AI could help save $70 billion per year from natural disasters

There is no avoiding it: Natural disasters invariably cost countries around the world billions. Now, emerging AI technologies could help save around $70 billion annually from natural disasters by 2050, according to a study from Deloitte.

Estimates show that natural disasters around the world could cause upwards of $450 billion in damage to infrastructure annually by 2050. With climate change worsening the frequency and severity of weather events, there is a growing need for solutions to avoid worst-case scenarios.

“Around the globe, infrastructure systems are under growing pressure – from extreme weather events and aging assets to the demands of the energy transition, urbanization, and accelerating technological change,” said Jennifer Steinmann, leader of Deloitte’s Global Sustainability Business.

“The potential of AI is vast. With the right vision and ecosystem collaboration, it can help leaders build infrastructure that’s stronger, more efficient, more sustainable and future-ready.”

AI solutions

Infrastructure resilience can be boosted by using AI for better planning and stronger preventative measures. Specific use cases like real-time detection of hazards and automated post-disaster damage assessments have already been deployed successfully in some countries.

Together, these AI-powered tools that can be deployed before, during, and after a hazard could help save approximately $70 billion (15%) from direct damages by 2050. The remaining losses (approximately $390 billion) can also be partially avoided using other resilience options, like earlier planning, better building practices, decentralization of assets, or other mitigation strategies.

Digital twins – virtual replicas that are used to simulate the behavior of real-world counterparts – are another strong solution that some local governments have already begun using. For example, Portuguese capital city Lisbon uses digital twin tools to study better resilience to floods; and Florida has used digital twins to better understand sea-level rise and extreme weather events.

Infrastructure is vulnerable

Infrastructure development is an important pillar for the global economy, accounting for up to 6% of GDPs in just transportation-related infrastructure, which is equal to around $200 billion per year. Looking forward, infrastructure value is likely to grow by about 85% (reaching over $390 trillion) by 2050.

That global infrastructure is vulnerable to a wide range of disasters. But it is climate change-fueled acute natural shocks (floods, hurricanes, and tornadoes) that are likely to cause more problems going forward. That is besides other non-climate related disasters like earthquakes.

Research from Deloitte shows that historical losses linked to natural disasters have been on the rise since at least the 1980s. The most common natural disasters have been storms, floods, and earthquakes.

By 2050, average annual losses from natural disasters are projected to rise by $260 billion compared to the past 15-year average. Nearly two-thirds of this jump (63%) stems from greater economic exposure – that is, more and higher-value assets placed in harm’s way – while the remaining 37% reflects the intensifying frequency and severity of hazards.

Challenges remain

Despite the promise of AI in combating the worst of natural disasters, there are still a number of obstacles in the way of further adoption. For one, AI tools are expensive to develop and contract. This includes not only the cost of technology, but also investments in data acquisition, storage, computing power, and skilled personnel.

There are also the lingering concerns about ethics, biases, and privacy when it comes to AI. Some AI-specific legislation has made adopting these kinds of tools a bit of a minefield, though the US is leading the way in creating a permissive regulatory environment, with the Senate putting a freeze on any new state and local AI laws just this week.

The main takeaway from the report is that investing in AI solutions offers a clear opportunity to mitigate the rising costs of natural disasters. By adopting these technologies, countries around the world can do more to protect lives and their economies from future disasters.

“If deployed strategically, AI can help leaders identify risks sooner, optimize resources, prevent costly failures and disruption, and accelerate response and recovery times during natural disasters,” said Steinmann.

“Investing in both preventative and reactive AI-powered infrastructure solutions can help safeguard economic value and increase business resilience.”