NEW YORK (Reuters Blogs) -- Super Typhoon Haiyan might well have been the biggest and strongest storm in recorded history, with wind speeds exceeding 200 miles per hour and hurricane-force winds extending more than 50 miles from the storms eye. Moody's estimates that half of the Philippines' sugar cane crop has been destroyed, along with a third of its rice-growing fields. Most devastating, thousands of people were killed by the storm. In other words, Haiyan is the very model of a modern environmental catastrophe.
At the same time, however, Haiyan is not a particularly devastating financial catastrophe. For all that the afflicted areas had the bad fortune to get hit just as the storm was at its peak strength, they were a long way from Manila, the commercial heart of the Philippines. The loss estimates of about $14 billion are large, but not crazily so given that the Philippines generally suffers about $5 billion per year in storm damage. And the IMF's mission chief in Manila, Rachel van Elkan, says the economic prospects for the country are just as rosy as they were. After all, all the money coming in to the country to help rebuild the devastated areas will end up making a positive contribution to the country's GDP.
Like most natural disasters, then, this one is not a huge economic disaster. And while all developing countries can make good use of financial inflows, it's not clear that the Philippines needs money right now more than it normally does. The national accounts are strong, and Haiyan won't hurt them significantly. Which means it's probably no big deal that all those talks back in 2011 about the Philippines issuing some kind of catastrophe bond never amounted to anything. If the Philippines had issued a cat bond back then, the value would have been for some tiny fraction of $14 billion, and even if it paid out in the wake of Haiyan, the money wouldn't actually help a great deal -- after all, Haiyan is already causing a huge influx of capital into the country.