HAITI -- February 17, 2010 at 3:10 PM ET
Economic Cost of Haiti Quake Could Hit $14 Billion
Recovery from the January earthquake that is believed to have killed hundreds of thousands of Haitians and left even more homeless could cost up to $14 billion, according to Latin America's main development bank.
The Inter-American Development Bank's preliminary estimate suggests the earthquake is likely the most devastating natural disaster in modern times, calling it "vastly more destructive than the Indonesian Tsunami of 2004 and the cyclone that hit Myanmar in 2008" on the bank's Web site.
"It caused five times more deaths per million inhabitants than the second-ranking natural killer, the 1972 earthquake in Nicaragua," the site said.
The bank's economists estimated the damage done to the country's economic sector, infrastructure, roads, and buildings will amount to between $7.2 billion and $13.9 billion, depending on the final death count and other variables. The high end mark is nearly twice the $7 billion in good and services the country's economy produces each year.
The bank used a model that factored in the scale of the disaster, deaths, population and GDP per capita and compared data from 2,000 natural disasters between 1970 and 2008. The range of 200,000 to 250,000 people dead or missing was used for the calculations.
Mark Skidmore, a professor of economics at Michigan State University who studies economics of natural disasters, agreed with the bank's dire assessment and pointed to Haiti's extreme poverty as the major contributor.
"If the same earthquake had happened in Japan or California we would have lost a few hundred lives. It wouldn't have been anything like the devastation we saw in Haiti," said Skidmore. The damage from natural disasters is usually "highly dependent on the level of development," he said.
Long term international support for the country will be key, he said, but there is also an economic opportunity that should be recognized.
"When you have destruction of capital you don't replace it with the same old stuff you replace it with new stuff," Skidmore said. "Haiti has an opportunity to move ahead two generations in terms of its level of technology and sophistication and that may actually yield long term benefits, but there has to be a commitment by Haitians and the international community."