In the midst of the Japanese earthquake and tsunami disaster - and my heart goes out to all those in the affected areas - is there a possibility of some good news? If the situation at the Fukushima nuclear power plant remains contained, the long-term effects on the economy may actually be positive, although the initial setback could be potentially quite severe, according to some ecomomists here in Norway.
Obviously, the first priority are the emergency and rescue efforts. Considering the damage to parts of the infrastructure, that will be quite a challenge, since there may no roads, railroads or even ports for bringing in the aid and resources needed. Disasters do affect supply chains, but the good thing is that Japan is a technologically highly advanced country, and thus highly capapble of solving any issues that may arise. That is not always the case in remoter areas of the globe.
A prerequiste for economic recovery is economic resilience. Japan is used to earthquakes and presumably, has the economic resilience needed to recover from this disaster. A very interesting view on economic resilience is shown the work of Adam Rose at the Multidisciplinary Center for Earthquake Engineering Research (MCEER).
The notion of disasters having a positive feedback into the economy is perhaps a bit out of the order at this very moment, in light of the current destruction and human suffering, but in the long run disasters in developed economies tend to have a positive effect, if you look at the overall picture. Of course, many insurers may suffer heavy losses, and many uninsured firms may go bankrupt, and many households will go through extremely harsh times to get back on their feet, but we must also keep in mind that the recovery effort will demand an enormous amount of resources. These resources must be supplied from somewhere, from local, national or international sources, and rebuilding an entire region will not come cheap.
A friend of mine works in a firm that manufactures shelter tents that are sent worldwide, and their business, probably already doing well after the Christchurch earthquake, will most likely do even better now. Is profiting from disasters a bad thing? I don't think so. One man's loss is another man's gain, as we say in Norway, and in times of disaster, sadly enough, it really holds true.
The recovery efforts may take time but I am sure that Japan will regain its ecomic strength eventually. One good thing about rebuilding is that you can replace the old with the new and better, and discard old, obsolete and inefficient solutions. Affected firms and business should thus have the potential to come out stronger and more competitive.
This may be a disaster on a human scale, on an economic scale it may very well be not. In the long term.