PH warned of $2-B loss from a deadly volcanic eruption
Earthquake-prone Philippines should also now prepare for volcanic eruptions threatening to equal or even surpass losses in recent weeks brought about by calamities.
According to global insurance and reinsurance services provider Swiss Re Group, Manila ranked fourth among cities worldwide that would incur the most economic losses from a massive ash fall.
In a report, the firm placed Manila just behind Managua in Nicaragua, San Jose in Costa Rica, and Quito in Equador among the top 15 cities at risk from substantial economic losses exceeding 0.5 percent of the gross domestic product (GDP).
Swiss Re said that in the case of the Philippines, which is located within the “Ring of Fire” that hosts 75 percent of all active volcanoes on Earth, most of the economic losses would be uninsured.
“If Mount Pinatubo erupted today with the same intensity as in 1991, it would cause an economic loss of about $2 billion. This is more than 1 percent of the country’s GDP. As the major part of the loss in the Philippines would not be insured, the cost of damages would impede the country’s economy for several years,” Swiss Re said.
Swiss Re arrived at the said estimated economic loss by adjusting 1991 inflation to 2015 values as well as approximating the exposure to the increase in Philippine population during that period.
Swiss Re noted the eruption of Mount Pinatubo on June 15, 1991, considered the second biggest eruption during the 20th century, “not only spewed an ash column to a height of more than 40 kilometers but had also produced avalanches of hot ash, gas and mud.”
Forecasts have minimized losses, yet “the severe damage caused by the eruption, and its after-effects, would disrupt the region’s economy for many years to come,” Swiss Re added.
“Substantial losses from volcanic ash fall are generally rare—with a return period exceeding 100 years. Even though, globally, the threat of volcanic ash fall on property is small, it can be of major importance for individual countries. The cities most at risk from large losses … are in developing and emerging countries,” Swiss Re said. —BEN O. DE VERA
