Disaster Economics

Disasters disrupt economic systems, evolving through cumulative risks over time, as illustrated by the 2023 Joshimath landslide in India. Classical economic theories by Smith, Ricardo, and Marx emphasized wealth creation through labor, land, rent, and surplus. Disasters challenge these frameworks by destabilizing wealth accumulation and linear economic processes. Viewing disasters as projects, not events, necessitates an evolutionary perspective, blending economic resilience with adaptive strategies to mitigate impacts on assets, production, and decision-making within complex, risk-laden environments. Post-Keynesian economics emphasizes effective demand and wealth creation while addressing risks and uncertainties inherent in capitalism. Schumpeter's "creative destruction" and Marx's critique of surplus value highlight capitalism's vulnerability to crises. Environmental risks, inequality, and disasters disrupt resilience, particularly for non-ownership societies. Beck’s risk theory correlates wealth concentration with risk disparity. Disasters exacerbate inequality as ownership societies recover through institutional resilience while vulnerable groups face prolonged impacts. This underscores the interplay of capital, risk, and inequality in shaping economic resilience. This chapter explores disaster economics through classical to neo-classical theories, focusing on wealth creation and climate risks.