Disasters and economic resilience – the effects of natural hazards on communities

Natural hazards are complex and the economic and social effects are not always immediately clear. How long are people affected economically after a bushfire, flood or cyclone, and is everyone impacted? Or does it depend on job status, industry or gender?

Important insights based on research were presented in mid August in a webinar by Professor Mehmet Ulubasoglu (Deakin University). The findings complete the Optimising post-disaster recovery interventions in Australia project and show that the short- and medium-term economic impacts of disasters hit different demographics and sectors harder than others.

Prof Ulubasoglu and the research team focused on four Australian disasters of differing scales, hazards and locations as case studies to explain how understanding the economic resilience of disaster-hit communities can help build more sustainable recovery models that direct funding towards the most vulnerable individuals and groups.

“Our research shows that ‘smallness’ in economic terms is a point of vulnerability in the sense that sectors find it difficult to come back to their pre-disaster income trajectory because they face a big loss compared to their size,” Prof Ulubasoglu explained.

By evaluating the economic impacts of the 2009 Black Saturday bushfires, 2009 Toodyay bushfire in Western Australia, the 2010/11 Queensland floods and 2013’s Tropical Cyclone Oswald in Queensland, the research found that in general, the hardest hit incomes in a disaster belong to agriculture, food services, accommodation, part-time and female workers, low-income employees, and small business owners.

“The poor become poorer following disasters,” Prof Ulubasoglu said, “and there may be lessons here governments can apply to help those suffering financially from the bushfires across Australia in late 2019 and early 2020.

“The findings tell us that those who are more vulnerable economically, such as females in the workforce and people with a lower socioeconomic background, may not be fully able to return to their pre-disaster income trajectory in the medium-term. This highlights the potential for disasters to widen income inequality over time.”

Prof Ulubasoglu believes focusing on individuals’ income stream enables policy advisers to explore how disaster-induced economic shocks can be transmitted to the labour force via income-earning channels, and offers a greater understanding of how the indirect costs of disaster like bushfires, cyclones and floods are borne by different segments of the working population.

“By defining economic resilience to be an individual’s ability to return to their pre-disaster income levels, this research helps policymakers better understand the socio-economics of disasters caused by natural hazards and formulate public policies in a sustainable way that better distributes scarce budgets and resources towards vulnerable socioeconomic groups and employing industries that are more sensitive to disasters,” Prof Ulubasoglu said.

Lead end-user Ed Pikusa from the Department for Environment and Water SA introduced the project in the webinar and said the research has produced innovative and insightful results that have generated deep thought among end-users.

“One of the things that really sets it apart from other projects is that it’s trying to dive into the very rich and deep datasets that are relied upon for a lot of public policy,” he said. “The project team has been able to draw out some fascinating insights about how individual sectors in the community are either impacted or even stimulated by natural disasters.

“We’ve been focusing a lot of our application efforts in our end-user utilisation on a closer examination of post-event recovery and how we can better target our resources through the very expensive period of recovery to those sectors of the economy that really need it.”

Bushfire and Natural Hazards CRC Research Director Dr John Bates explained that different sectors represent different levels of vulnerability to natural hazards economically.  

“Thanks to this research, we can now better understand the impacts on the incomes of individuals and small businesses whose lives and occupations have been affected by natural hazards. What it’s telling us is that not everyone is affected in the same way - there are some groups who are much more affected than others,” he said.

Four short policy briefs cover each case study area, providing a practical understanding of how the research is revealing the complexities around the economics of recovery from natural hazards. Importantly, a detailed research report covers the full details for each case study.

Watch the full recording of the webinar above or on the CRC Hazard Channel.