Peru's Breakneck Economic Growth Raises Cost of Catastrophe

(Bloomberg) -- As Peru prepares to rebuild in the wake of massive flooding, politicians should be aware of one thing: This recurrent phenomena, triggered by the El Nino weather system, is creating more devastation each time. 

The rainfall behind the flooding intensified in March, forcing rivers to overflow while inundating towns and cities along the country's arid coast. Even as the wet weather continues into its fourth straight month, it's already clear the economic cost will be higher than during previous, severe El Ninos in 1982-1983 and 1997-1998. 

The intensity of this year's rains is to blame for the damage, as El Nino caused the nearby sea to warm up more quickly than even previous, severe El Ninos, which in turn lead to downpours that soaked the arid coastal region and triggered landslides in mountainous areas. More than 100 people have died in the disaster. The deluge in March in the northwestern region of Piura set new records for rainfall, flooding the region's capital.

Peru in some respects has become more vulnerable to El Nino in recent decades, as its growing population has caused urban areas to expand, often with little planning or disaster prevention.

At the same time, Peru poured money into infrastructure, doubling the amount of paved roads over the past 20 years, which helped fuel the fastest growth among major Latin American economies. Floods and landslides in recent weeks destroyed thousands of miles of those roads and more than 200 bridges, leaving entire towns stranded.

That has cost over $3 billion in damage, according to estimates by Macroconsult, a Lima-based research company. The government over the weekend pegged the cost at about $3 billion as well.

President Pedro Pablo Kuczynski will have to plan the reconstruction carefully. He has said the government will include disaster mitigation in the recovery program to reduce the country's vulnerability to future emergencies. But Peru may have have to wait another 15 years or so for the next severe El Nino to know whether the efforts worked.

To contact the author of this story: John Quigley in Lima at jquigley8@bloomberg.net.

To contact the editor responsible for this story: Philip Sanders at psanders@bloomberg.net, Randy Woods