Estimating the Direct Economic Damages of the Earthquake in Haiti

This article makes an initial assessment of the monetary damages caused by the 2010 earthquake in Haiti. Damages are estimated for a disaster with both 200, 000 and 250, 000 total dead and missing, using HaitiÕs economic and demographic data. The base estimate is US8. 1bn, but for several reasons this may be a lower-bound estimate. While the results are subject to many caveats, including possibly high forecast error, the implications of such an estimate are significant. Raising such a figure will require many donors. Hence excellent coordination of funding and execution will be key to ensuring the efficient use of funds. We use simple regression techniques to assess the estimated direct cost of the catastrophic earthquake that struck Haiti on January 12, 2010. The earthquake, which hit about 15km (10 miles) southwest of the capital city Port-au-Prince, was followed by several strong aftershocks and has caused significant loss of human life, the displacement of hundreds of thousands and severe damage to the countryÕs economic infrastructure. In order to estimate the monetary damages caused by this event, we combine worldwide data from about 2, 000 natural catastrophic events between 1970 and 2008. We model the dollar amount of damage of each event as a function of the number of dead or missing, the level of economic development (real GDP per capita), country size (alternatively measured as population size, real GDP or land area), regional dummies and a linear trend. Using these regression results we make out-of-sample predictions regarding the estimated dollar amount of damages that can be expected for a country with HaitiÕs economic and demographic characteristics in the aftermath of the catastrophic earthquake of January 12. The unit of observation is an event as recorded in the Emergency Events Database (EM-DAT) maintained by the Centre for Research on the Epidemiology of Disasters (CRED) at the Catholic University of Louvain, Belgium