The Financial Impact of Natural Disasters on Communities

The Financial Impact of Natural Disasters on Communities



By Adrian Johansen 


The natural world is intrinsically tied with humanity, providing comfort, sustenance, beauty, and more. But it can also be dangerous and destructive, and natural disasters can happen at a moment’s notice. Natural disasters run the gamut from tornados and hurricanes to volcanic eruptions, and these extreme weather events are increasing in frequency due to climate change.

The sheer magnitude of natural disasters can be awe-inspiring as well as destructive. As an example, the March 21 eruption of the Fagradalsfjall volcano in Iceland, which drew a large number of hikers and other curious onlookers gathered in droves to witness the awesome power of nature. Many visitors subsequently shared photos and videos of the event, effectively becoming citizen journalists in the process.

The volcano in question is far removed from civilization, located a safe 25 miles from Iceland’s capital city of Reykjavik. As such, the eruption ultimately had little impact on daily life, with no reported injuries or structural damage, and thus little to no financial repercussions. Yet the socially distanced Fagradalsfjall eruption is the exception rather than the rule when it comes to natural disasters in populated areas.

The Role of Citizen Journalists in Disaster Coverage

Depending on their severity and range of damage, natural disasters can greatly impact communities of all sizes. Often, the financial repercussions that follow a natural disaster are particularly severe, affecting individuals, businesses, and the community as a whole. According to the Federal Emergency Management Agency (FEMA), about 25 percent of local businesses never reopen following a natural disaster. There may also be lasting economic effects on a macro scale, ultimately affecting our food supply, economy, and overall public health.

The good news is that individuals, business owners, and community leaders alike can work to reduce the economic impact of natural disasters, by preparing ahead and staying on top of breaking events and relevant news reports. Concerned citizens can also spread the word and advocate for mutual aid on various social media channels, armed with only a smartphone or similar internet-connected device.

Citizen journalists are a crucial piece of the puzzle in terms of natural disaster recovery, as they serve the people rather than media outlets. As first-hand witnesses to the dangerous natural events, these mobile journalists are able to provide an accurate account of real-time events, as well as the subsequent economic fallout. Traditional reporters are typically limited in scope, and may be unfamiliar with the communities directly affected by natural disasters, leaving significant gaps in coverage.

Considering Indirect Impact Alongside Immediate Needs

After a natural disaster has occurred, news coverage is vital to the rebuilding process. Talking to local residents and business owners directly affected by the disaster, and then sharing those stories with the public, can bring widespread attention to the needs of the community. And once those community needs, from medical care to emergency housing and economic considerations, are laid out, the rebuilding process can truly begin.

Many times, the aftermath of a natural disaster is costlier than the event itself, although indirect economic impact may be difficult to measure. If a local restaurant is shuttered due to damages caused by a hurricane or earthquake, for instance, that closure can cause a ripple effect across the supply chain. This phenomenon is known as indirect economic impact, and it’s often substantial.

During the 2005 Atlantic Hurricane season, Hurricane Katrina wreaked havoc across the Caribbean and U.S. Gulf Coast, causing extensive damage. The total economic cost exceeded $209 billion, with an estimated indirect impact of about half that amount, as myriad businesses were shut down for extended periods of time. The 2005 hurricane season ranks among the world’s costliest natural disasters.

Planning Ahead and Being Prepared for Anything

Business owners operating in vulnerable areas, such as the Gulf Coast and Tornado Alley in the Central U.S., must therefore have a solid plan in place in the event of a natural disaster. Planning ahead can help mitigate some of the costs of repair, and may speed up the recovery process. When creating a recovery plan, every aspect of the business must be considered, from employees to equipment and the building itself.

Financial considerations should also be included in a business recovery plan, no matter the industry. Business owners may want to create an emergency fund designed to help cover expenses in the event of a delayed reopening. In disaster-prone areas, it also makes sense to invest in a comprehensive insurance plan that covers remediation services and rebuilding costs.

Additionally, be sure to take plenty of high-quality “before” photos well before disaster strikes and store them alongside insurance documents. This can help streamline the claims process and lessen the financial burden of rebuilding following a natural disaster. And when local business owners do their part to clean up the damage and re-open their doors in a timely fashion, communities may find it easier to bounce back and rise above the tragedy. Resilience, thoughtful news coverage, and planning ahead are vital to the process.


Adrian Johansen strives to prioritize sustainability and ethics in all she does. To that end, she writes in multiple fields, applying and promoting sustainable methods and ideals as much as possible. You can find more of her writing here


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