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Russian Forest Fires Cause $15 Billion of Damage to Economy

Economics / Russia Aug 15, 2010 - 04:56 AM GMT

By: Pravda

Economics

Experts started to calculate the losses, which the Russian economy suffered as a result of unusually hot summer and immense forest fires. The damage may total one percent of the GDP growth in 2010, which is equal to $15 billion, or 450 billion rubles. For the time being, the experts take account of direct costs and negative short-term consequences for the economy.


Analysts with HSBC and Uralsib forecast an industrial setback or even stagnation. The harvest of crops will drop to 60-65 million tons because of the drought in 2010. Russia's temporal ban on the export of crops will cause the losses of $3 billion, which in its turn will trigger the growth of the food inflation up to 9.5 percent.

Russia Today: Muscovites getting out to anywhere cooler

Ecologists say that the Russian government will need to retrieve the system of the state forest protection, which was abolished during the reforms in 2005-2006. Otherwise, the situation with forest fires in the country will remain catastrophic. The authorities are undoubtedly guilty of the situation with the fires, since the forest protection system has been ruined, and the funding of this field has been decreased. The law stipulates EMERCOM's reaction to wildfires only when they threaten settlements.

Only 2.2 billion rubles were assigned for the struggle with wildfires in Russia in 2010. Therefore, extinguishing fires on one hectare of forest cost $0,033. No one is currently responsible for preventing and extinguishing forest fires at early stages. Quite on the contrary, an employee, who shows an initiative at this point, can be accused of inappropriate spending.

About 70,000 foresters and nearly 130,000 other employees of the forest sector guaranteed fire safety in Russian forests prior to the reform. The personnel has been subsequently cut to 12,000 people . They have many other job duties to fulfill, which makes it very hard for them to look into the matter of fire prevention.

The situation with forest fires may repeat in the future, unless the government retrieves the special state-run forest service and creates the joint system of aviation protection of forests. If Russia had such a system, it would be possible to cut the damage five or even ten times and avoid human losses.

Pravda.ru

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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