Estimating the Lost Economic Production Caused by Internal Displacement Because of Disasters

Disasters are a large cause of internal displacement at the global level, in 2017 alone affecting more than 19 million people. This dimension of disaster risk is usually overlooked in many disaster risk management strategies and assessments. It is only very recently that efforts to quantify displacement risk and integrate that dimension into existing physical risk models have been made. A key component of internal displacement assessment is the quantification of its economic impacts, both direct and indirect, not only to make a figure available but to raise awareness and increase accountability among governments, stakeholders, policymakers, and decision makers. This article presents a novel and peril-agnostic methodology with which to estimate, using a scenario-based approach, the economic production lost because of internal population displacement. The methodology is applied by using as a triggering event the April 2015 Gorkha, Nepal M7.8 earthquake. The method quantifies the indirect cost caused by internal population displacement because of that event in terms of lost economic production and estimates the loss to be between USD 400 and 850 million.