The economic impact of natural disasters in Canada will cost billions of dollars if infrastructure is not improved, suggests a new TD Economics report.
The special report
, Natural Catastrophes: A Canadian Economic Perspective
, released Monday, says the economic and financial impact of natural catastrophes tend to be masked by the calculation of economic indicators, such as GDP.
In the short-term, it says, natural disasters – unless extreme, like the 2011 tsunami in Japan – only appear to impact individual businesses, steering clear of financial markets, likely due to investor perception that the impacts are ‘short-lived’ and government assistance lessoning the financial blow.
However, the long-term consequences are being ignored, the report indicates. The more frequent natural disasters – no matter how small – occur, the more pressure governments, firms and households alike feel financially and productivity-wise.
The report predicts that if efforts are not made to upgrade infrastructure to withstand harsh conditions; damages, healthcare costs, lost labour hours and reduced performance will cost Canada $5 billion per-year by 2020 and between $21 and $43 billion by 2050. On the other hand, for every dollar invested into infrastructure, between $9 and $38 could be yielded.
Moving forward, businesses need to identify how natural disasters impact their bottom line and adjust their financial plans accordingly, while governments need to identify and prioritize infrastructure vulnerabilities and make the necessary improvements to prevent future damage, loss of life and economic disruption.
“With no sign that things are going to be getting any better, it’s prudent for businesses and policy-makers to start thinking of the long term-implications, and place a larger emphasis on catastrophes when making investment decisions,” says the report.
“Awareness and preparation is the first step toward ensuring the safety of people, property, and prosperity for Canada’s future.”
to access the report.
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