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Measuring Direct Economic Loss

Draft Working Paper for the 5th Expert Group Meeting on Disaster Related Statistics and review at Asia-Pacific Economic Statistics Week, 2017

Introduction 1. Direct economic loss is one of the core disaster-related indicators for monitoring

progress in the UN Sustainable Development Goals and in the Sendai Framework for Disaster Risk Reductions. In that context, Direct economic loss is defined for the monitoring of Target C (see below) in the Sendai Framework for Disaster Risk Reduction as "the monetary value of total or partial destruction of physical assets existing in the affected area." The SDGs and Sendai Framework targets have brought refreshed attention to a measurement challenge previously cited, among other places, in the UN Framework for Development of Environment Statistics (FDES).

2. A 2016 OECD study on “Improving the Evidence Base on the Costs of Disasters”, asserts,

in its introductory paragraph: “there is hardly any comparable data available on national expenditure for disaster risk management and data on disaster losses is

generally incomplete and thought to be underestimated.”

3. A very broad range of economic impacts of a disaster can be observed and valued and the framework for compiling statistics and calculating international indicators needs to

distinguish and, where possible, separate the measurement of different types of impacts in order to meet the demands for producing indicators and for other uses of statistics

for developing government policies to reduce disaster risk. The first important distinction is between direct and indirect economic impacts. Secondly, is to distinguish

different methods for monetary valuation of impacts. It is necessary from the outset to introduce the scope of what is feasible, that is what can be measured with reasonable

reliability and relevance for policy development, using data sources currently accessible to governments, and to understand differences in interpretation for the different

components or different approaches to valuing economic impacts.

4. The indicator adopted by the United Nations Statistic Commission for monitoring 3

targets related to 3 separate SDG indicators is : direct economic loss from disaster. Indirect effects need to be described as impacts, instead of losses, because some

indirect effects may be partially positive (e.g. contributing to GDP).

5. The focus of this paper is p on the direct economic losses, which are mainly damages and destruction to assets.

Direct and Indirect Impacts

6. The distinction between direct and indirect impacts has a fundamental importance for the scope of impacts from disaster. According to recommendations on terminologies

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and indicators submitted to the UN General Assembly, direct economic loss refers to damages to economic assets directly triggered by a disaster.

7. Indirect impacts, according to the official terminology adopted for monitoring the Sendai Framework (United Nations, 2016) are “a decline in economic value added as a

consequence of direct economic loss and/or human and environmental impacts.” For indirect and especially the longer term economic impacts, important sources of statistics

will include changes in balance of payments, international debt, and employment statistics. In practice indirect economic impacts are generally based on models and

scenario analyses, considering the changes in trajectories to economic activity that could have been caused by disasters. In contrast, direct economic impacts are mainly values

calculated for the observable damages and destruction to assets caused by a disaster.

8. This creates a link, in principle, between the direct impacts statistics and the System of National Accounts (SNA, 2008), which includes an entry in the asset accounts for

catastrophic losses. 1 It also suggests that the scope for direct economic loss valuation used to produce aggregate indicators should be restricted specifically to impacts to economic assets. It also means that direct economic loss, though of important relevance to the broader national accounts system, would have no direct effect on the calculation of GDP. Instead, impacts to activity within the economy come later, in the estimation of indirect impacts.

9. Note that in contrast to assets, any direct losses of goods and services resulting from

disaster is not identified as such in the SNA. Instead, it may appear implicitly, but not explicitly, as less production and Gross Value Added in the subsequent accounting for the impacted sectors.

10. Also, however, increased activities, such as emergency response and security services,

will be reflected in the national accounts, which could potentially show a marginal increase in activity (i.e. nominal increase of GDP) without any indication of the overall

net impacts. If economic valuations for the costs of disruptions to services and other indirect costs are calculated, a net calculation of total indirect costs might be

considered as additional economic losses.

11. Important also to note an important and related concept in the Sendai Framework Indicators (in this case, for Target D), which refers to impacts to assets (particularly critical infrastructural), but from the perspective of disruptions to the flows of services. The Sendai Framework Indicators for Target D are not valued in monetary terms. In

1 In the SNA, catastrophic losses are recorded as Other Change in the Volume of Assets. They are defined in

paragraph 12.46: “The volume changes recorded as catastrophic losses in the other changes in the volume of

assets account are the result of large scale, discrete and recognizable events that may destroy a significantly

large number of assets within any of the asset categories. Such events will generally be easy to identify. They

include major earthquakes, volcanic eruptions, tidal waves, exceptionally severe hurricanes, drought and other

natural disasters; acts of war, riots and other political events; and technological accidents such as major toxic

spills or release of radioactive particles into the air. Included here are such major losses as deterioration in the

quality of land caused by abnormal flooding or wind damage; destruction of cultivated assets by drought or

outbreaks of disease; destruction of buildings, equipment or valuables in forest fires or earthquakes.”.

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principle valuations of economic impacts from disruptions to services or other economic activities, where available, should be recorded as part of indirect economic impacts only.

12. In practice, the other changes in volume measurement account is not an important or

much used aspect of the national accounts, even in the minority countries that compile national asset accounts. Therefore, to respond to the demand for this new SDG and

Sendai Framework indicator, all national statistical systems will need to identify the current core sources of data that can be used for valuing damages and destruction to

assets.

13. An aim for economic loss measurement in the disaster-related Statistics Framework (DRSF) Guideline is to retain consistency, as much as possible, with existing standards

and good practices used for the regular compilation of official economic statistics in normal times, in order to maintain the best possible coherence with the contextual

indicators that are used in indicators (e.g. GDP). However, in practice, there can be no single solution or standard method for measuring direct economic loss across all cases. More realistic is to produce a series of related but different values for the relevant components of direct economic losses, such as the list of variables discussed in the rest of this paper.

Observation and Assessment

14. The second distinction to make in the underpinning statistics for this indicator are two main types of valuation or measurement approaches used to capture the extent of

damages to the economy. The first type are the observations, directly and subjectively observable from accounts or reports from economic actors. The second type is the

assessments conducted by economists, engineers, and other experts, based on their own expertise and knowledge of the affected area.

15. As long as direct losses emphasizes assets, SNA asset values should be considered for

the direct impacts to assets. SNA asset values can be measured from actual transactions (historical prices or reconstruction costs) or as the net present value (NPV) of expected

benefits. In reality, such values will not always be available (in practice transactions in assets are comparatively rare and national asset accounting is not commonly done).

16. Data on actual transactions for the reconstruction of damaged or destroyed assets, including privately owned assets like dwellings, could theoretically be collected through

the existing (or specially-designed) economic surveys of households and enterprises. These transactions are, in principle, a subset of information that is already collected

through expenditure accounts within the SNA. Therefore, a lot of relevant information for valuing economic losses from disasters could be derived directly from observations

compiled for disaster risk reduction satellite accounting to the SNA2, which should

2 A draft proposal for DRR satell ite accounts and DRR characteristic activity classification has been developed

for DRSF, but at the time of writing, this concept has not yet been fully tested for feasibil ity by national statistical systems. The idea has also been developed for the OECD, which also compiles statistics in its international database on international transfers (ODA) for DRR.

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include explicitly within its classification entries for expenditures on recovery and reconstruction.

17. The assessments of economic loss may come about in a variety of forms. Initially after a disaster, official (or other semi-official) institutions with jurisdiction may provide

provisional estimations (sometimes called ‘spot assesments’), quickly after a disaster, in order to provide a provisional approximation of the scale of damages and recovery

needs and the scope for reaction required by different ministries. In addition, post disaster needs assessments (PDNAs) are sometimes conducted, especially after large

scale events that attracted international attention and support. These measurements can be compiled as approximations, ideally with information on the likely margin of

error, and reported for various policy-relevant purposes.

18. PDNAs are conducted following guidelines on the damage and loss assessment (DALA) methodology, originally developed by the United Nations Economic Commission for

Latin America and the Caribbean (UN-ECLAC) and further updated by the World Bank’s Global Facility for Disaster Reduction and Recovery (GFDRR).

19. PDNAs typically rely on traditional data collection instruments, like household surveys,

to identify damages and there costs. If these instuments could be conducted for a representative sample of hazards across time, then they could, in theory compose a system for compiling estimates of economic loss across events (i.e time series statistics on material impacts and economic loss assesment) . The methodologies could be continuously improved over time through advancements in estimation methods and for alignment with the demand for time series indicators. However, in practice, PNDAs are usually only conducted after the very largest scale disaster events such as, hurricane Yolanda in the Philippines, Thailand’s 2011 floods, and Cyclone Evan that caused major economic destruction in Fiji and Samoa. The World Bank’s GFDRRR website current

hosts reports for 49 disasters in 40 countries, including 15 cyclones and multiple droughts, floods, earthquakes, tropical storms, and 1 volcanic eruption (Cape Verde

2014-15).3

20. Often, spot assessments will be useful for compilation of statistics on direct economic loss, because they may be the only values available for selected assets damaged or destroyed by a disaster. Where possible, values from spot assessents should be validated with checks from other sources of data, such as statistics on damages in physical terms (e.g. square meters). PDNA studies are another important source of data for economic loss measurement, noting that in many cases these studies are conducted for specific purposes other than for the production of comparable statistics across disaster events. (e.g. to determine the scope for loans or needs for international assistance).

Monetary Valuation

3 https://www.gfdrr.org/post-disaster-needs-assessments

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21. When considering the change in value to an asset from damages or destruction4 it is important to note that scale of impacts for each individual object may vary from minor damages up to completely destroyed with negligible recovery value. Increasingly,

modern monitoring and observation tools, especially remote sensing (combined with ‘ground-truthing’) , can be used to produce information on the physical extent of

damages to infrastructure and eventually remote sensing images will be utilized to produce standard physical-unit measures of extent of material impacts. Meanwhile,

distinguishing among destroyed and relative extent of damages to assets should be incorporated in the caclualed value of the direct economic impacts.

22. The first preference is consistency with valuation principles of the System of National

Accounts, in order to maintain some valuation consistency with key indicators, like GDP. That means that, w here possible, the first preference for valuation is to use market

prices. But, since market transactions are rare for many types of assets, often a proxy measure is needed. According to the economic principles used to define a productive

asset, the value of assets to their owner is related to the current value of the expected future stream of income, known as the net present value (NPV). NPV calculations are related, at least in theory, to market values of assets but may be significantly different from the (re)construction costs of an asset that actually occur.

23. As an illustrative example of the challenge of the great diversity of material impacts and their implication for choosing an appropriate approach to valuation, let’s consider the case of an old factory that is destroyed from a disaster. Imagine that the factory is old and has become decrepit and thus the building itself had very little value. However, as a productive asset, the factory is used to produce output, with a small profit to the owner and, crucially, employment and salaries for, let’s say, around 500 employees. In this example, what is really lost, economically speaking, if the factory is destroyed?

24. The answer to this question depends on which of the many possible valuation approaches is used. Reconstruction of the factory and its equipment may not occur at

all, but if at some point in the future it does, it could be an indication of the loss, though the reconstructed building would almost certainly be very different from the old

decrepit structure that existed previously. If we consider the pre-disaster expected market value of the building and its equipment, than the economic loss, may be quite small, in fact it could be close to negligible. But what about the 500 employees, who, when combined with the now destroyed assets, had been producing output that made it worth it to the owners to maintain the assets and keep these workers employed? Does it make sense, in this case, to ignore impacts of and to the workers for valuation of direct economic loss? If we attempt to estimate the NPV for the production associated with the factory, than we could estimate the value of output from the combination of the assets and the workers. Alternatively, it may be possible to calculate the NPV of the factory and its equipment only, excluding the productive value of the employees, but again this would be a different type of value.

4 It’s general assumed that destruction is a total loss, thus equivalent to the value of the asset, although there

may or may not stil l be residual values, such as value of ownership to the property where the asset was destroyed

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25. Another important illustrative example is the case of growing crops, which are a type of inventory expected to bring value to owners in the form of future transactions, after production. In the case of destroyed crops, especially single-season crops like rice,

there is little other choice but to value these losses in terms of loss of expected output (which is similar, conceptually, to the NPV approach described for the destroyed

factory). However, for other types of agricultural inventories that are more traditional examples of assets, because they are used in repeat-use to produce income, i.e.

livestock or plantations, replacement costs are also a valuation option because the owners may simply be able to replace the losses by buying new livestock or replanting

trees.

26. Note for this case that there could be a major difference, analytically, between recovery (where possible) of costs associated with damaged or destroyed crops as

compared to the expected value to owners had the crops reached the market (e.g. the closest relevant market value for mature crops of the same type). Normally, the first

preference for valuing damages should be to use reparations costs or its closest approximation. However, for the special case of growing crops, there is a clear analytical value to producing measurements of expected lost value of those crops at maturity (i.e. the foregone output to farmers). When a field of crops is destroyed, replacement is only possible by restoring the land and waiting to restartithe production process at the beginning of the next growing season. The costs of restarting production will be significant and different from the amount of income owners were anticipating from their crops. Thus, there are at least two types of mutually exclusive values which will be experienced by the farmers from damages to their crops (foregone output and damages to assets –e.g damaged land or equipment) and both should be valued and included in the direct economic loss valuation, where possible.

27. For a third and final example, let’s consider a public asset, like a road or a bridge, a

school, or a public hospital. These assets are productive in the sense that they are used to produce services, but they are not used to create and income direct to its nominal

owner (the government). In this case, normally the best approach is to use actual reconstruction costs, which are borne by the government and recorded as expenditure

by the relevant ministries or local authorities. There are also other economic effects from these damages, such as the disruptions to services and additional costs to conducting business, e.g in the case of loss of a bridge, which was an important route for delivering products to markerts. Presumably, these costs will typically be accounted as indirect impacts, but important to note as well that they are consequences of losses to assets, similar, in principle, to the loss of income to the owners of the destroyed crops or the factory.

28. These examples are summarized simply to explain that there are various valuation

possibilities or approaches that can be used, depending on the nature of the affected assets and the expectations from users of the statistics in terms of what should be the scope for analyzing the losses. Usually, there is a need to combine a set of different valuation approaches, and therefore it is critical to be very clear in the recommendations for different types of appropriate valuations in the different situations. Thus, a main objective for developing recommendations for statistics in the

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DRSF is to provide enhanced clarity on the relevance of different measurement and the most appropriate options, depending on the contextual circumstances.

29. We also need clarity about when it is ok or not ok to sum together, or alternatively, differentiate between values in order to be clear about the scope of measurement to

create the possibility for comparisons and to avoid mixing apples and oranges and thus creating incoherence in the aggregated values.

30. In the case of directly observed transactions or records of expenditures by government

or other economic institutions, the information on damages might be available in terms of the monetary valuation only. In all other cases, there must also have been a

collection of basic data on damages or destruction physical terms: e.g. number of buildings or other objects, length of roads, used for approximation the costs in

monetary terms.

31. The statistics in physical terms are also useful in their own right and should always be retained in the databases, in addition to the monetary valuations. The relationship and the significance of maintain both types of data is similar to the explanation of accounting according to prices and in volume terms in the SNA.

32. Moreover, monetary values of disaster impacts, while very important for reporting

indicators, will always be subject to consideration within the local economic context. For example, economic damages for the poor or in poverty areas, which could have little significance in relation to global GDP, have strong relevance in relation to the

Sutainable Development Goal 1. Maintaining as much information as possible on the impacts in physical terms allows the statisticians or analyst to trace back the valuation methodology and understand how various analyses may by the approaches used and constraints for valuation of damages.

Economic loss

Reconstruction Change in asset value

Direct loss

Observations (transactions)

Assesments

Indirect Loss

Estmated costs of disruptions to sevices

Modelled impacts of direct losses to assets

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33. An example of a simplified and generalized approach to assessment or estimation of

economic loss in the context of limited availability of direct observations of costs, the

idea has emerged in the outcome document for monitoring Sendai Framework Indicators (United Nations, 2016) for applying average per-unit values of assets for

estimating the cost of damages for a given impact area.

34. While the concept offers a simple and generalized approach to the challenge of monetary valuation, in practice, average unit cost approach also face numerous data

constraints. First there is a need to establish national standards for defining average per unit cost multiplier values for assets (e.g. average cost of roads per kilometer). This may

include a need to identify a range of region-specific (sub-national) multipliers according to the differences in economic costs for (re)construction (e.g. between rural and urban

provinces). Many complex challenges should be anticipated in producing average baseline reference values for assessing changes, including the need for frequent updates

and adjustments for inflation. Expertise and risk models from the insurance industry could be of strong relevance to help the governing agencies, like the disaster management agencies and national statistics offices to begin developing tools for anticipating and calculating aggregated values of losses to expose assets.

35. Where available, there are several potential market prices, or types of values for the losses incurred directly by a disaster, depending on the timing and context for the valuation. Prices may be reported from the perspective of producers or the purchaser. Of course, values for assets could change before or after a disaster, an effect that could be at least partially caused by the disaster, especially in the case of large disasters because the extent of the damages could potentially have broader effects on the market. There may be estimates of insurance coverage for damaged properties, and there are costs to assets absorbed partially or completely by governments and non-profit

organizations.

36. Land use and land cover mapping are produced by official sources in countries that can be used to identify the location of, e.g., agricultural land (and other associated assets)

to determine economic exposure. Thus risk and impacts of farms may be relatively easy to calculate, with the help of GIS, as compared to measurement for some other types of assets or for other components of risk that are not as visible from remote sensing, cadaster maps, or other geo-referenced data sets.

37. Administrative records related to support to enterprises for recovery from damages to

assets could also to be integrated to improve these figures via validataion excercises and, possibly, to fill gaps. For example, average government tax revenue and other types of baseline economics derived from the locally governing authorities in affected regions can also be used for estimation (or validation of estimates) of values for assets in the affected areas. Also relevant to reviewing the quality of estimated values of damages will be to review the figures on disaster risk reduction, environmental protection, and other relevant government expenditures before and after disaster occurrences.

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The objects of direct loss valuation 38. A third distinction or categorization that can be helpful for disassembling the challenges

with producing statistics on direct economic loss is the different types of objects of damages and destruction. For example, often there is better availability of data on damages to public infrastructure (like roads or public hospitals) becasuse the responsible agencies are within the government and thus would be producing administrative records and costs of reconstuction, which can be made available for statistical purposes

39. The SNA maintains a definition and also categorizations for economic assets.5 As much as possible, valuations of the direct impacts ( should be made consistent with the existing standard classifications for assets used in economic statistics ). However, special

functional classifications for disaster impacts, such as requirement to specify impacts to “critical infrastructure” (typically these are components of the public good assets) can

be accommodated as a specialized sub-domain of the broader classification of assets.

40. Direct economic loss measurement is somewhat simplified by focusing on impacts to critical infrastructure and other types of relatively long-term assets like dwellings.

Transactions in such assets are rare but there usually should be some form of price indications available consistent with SNA valuation - e.g. cost of production in the case

of public infrastructure and value of comparable assets in the case of dwellings.

41. Included within the scope of direct impacts to assets are the impacts to valuable cultural and environmental resources and other forms of natural capital. Although, direct

environmental impacts can be very significant, compilers need to be conscious of the scope of assets that can be consistently valued in monetary terms. In the SNA, the scope for monetary valuation is limited by the SNA asset boundary, which includes the stores

of value that have attributed ownership by an economic entity (i.e. government, private enterprise, or a household).

42. Thus, some types of assets may be significantly damaged or destroyed by a disaster, but

those damages could be beyond what can be valued in monetary terms consistently with SNA standards. Particularly, some inherent and non-market (common good) values

in the environment or to cultural heritage will be beyond the normal scope of asset accounting according to the SNA. However, the costs of restorative efforts for

ecosystems or for cultural heritage sites will be important information for a complete understanding of the economic impacts from a disaster.

43. A core type of economic asset that, in many cases, tends to be highly vulnerable to

impacts from hazards is agricultural land. Indeed, agriculture is singled out in the direct economic loss indicators (Target C) for the Sendai Framework. (Indicator C-2: “Direct

Agricultural Loss attributed to disasters”

5 An asset is a store of value representing a benefit or series of benefits accruing to the economic owner by holding or using

the entity over a period of time. It is a means of carrying forward value from one accounting period to another.

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44. Note the agreed description for indicator C-2 for Sendai Framework monitoring (“Direct Agricultural Loss attributed to disasters): “agriculture is understood to include crops, livestock, fisheries, apiculture, aquaculture, and forest sectors as well as associated

facilities and infrastructure.” According to the SNA, the relevant assets are machinery and equipment, livestock and trees cultivated for fruits and nuts (“cultivated biological

resources” in the national accounts terminology), inventories (e.g. the growing crops) and improvements to land. Damages or destruction to these assets should be valued as

important components (in many cases the most significant damages in monetary terms) of economic loss.

45. Land improvement is defined in paragraph 10.79 of the SNA as “actions that lead to

major improvements in the quantity, quality or productivity of land”. Generally crops are classified as works-in-progress rather than as land improvement. Work-in-progress

is defined in SNA paragraph 10.134 (“consists of output produced by an enterprise that is not yet sufficiently processed to be in a state in which it is normally supplied to other

institutional units”) and further described for the agriculture case in 10.140. Assuming that the classifications are applied appropriately, there will be no double-counting of damages in compiling valuations of direct damages to crops and to land improvements and other assets owned by agricultural enterprises, such as livestock, buildings and equipment.

46. Another case for special consideration, potentially within the scope of direct economic

loss measurement are medical costs and other costs associated with the emergency response immediately after a disaster. Medical facilities (hospitals, clinics) are critical infrastructure and part of a nation’s economic assets. However, medical services (e.g. the provision of emergency medical care) are not assets and thus, in principal, are excluded from the scope of the direct economic loss indicator.

47. However, costs of medical care for injuries or illnesses could also be considered as direct impacts, in a broader sense, noting that injuries and illnesses are variables of the

Affected Population measurement, which is another of the core indicators for monitoring disaster risk reduction within the SDGs and the Sendai Framework.

48. Medical services are considered production and therefore actually generate GDP after a

disaster, as do many of the other types of activities that take place as part of disaster recovery. However, at the same time, the emergency medical care may also represent significant opportunity costs, incurred by the affected households, or by insurance or public financing on behalf of households.

Direct Impacts and GDP

49. The full title for the economic loss indicator adopted for the Sendai Framework and for SDG monitoring is Direct Economic loss in relation to global gross domestic product

(GDP). This specification alerts to the demand for making comparisons in relation to the economic context of the impacts – or, in this case, the value of gross production in the national economy.

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Direct Economic Loss / GDPi,t

50. The contextual information in the denominator (GDP for country ‘i’ and time period ‘t’)

matters in the international context because relatively large economies are likely to have a greater capacity to absorb direct economic losses as compared to smaller ones

and thus the relative scale of direct economic losses will often be better for cross-country comparisons.

51. On the other hand, sometimes direct economic losses are concentrated in specific areas

within a country and therefore the nationally aggregated figures on production may not be the most relevant context for other types of analyses. The time period 't' also needs

some careful thought. Because damages to the assets, and particularly to the work-in-progress crops or other inventories, the year of the the disaster occurrence is not

necessarily the most appropriate reference. The year prior to the disaster (t-1) might be more relevant since the destroyed crops never reached markets (and likewise for the

foregone output connected to other outputs). The GDP context could be affected by whether a disaster creates significant damages to productive assets near the beginning or at the end of an accounting period, especially for large scale disasters like the 2015 earthquake in Nepal which happened at the end of the financial year but reportedly had sweeping effects across the national GDP.

52. There can only be direct losses to GDP caused by a disaster for cases where goods and services (e.g. lost output or medical services) are included in the valuation. Otherwise, the impacts on GDP are part of what is considered part of the indirect economic impacts measurement (i.e. results from direct impacts to asset on the flows of production happening after the emergency period).

Summary and Conclusions

53. The objective for this paper is to summarize the major conceptual and practical

challenges with meeting the demands for producing internationally harmonized indicators for direct economic loss in alignment with requirements for the SDGs and

Sendai Framework targets, especially in the context of the existing stadards for economic statisics compilation and valuation (SNA 2008).

54. While it is not the objective of this paper to provide any specific prescriptive

recommendations for producing the statistics that underpin this indicator, a general conclusion from this summary is that it can be useful for the responsible compilers of

relevant data on economic loss from disasters to organize their statistics according to the core conceptual principles and a few of the critical practical considerations with

valuation in order to simplfify the challenge and produce a database of multi-purpose statistics that could be useful for monitoring this indicator, but also for other purposes

and for cases where not all of the elements of direct economic loss could be measured completely:

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Summary Components of direct economic loss measurement

References:

OECD (2016) Improving the Evidence Base on the Costs of Disasters, OECD Publication, Paris, France

United Nations (2008) System of National Accounts, New York, USA

United Nations (2015) Report of the open-ended intergovernmental expert working group on indicators and terminology relating to disaster risk reduction, Note by the Secretary-General

Seventy-first session of the General Assembl, Agenda item 19 (c), A/71/644, New York, USA

Components for Direct Economic Loss

Privately-owned Assets

Asset Value

Reconstruction (e.g. shops,

factories, work-in progress crops)

Change in asset value

Emergency Medical Service

-> Payments by households or

insurance claims

Publicly-owned Assets

Asset Value

Reconstruction Change in asset va lue

Emergency Medical Service

-> Records of public expenditure of

response