are usually divided into direct and indirect costs. The direct costs are those associated with the actual damage caused by the earthquake, while the indirect costs (which are more difficult to quantify) are those associated with loss of production and overall economic consequences of the event. To compare the losses over time, costs have been brought to a present value. The adjustment is to bring all costs to the values that would be paid in today's money for the event‐year earthquake effects. The total (direct and estimated indirect) earthquake losses have then been calculated as a percentage of GWP, the Gross World Product (the world's total economic output), also adjusted to present‐day values, to give an annual global loss rate.
The surprising conclusion is reached that, although the global annual loss rate has fluctuated somewhat over time, the trend has remained relatively constant, with a peak of 0.1% in 1949, reducing in more recent years to about half of this value. Thus, while production and population have increased enormously over the last century, and thus actual values of loss have increased correspondingly, there has been only a small decrease in the loss rate as a proportion of GWP. But this decrease is not enough to suggest that the problem of economic earthquake losses is being brought under control. For small poor countries such as Haiti, the total cost of a single event can be more than 100% of the country's GDP. Indeed, recent events have suggested that, given the increasing interconnectedness of the world's economy, the indirect losses are increasing and will become more dominant in future events (Daniell et al. 2012).
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35 Moon,
