Chile’s Calbuco eruption could have devastating economic effects
Share this on

Chile’s Calbuco eruption could have devastating economic effects

On April 23 and 24, southern Chile was jolted when the Calbuco volcano erupted twice in 24 hours, marking its first eruption in 42 years.

Calbuco, considered one of the most dangerous among Chile’s 2,000 volcanic peaks, shot a 17-kilometer-high ash cloud into the air, covering nearby towns with grey ash.

Luckily no one was harmed, thanks to Chile’s swift disaster response in the area. However, it cost the country a significant amount of money due to resulting economic setbacks. According to Rodrigo Álvarez, the head of Chile’s mining and geological service, the effect could last for much longer than expected.

“This is a complex (volcanic) process that could last for weeks,” Álvarez told Reuters.

The eruption comes only a month after northern Chile was swept by a massive, deadly flood in the Atacama region. Now the southern part of the country has its own challenge in dealing with the financial loss that the eruption brought.

Obviously, tourism in the area was halted due to the thick ash that prevented planes from flying in and out. American Airlines, Delta and Chilean airline LAN cancelled flights from the United States to the country’s capital, Santiago. According to the Wall Street Journal, flights from Argentina’s Ezeiza airport were also cancelled, while Chile’s Neuquén airport remained closed.

The thick ash released in volcanic eruptions does not only affect visibility, but can also damage aircrafts. Stella Poma, a geologist at the University of Buenos Aires, confirmed the haziness of the sky even in the neighboring country.

“The ashes are already in Buenos Aires. You can look up in the sky and see a grayish, cloud-like area… the ashes are very corrosive and can be damaging to planes,” Poma told the WSJ.

More than 200,000 tourists flock to the region each year, but experts expect that number to change — in one way or another — following the eruption.

Emir Jadue, head of the Chamber of Commerce in Puerto Varas, a city close to Calbuco, said the volcanic activity could have a double effect on tourism.

“The volcano could decrease the number of tourists coming for outdoors activities … but it could also increase the number of tourists who want to see an active volcano,” Jadue said in an interview with Channel News Asia.

For the moment, at least, the eruption seems to have discouraged tourists from heading south. Hotels near the affected areas reported 10 percent cancellations on the dates following the eruption.

The rich agricultural resources of the Los Lagos region were destroyed by the ash fall, with an estimated $600 million loss reported.

Chile’s huge salmon industry, the second-largest in the world, was also greatly affected. Los Lagos houses the biggest concentration of salmon farms in Chile, and much of its water reserves were contaminated by ash.

Meanwhile, the mining sector and its developing projects appear to be unharmed after the recent disasters. Santiago’s White Mountain Titanium Corporation (OTCQB: WMTM), which has a project in Cerro Blanco, near the site of the flooding in Atacama, is still focusing on producing 112 million tons of high-grade titanium once it begins operations. This kind of development in the mining industry could contribute to Chile’s economic rehabilitation after back-to-back natural disasters.

Liked this article? You might also like:

Northern floods raise doubts about Chile’s ability to cope with natural disasters

Chilean copper mining industry is digging its own grave