Catastrophes such as floods, drought and diseases can have a serious effect on local tourism industries. Increased events of extreme weather, such as tornadoes, hurricanes and typhoons have been predicted for the coming years, possibly as a consequence of climate change. This increase in storm occurrence is already becoming more prevalent in Caribbean and South East Asia. Increased density of development, higher unit investments in the precarious coastal zone, and more fanciful architectural styles increase the risks and costs from natural hazards.
Wind damage, storm waves, heavy rains and flooding from Hurricane Mitch in 1998 caused highways to be cut off, resorts and local settlements to be destroyed, boats sunk and as a result securing insurance has become much more difficult. In the southern States of the USA insurance premiums have gone up in price, and some companies will no longer even offer hurricane insurance.

Picture courtesy of NOAA

Most islands in the Caribbean rely on tourism to generate an increasingly important part of their revenues and foreign exchange. Recovering from hurricane events is expensive - in the BVI total cost for Hurricane Lenny was estimated at $22,053,963 or about 3.1% of gross domestic product or national income - and usually takes time, two factors that jeopardise economic stability. The true threat to the economy from a long term perspective is the fact that as potential visitors become aware that hurricanes may be annual events in the region they might prefer travelling somewhere else entirely. Some island governments have even ordered a news blackout after each hurricane so as not to scare tourists away, but seasonal travellers may eventually simply opt for visiting non- Caribbean locations.

Picture courtesy of NOAA.

In the USA the National Flood Insurance Program (NFIP) and the Coastal Zone Management Program exist, in part, to address insurance problems that property owners face following hurricane impact. The NFIP offers flood insurance to coastal landowners in communities that have met government standards for building in coastal areas (elevating structures above a designated flood level, designation of high hazard areas where no building is allowed, etc.). In addition, FEMA is responsible for supporting and facilitating the work of state emergency preparedness offices in the preparation of coastal evacuation plans should a hurricane hit.
In the long term governments should start thinking about coastal setback policies. Wise planning will also include hurricanes in policies ranging in scope from building codes to agriculture (planting more crops that grow underground, for instance). It also certainly brings up the question of small islands' dependence on tourism.