Extreme weather events deadlier than other natural disasters

New Delhi, Jan 4 (UNI) Extreme weather conditions have proven to be far more devastative towards human life than even earthquakes, with droughts and floods causing ten times greater number of deaths, according to the World Bank Report on Climate Change.

Windstorm and extreme temperature also lead to significant loss of life, according to an international data base of the US Foreign Disaster Assistance and the Centre for Research on the Epidemiology of Disasters(CRED) quoted in the World Bank Report on Climate Change.

Pointing out these facts, the study underlines the importance of weather risk markets to developing countries for transferring financial risks.

Events back to 1900s are documented in this database. The total number of people affected by weather events is well over four billion during this time period.

Floods have affected over two billion people and caused a damage worth over 378 million dollars while drought has affected nearly 1.673 billion people and damaged property worth over 50 million US dollars.

As compared to these, earthquake have affected over seven crore people during the period. However, the economic loss caused by earthquake was over 300 million dollars.

Typhoon, cyclone and storm have proved to be more devastative than earthquake as far as the loss of human life was concerned.

The same natural disaster that contribute significantly to human suffering, also create economic problems in developing countries.

Beyond the direct economic losses, economic growth in many of these countries can be slowed due to adverse weather events. In part, this is because the economy of the majority of developing countries is highly dependent on agriculture.

So assessing weather risk has become very important for developing countries, says the study.

Weather risk markets are among the newest and the most innovative of markets for transferring financial risk. The financial instruments traded in weaher risk markets are often callked weather derivatives. Participants in weather risk markets are drawn from a broad range of economic sectors such as energy, insurance, banking, agriculture, leisure, construction and entertainment.

To date, the US energy sector has been responsible for most activity in weather risk markets but new participants from Europe, Asia, Australia, Latin America and Africa are now entering the market.

According to a survey conducted by PricewaterhouseCoopers, more than 7.5 billion US dolars of weather risk has been transferred in weather markets since 1997.

As economic agents from different sectors gain a better understanding of the impact of weather on their economic activities, weather markets are likely to expand further, the study said.

UNI