of a mattress March 17 in Kensennuma. (Chris McGrath/Getty Images)

Aldrich recently conducted a comparative study looking at recovery times in Kobe, Japan, New Orleans and Tamil Nadu, India, after major disasters. What he found, was that different neighborhoods bounced back differently over different times periods. Why?

“It wasn’t a question of wealth, education or aid. What really matter was how connected were local villagers? In all those cases, neighborhoods where people were more involved with their neighbors had more access to aid afterwards and a better overall recovery.”

Culturally and structurally Japan is very different from the Southeast Asian countries hit by the 2004 tsunami. Aceh, Indonesia, was the worst affected. Before the tsunami nearly one-third of the population there lived in poverty and much of the infrastructure was rudimentary. Even now the city is still recovering from the disaster – though most of the rebuilding is finished and aid agencies have turned their focus from recovery to prevention.

But both Aceh and Sendai, the coastal area in Japan hit hardest by the tsunami, share some similarities.

Aceh suffered from a protracted armed conflict that closed off villages and kept communities from forming tight bonds. The area around Sendai was also largely rural, and some sociologists have expressed concerns that the Japanese reputation for stoicism may lead to isolation that could rend the social fabric.

Responding to the psychological impacts of disaster is where Aceh can offer a lesson. It’s not culture or infrastructure rebuilding that matters in the long-term, says Aldrich, but ensuring that community bonds are not severed.

To do that, psychosocial programs in Aceh worked quickly to keep families together and create situations that mimicked normalcy. Aid groups set up temporary schools, supported religious activities and hosted sewing circles and other group events.

The psychological trauma was still enormous. Even today tsunami rumors spark chaos that sends people running for higher ground, and many families have not returned to the coastal communities they once lived in. Most psychosocial programs ended in 2007 with a fair amount of success. But when calculating the costs, it’s important to remember that the deepest and longest lasting are often beyond measure.

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