Disaster economy

We all know natural disasters such as floods, wildfires, and hurricanes are increasingly common—but what you might not realize is how much they’re hurting the economy.

Just in the first half of 2025 alone, the US saw more than $101 billion in losses from fires and storms, according to Bloomberg—a new record. A huge swath of this damage is from the brutal wildfires in Los Angeles earlier this year, which cumulatively generated roughly $40 billion in losses.

The culprit behind all of this is, of course, climate change, which is making these weather events not only more frequent, but more severe. And the devastating losses couldn’t come at a worse time: There are fewer funds than ever to help resuscitate. Just look at the Federal Emergency Management Agency’s Disaster Relief Fund, which was on the precipice of running out of money last month before a series of court battles kept it afloat.

The big business of disaster recovery

While disasters take an enormous toll on the economy, recovering from them has become an increasingly lucrative enterprise.

The US spent an average of $80 billion per year on disaster recovery in the 1990s. In the year ending in June, the country shelled out roughly $1 trillion.

In fact, over 36% of all GDP growth since 2000, or about $7.7 trillion, is due to spending related to cleaning up after a natural disaster or preparing for the next one, according to Bloomberg Intelligence data.

Most of this spending goes to insurance companies, hardware stores, storage facilities, power grid equipment manufacturers, and self-storage facilities. These aren’t businesses that are necessarily marketing themselves as climate change solutions, but have functional use for preparing for and recovering from natural disasters.

One investing takeaway: Bloomberg has put together 100 public companies related to disaster relief in its new Prepare and Repair Index, which has outperformed the S&P 500 by 6.5% per year over the past decade. And as storms only continue to get worse in the years ahead, the companies that help with the recovery will continue to profit.—LB