The social impact of natural disasters – at what cost? Emergency Management

The social impact of natural disasters – at what cost?

Emergency situations can be an incredibly stressful, disruptive and traumatic time for those affected.

A report from from Deloitte Economics has examined for the first time the economic costs of social impacts by drawing on community experiences and analysing data on the increased health related, employment and community costs experienced following a natural disaster.

The Economic Cost of the Social Impact of Natural Disasters states that increased mental health issues, alcohol misuse, domestic violence, chronic disease and short-term unemployment have resulted from extreme weather events such as bushfires, severe storms, cyclones, floods and earthquakes in Australia.

The report, prepared on behalf of the Australian Business Roundtable for Disaster Resilience & Safer Communities[1], finds that in Victoria alone the estimated social costs associated with the Black Saturday Bushfires were larger than the financial costs – at least $3.9 billion in social impacts and $3.1 billion in direct financial impacts. The report finds that the projected lifetime cost resulting from the 2009 Black Saturday bushfires include:

  • Mental health issues – $1,068bn
  • Risky/high risk alcohol consumption – $193m
  • Chronic disease/non communicable diseases – $321m
  • Family violence – $985.4m
  • Environmental damage -$411m

Emergency situations can be an incredibly stressful, disruptive and traumatic time for those affected. Whole communities can be uprooted, friends and family divided, homes, livelihoods and, of course, lives can be lost. In the aftermath of such a disaster, people may experience a range of physical, psychological, emotional or behavioural reactions that, while perfectly natural, can significantly impact their ability to cope with the situation.[2]

People may experience shock and disbelief, fear and apprehension, anger, and shame and guilt in the early days after an event, and over the longer term. Trauma and grief will put personal, family and community relationships under pressure. The mental health impacts of disasters can lead to an increase in problematic alcohol and drug use, self-harm, violence and abuse – which may well act as early warning signs. Whether or not they have experienced direct losses, the disaster may trigger post-traumatic stress for people who have experienced previous trauma, including war service, previous bushfires or house fires, and family loss.

The estimated social costs associated with the Black Saturday Bushfires were larger than the financial costs – at least $3.9b in social impacts and $3.1b in direct financial impacts.

Life events not related to the disaster, such as relationship breakdown, bereavement or losing a job, can compound the grief and trauma of the disaster. Many people suffer vicarious trauma because of their involvement with impacted households and communities through business, services, sport, schools and social connections.[3] The impact of exposure to emergency events on an individual’s emotional and social wellbeing or mental health can be mild or severe; short term or long lasting. There is consistent evidence that anywhere between 5–40 per cent of people involved in an emergency event are at risk of sustaining severe and protracted psychological injury.[4]

While recovery is positive for most there remains a group of people that are struggling with their recovery. Many of these will take a number of years more to regain their previous state of health, welfare and happiness and to fully re-engage with their lives, while many will not recover at all.[5]

In addition, the ability of a community to recover from a disaster reflects its underlying functioning. Communities that function well in everyday life, with strong social connections and plentiful resources will often be most resilient when facing a crisis. People and communities with pre-existing vulnerabilities or who are disadvantaged are more at risk of the immediate, medium and long-term effects of disasters, such as loss, injury, and social and economic hardship.

The report states that critical to ensuring long-term impacts are minimised is “strengthening local capacity and capability, with greater emphasis on community engagement and a better understanding of the diversity, needs, strengths and vulnerabilities within communities.”[6]

Case Study: 2014 Hazelwood Mine fire

The impacts of an emergency can add to and significantly compound the difficulties disadvantaged people are already facing. Following the 2014 Hazelwood Mine fire, mental health organisations advised that there were significant ongoing, emerging and new mental health issues as a result of the fire. During and after the fire, people with pre-existing mental health issues experienced stress and trauma, in some cases exacerbating their condition significantly. Other people with no history of mental health issues presented as new clients. Despite this increase in demand for mental health services there was no additional funding for organisations to deal with this.[7]


The Economic Cost of the Social Impact of Natural Disasters states that a greater effort should be invested in the preparedness of individuals, in particular long-term psycho-social recovery, including community development programs and support for areas such as health and wellbeing, employment and education. This reflects the recent Hazelwood Mine Fire Inquiry Report 2015/16 which recommended strengthening health services, promoting healthy living, reducing health inequities, building pride of place, and strengthening leadership and sustainability. These recommendations would help to social capital alongside building disaster resilience.

The Economic Cost of the Social Impact of Natural Disasters makes a number of recommendations to Government and to the non-government sector about how to make communities more resilient to extreme weather events:

  • Pre- and post-disaster funding should better reflect the long-term nature of social impacts
  • A collaborative approach involving government, business, not-for-profits and community is needed to address the medium- and long-term economic costs of the social impacts of natural disasters
  • Governments, businesses and communities need to further invest in community resilience programs that drive learning and sustained behaviour change
  • Further research must be done into ways of quantifying the medium- and long-term costs of the social impacts of natural disasters

VCOSS has long advocated that community sector organisations build direct relationships with the most disadvantaged members of a community through the services they provide. These organisations can therefore play a significant role in building resilience of communities, informing the community about support services and health initiatives, particularly in an emergency, provided they have adequate resources to undertake this role.

Resilience is best built well before and far beyond the management of disasters and emergency risks. As well as promoting the wellbeing of people and communities in emergencies, its broader benefits include increasing the social and economic wellbeing of communities across Victoria.


Main image: Jeff Hitchcock/CC

[1] The Australian Business Roundtable for Disaster Resilience & Safer Communities was established by the Chief Executive Officers of Australian Red Cross, Insurance Australia Group, Investa Property Group, Munich Re, Optus and Westpac Group.

[2] Australian Red Cross, The hidden impact of disasters, Humanitarian Issue 27, Melbourne, 2015.

[3] Berry Street, On the frontline in emergencies: A practical guide for communities and community sector organisations, Berry Street 2014

[4] DHS, Psychosocial support: a framework for emergencies, Victorian Government, 2014

[5] Hubbard B, Report to the Victorian Government of the 2009 bushfire-affected communities five year consultation, 2014

[6] COAG, National Strategy for Disaster Resilience, Council of Australian Governments, 2011

[7] Victorian Council of Social Service, One year on: Morwell and the 2014 Hazelwood Mine fire, VCOSS, 2015