Financial Costs of Earthquakes and Wars

Alan Kafka
Weston Observatory
Department of Earth and Environmental Sciences
Boston College

Today I read that the cost of the 2011 Japan megaquake might be as much as $305 billion dollars. I don’t usually think in terms of billions of dollars (my salary is somewhat lower than that), and I wanted to get some sense of what that number means in the context of things that cost many billions of dollars.

I compared the potential $305B cost of the Japan earthquake to some other earthquakes, Hurricane Katrina, the Gulf Oil Spill, the wars in Iraq and Afghanistan, and some potential scenario earthquakes that might occur in the future. The comparison with wars is not intended to be a political statement, but I think it does give a good visual picture of the context of what earthquakes and other disasters cost (see figure). (Click on figure for an enlarged version.)

The numbers plotted in the figure show that the 2011 Japan megaquake would (if these estimates are right) be the most costly earthquake by quite a large margin. Big earthquakes that might occur in the future near US cities are shown by the scenario earthquakes, plotted in green. The costs of those potential earthquakes could be comparable to that of the Japan megaquake. The cost of the Gulf Oil Spill is about comparable to that of the Chile earthquake, and the cost of Hurricane Katrina is comparable to that of the Kobe, Japan earthquake of 1995.

Note: These numbers are just order of magnitude estimates, and were not very carefully sourced for this blog. There are probably better numbers available in detailed studies. The idea here was just to create a quick and simple visual picture of the order of magnitude differences in the costs of these events. The websites and references that I used for the numbers shown here are given in this Excel spreadsheet.