Lost Business

Immediately following a tsunami disaster, many businesses will be unable to trade because of destruction to premises, stock, machinery, facilities, transport networks, supplies and loss of staff.

		Damage at Resurrection Bay, Seward, Alaska, resulting from 1964 tsunami.

All sectors of the business community are likely to be affected, though to various degrees of severity (see Table 2). Loss of agricultural production (by various means e.g. loss of crops, contamination of soils, destruction of market and distribution networks, loss of livestock populations) can have major economic implications, especially for developing nations and small island states dependent on agricultural activity. For example, where contagious (epizootic/zoonotic) diseases break out in livestock populations (e.g. Foot and Mouth) because of the negative impacts of a disaster, trading restrictions may have a significant economic impact. For example, it has been estimated that loss of export revenues associated with Foot and Mouth (FMD) disease in south America are in excess of US$500 million per year. A similar outbreak of FMD in the US national herd would cost an estimated US$7 billion.

Business Recovery

Businesses impacted by a tsunami will take time to recover their activity to pre-disaster levels (see Table 3). This time period will vary from business to business depending on a range of factors including level of preparedness, supply of raw materials, availability of distribution/transport networks and requirements of the market place/product user and variations in price. In extreme cases, the business recovery phase may last considerable periods of time. For example, reestablishment of crab fishing beds in Prince William Sound following total destruction by the 1964 Alaska tsunami took between 8 and 12 years. Such a recovery period would have had significant consequences for the crab fishing industry and its employees.

Business Continuity and Employment

Any large disaster event will cause a disruption of business activity and continuity. Some service sectors will see increases in product demand after the disaster (e.g. power/water suppliers and construction/building firms) whilst others will see falls in their business activity. Also, there may be large changes in the employment market with large unemployment in most sectors where these businesses have been destroyed or badly damaged. There will however, be associated shifts in the employment market with large numbers of building/construction jobs (e.g. labourers) becoming available.

Overseas Trade

Research has demonstrated that in most cases and especially for developing countries, the trade deficit (surplus) as a percentage of imports will increase sharply in the period after a disaster and as such, a country's balance of payments will be negatively affected. Such a macroeconomic effect will be especially severe where a country relies heavily on export of a limited and specific commodity e.g. bananas, olives, mineral resource. If the entire economic crop is destroyed, or the facilities to transport/ distribute and refrigerate a product are lost, then the disaster may have a profound and prolonged economic impact.