Friday, October 17, 2008

World Bank Estimate: Pandemic Would Cost $3 Trillion Dollars

 

 

# 2394

 

 

Today appears to be a `theme day'.  

 

 

First we had the Lloyd's pandemic report saying another pandemic is inevitable, and now we get this report from Jason Gale of Bloomberg news, where the World Bank says pretty much the same thing.

 

Two years ago the World Bank issued a similar report, also calling for up to 71 million deaths in a `worst-case' pandemic, and put the costs at $2 trillion dollars.

 

 

First Jason's report, then a little discussion about numbers and estimates.

 

 

 

Flu Pandemic May Cost World Economy Up to $3 Trillion (Update3)

 

By Jason Gale

 

Oct. 17 (Bloomberg) -- A flu pandemic could kill 71 million people worldwide and push the global economy into a ``major global recession'' costing more than $3 trillion, according to raised estimates by the World Bank of a worst-case scenario.

 

A slump in tourism, transportation and retail sales, as well as workplace absenteeism and lower productivity caused by a ``severe'' outbreak, may cut global gross domestic product by 4.8 percent, the Washington-based bank said in an internal report updated last month and obtained by Bloomberg News today. Economic modeling by the bank in June 2006 estimated GDP would drop by 3.1 percent, or about $2 trillion.

 

The spread of the H5N1 avian-influenza strain across Asia, Africa and Europe prompted the development of vaccines and the slaughter of poultry from Indonesia to the U.K. Measures to avoid infection would generate most of the costs, said the report, which used simulations to underline the importance of global preparations for a pandemic sparked by bird flu. Human cases of H5N1 infection have fallen by half this year as controls of outbreaks in poultry improve.

 

``Even with such efforts, an eventual human pandemic at some unknown point in the future is virtually inevitable,'' Andrew Burns, Dominique van der Mensbrugghe and Hans Timmer, economists at the bank, wrote in the report.

 

(Continue)

 

 

I'm not sure exactly how the World Bank came up with these numbers.   They would appear to me to be, charitably speaking, conservative at best.

 

We've been told that the global markets have taken more than a $6 trillion dollar hit in the past couple of weeks, and it is hard for me to believe that a `worst-case' pandemic would have half the impact of the credit crisis of the past few weeks.

 

Their `worst-case' scenario seems to revolve around 71 million deaths globally, or roughly 1% of the population.   Not an unreasonable assumption, I suppose, but certainly on the `low' end among many estimates.

 

In 1918, the world's population was 1/3rd of today's, and historians believe somewhere between 50 million and 100 million people perished from the Spanish Flu.   

 

Even taking the low estimate, 50 million, and adjusting for the increase in the world's population, you'd be at roughly 150 million deaths today.  Double the World Bank estimate.

 

And 1918 may not be the worst-case scenario.

 

Lloyd's of London issued a pandemic report today where they state exactly that point.   From their executive summary:

 

 

2. 1918 may not be a worst case It is certainly true that the 1918 event was extreme relative to other pandemics in history. However many published “worst case” scenarios take 1918 as a base. There is a danger that we over optimise to this one scenario. There are other forms of pandemic than influenza, some have higher case mortality. Pandemic preparedness should consider a range of scenarios to ensure plans are appropriately flexible.

 

 

 

Trying to fix the number of deaths, or the economic costs, of a future pandemic is really impossible.   No one knows what pathogen will spark the next pandemic, or how virulent it will be, so one guess is pretty much as good as another.

 

 

While none of these estimates may prove to be accurate, they do have value.  They show that the costs, in terms of lives and economic losses, would be heavy from a severe pandemic.   

 

 

And that, hopefully, will be viewed by nations, businesses, and individuals as reason enough to prepare.

1 comment:

blackrain said...

This is the very reason that we can't afford to be throwing away resources on wars.