Natural disasters come in many forms: floods, fires, earthquakes, tornadoes, volcanic eruptions and landslides are but a few of the calamities that people endure. It is when nature comes into conflict with humans that catastrophe results. The response to these natural disasters has been to invest in early warning systems in order to protect lives and property, and to offer residents and businessmen advice on how best to survive the types of disasters that any one area is prone to. Fortunately, not all parts of the world are subject to every type of disaster, which means that people in any one area have to prepare only for those disasters which are likely to occur in their area. Such preparation can take the form of developing evacuation programs and finding ways to minimize damage both to people, livestock and property. This research examines the economic effects of natural disasters, with special emphasis on two major disasters occurring in the 1990s: the floods of the Midwest in 1993 and the earthquake in Southern California in 1994.
When a natural disaster hits an area, the first obvious effect is to the infrastructure. Communication lines are severed, and it can be several hours before utilities and communications reach even a basic level of service, depending on the type of disaster. Many types of natural disasters, such as tornadoes and hurricanes, involve some type of warning so that emergency communication stations and auxiliary government offices can be set up before the need for their use actually occurs. Other types of disasters, such as earthquakes, provide no such warning, with the result that the surrounding populace is taken by surprise.
After a disaster has hit an area, businesses are destroyed and homes are lost. Residents must find temporary lodging, and businesses must determine whether to repair and rebuild their facilities, cease operations or relocate to a different area altogether. To some degre...