The true cost of the DANA
Here, every autumn, we have learned to pronounce dana with a disturbing regularity. Isolated high-altitude depressions are no longer a rare meteorological quirk, but a recurring threat that floods neighborhoods, clogs roads, and paralyzes activity. But what is their real economic cost? And, above all, what can we do to reduce it?
International evidence is clear: natural disasters reduce economic activity in the short term and can leave lasting scars. Economic literature concludes that although large, developed economies can offset some of the damage, the impact is negative. In less diversified countries or those with weaker institutions, the impact is even more severe. Studies confirm that climate shocks depend not only on their intensity but also on preparedness and adaptive capacity.
How does this translate to a DANA (isolated high-altitude depression) affecting our homes? First, there's a supply shock: businesses closing for days or weeks, lost harvests, and key infrastructure out of service. Second, a demand shock: families postponing purchases, tourists canceling trips, and investments being put on hold. Third, a financial channel: insured and uninsured losses, liquidity pressures for SMEs, and a risk of default by families and businesses whose activity or income has been interrupted. The result is a temporary drop in production and employment, followed by a rebound linked to reconstruction (see recent study by...). BBVA ResearchBut we must be wary of the illusion: rebuilding does not generate "clean growth"; it only replaces what has been destroyed, and the lost well-being is not recovered.
Furthermore, the impact is not evenly distributed. As the World Bank points out (Unbreakable), one euro of damage does not have the same effect on a family with savings and insurance as it does on one living paycheck to paycheck. The most vulnerable households—single-parent families, those in precarious employment, recent immigrants—suffer much more because they have fewer support networks and less room to recover. A recent study by CaixaBank Research The study of the DANA storm in the province of Valencia shows that, despite a general recovery each year, disparities persist between municipalities and socioeconomic profiles. Therefore, it is clear that without swift aid, the economic wound will widen and become chronic.
There is also an incentive problem. When flood risk isn't reflected in land prices, insurance premiums, or building permits, construction occurs in unsuitable locations. In a climate that accelerates extreme events, these mistakes translate into recurring public costs. The solution isn't to prohibit living on the coast or riverbanks, but rather to accurately assess the risk and improve planning.
The good news is that investing in resilience pays off. Cost-benefit research indicates that every euro spent on prevention can save several in future damages.Wouter Botzen, Deschenes and Mark Sanders 2019It's not just public works – wetlands, dunes, stream maintenance – but also technology: alert systems, school and work closure protocols, parametric insurance that pays out automatically when rainfall exceeds a threshold, and plans for SMEs and the self-employed to resume activity quickly.
A DANA (isolated high-altitude depression) is not just meteorology: it's the political economy of the territory. It challenges us to consider how we value risk, how we distribute costs, and how we invest to reduce future damage. If we simply repeat the same promises of reconstruction, we haven't learned the lesson. The indicator of success won't be the speed at which we remove mud, but how much mud we won't have to remove at all.
