NU Online News Service, Feb.17, 11:15 a.m. EST

Economists at the Inter-American Development Bank estimated that the cost of rebuilding Haiti could reach $14 billion--a figure far above early numbers provided by catastrophe modeling firms.

Their estimate would make the Jan. 12 earthquake proportionately the most destructive natural disaster of modern times. Because the property and casualty market in the country is so small, insurance losses are expected to be just under $20 million.

Eqecat, the Oakland, Calif.-based catastrophe modeling firm, said on Jan. 15 it was revising its economic damage estimate upward to be in the low-single-digit billions of dollars.

The bank study, it was explained, used simple regression techniques employing data from past natural disasters and their damage estimates. It takes into account several variables including the magnitude of the disaster, the number of fatalities, and the affected country's population and per capita GDP.

The study calculates damages assuming either 200,000 or 250,000 people dead or missing (as of Feb. 11, the Haitian government had reported 230,000 dead).

Last month Risk Management Solutions in Newark, Calif., said the quake had caused an estimated 250,000 fatalities--and disease, starvation and lack of medical care could push the death toll higher.

IDB economists Andrew Powell, Eduardo Cavallo and Oscar Becerra calculated a base estimate of $8.1 billion for a 250,000 dead-or-missing toll, but they estimate this figure is likely to be at the low end and conclude that an estimate of $13.9 billion is within the statistical margin of error.

The study said the Haiti earthquake was vastly more destructive than the Indonesian Tsunami of 2004 and the cyclone that hit Myanmar in 2008. It caused five times more deaths per million inhabitants than the second-ranking natural killer, the 1972 earthquake in Nicaragua.

The economists concluded that the scale of the damages in Haiti will require unprecedented coordination among the multiple bilateral, multilateral and private donors.

To ensure the efficient use of billions of dollars in reconstruction funds, for example, individual donors may need to surrender the kind of control and conditionality they typically demand of projects they finance. This will in turn require extraordinary mechanisms to ensure transparency and accountability, they said.

Haiti is part of The Caribbean Catastrophe Risk Insurance Facility risk pooling facility, but that limited coverage will provide the island nation with a little under $8 million for earthquake damage.

Special Reports /

Haiti Reconstruction Put At Nearly $14 Billion

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