New Zealand earthquake: Economy takes a hit, too
New Zealand earthquake losses could reach $12 billion or more, because of the huge impact from indirect losses.
- The government's natural catastrophe fund expects to pay out $1.5 billion (NZ) -- $1.1 billion (US) -- to residential property owners.
- Private insurers are expected to pay out twice that amount in residential claims beyond the government's maximum payouts.
- Commercial losses and business interruption claims will add to private insurers' payouts, estimated to total somewhere between $3.7 billion (US) and $8.4 billion.
Indirect economic losses, however, could double or even triple those totals, especially in the next few months. That's because earthquakes tend to have a bigger impact on infrastructure, such as roads and water, than other large-scale natural disasters, such as hurricanes. As of Friday morning local time, for example, 32 streets and 13 bridges were closed to traffic, according to Christchurch City Council.
That's a blow to businesses trying to move products in and out of the area.
"They have to reroute to find a second-best transportation network," says JiYoung Park, a professor of urban and regional planning at the Universtiy of Buffalo's school of architecture and planning. "The transportation costs will be increased."