The Himalayan nation of Nepal was rocked by a 7+ magnitudeearthquake on April 25, a disaster that killed more than 7,000people and injured scores more in the impoverished Asian nation.Thousands of structures in the capital city of Kathmandu werereduced to rubble, and it is currently estimated that hundreds ofthousands of homes and smaller structures were destroyed across thecountry.

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Here in the West, the most-covered impact of the Nepalearthquake was likely the destruction it wreaked on Mount Everest,the tallest mountain in the world, where avalanches triggered bythe quake swept away a number of climbers and caused widespreaddamage on the mountain. At least 17 climbers were killed, includingGoogle executive Dan Fredinburg, and nearly 40 others injured.

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A global disaster, to be sure, but for a country like Nepal,which relies heavily on tourism to keep its economy afloat, theaftereffects could linger for decades. It appears the climbingseason on Mt. Everest may already be coming to an abrupt, early enddue to the avalanche damage, and it will likely take years for thecountry's other tourism centers to rebuild. In the meantime,tourist dollars are drying up.

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Columbia University economics professor Jeffrey Sachs,a special adviser to the United Nations Secretary General anddirector of Columbia's Earth Institute, addressed the role thatinsurance could play in this recovery in Monday's New York Times.

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“Catastrophes like earthquakes, typhoons, droughts, floods andepidemics pose quantifiable risks,” Sachs wrote. “These risks can'tbe specified with the actuarial precision that underlies home andlife insurance, but there is enough precision to allow forinsurance coverage. For hundreds of years, Lloyd's and otherinsurers have been diversifying the risks of even one-time events;natural hazards like earthquakes are not one-time events, butoccurrences that return with calculable probabilities. SupposeNepal's government could have gone shopping for earthquakeinsurance to cover the large-scale losses and public-sectorresponse after a disaster. Potential underwriters would examine theprobabilities of earthquakes at various magnitudes, using thehistorical record, seismic modeling and assessments of thevulnerabilities of the buildings.”

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