Wed, Jan 25, 2006 - Page 9 News List

Can we avoid the occasional disasters dished out by nature?

By Richard Posner

One year after the Indian Ocean tsunami, what are the lessons? The biggest one is that it was the type of disaster to which policymakers pay too little attention -- one that has a very low or unknown probability of occurring, but that creates enormous losses if it does occur. Great as the death toll, physical and emotional suffering of survivors, and property damage caused by the tsunami were, even greater losses could be inflicted by other disasters of low (but not negligible), or unknown, probability.

For example, the asteroid that exploded above Siberia in 1908 with the force of a hydrogen bomb might have killed millions of people had it exploded above a major city. Yet that asteroid was only about 60m in diameter. A much larger one (among the thousands of dangerously large asteroids in orbits that intersect the earth's) could strike the earth and cause the total extinction of the human race through a combination of shock waves, fire, tsunamis and blockage of sunlight, wherever it struck.

Other catastrophic risks include natural epidemics (the 1918-1919 Spanish influenza killed between 20 million and 40 million people), nuclear or biological attacks by terrorists, certain types of lab accidents and abrupt global warming. The probability of catastrophes, whether intentional or not, resulting from human activity appears to be increasing because of the rapidity and direction of technological advances.

The fact that a catastrophe is unlikely to occur is not a rational justification for ignoring the risk of its occurrence. Suppose that a tsunami as destructive as the one in the Indian Ocean last year occurs on average once a century and kills 250,000 people. That is an average of 2,500 deaths per year. If such a toll could be substantially reduced at moderate cost, the investment would be worthwhile.

Warning signs

Educating residents of low-lying coastal areas about the warning signs of a tsunami (tremors and a sudden recession in the ocean), establishing a warning system involving emergency broadcasts, telephone warnings and air-raid-type sirens, and improving emergency response systems would have saved many who were killed by the Indian Ocean tsunami. At the same time, the cost would have been well below any reasonable estimate of the average losses that can be expected from tsunamis.

There are several reasons why such measures weren't taken in anticipation of a tsunami on the scale that occurred. First, although a once-in-a-century event is as likely to occur at the beginning of the century as at any other time, it is much less likely to occur in the first decade of the century than later. Politicians with limited terms of office and thus foreshortened political horizons are likely to discount low-risk disaster possibilities, since the risk of damage to their careers from failing to take precautionary measures is truncated.

Second, to the extent that effective precautions require governmental action, the fact that government is a centralized system of control makes it difficult for officials to respond to the full spectrum of possible risks against which cost-justified measures might be taken. Given the variety of matters to which they must attend, officials are likely to have a high threshold of attention below which risks are ignored.

Bearing the costs

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