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The Health and Economic Aftershocks of Japan's Triple Disaster

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JAPAN NUCLEAR EFFECTS
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The consequences of Japan's massive earthquake, tsunami, and nuclear disaster are reverberating across the globe including the United States. Japan has the 3rd largest economy in the world, contributing 8.7% of total global output and exporting $767.8 billion worth of goods in 2010 alone. While massive rebuilding efforts are progressing following the disaster, severe problems persist at the Fukushima nuclear plant with three of the reactors melted down, further threatening production in Japan and spreading concerns across various sectors of the economy. The crisis is the world's worst nuclear accident in 25 years, rated by the International Atomic Energy Agency to be a level 7 out of 7 in severity. The Japanese government is committing significant funding to strengthen its infrastructure, promote resiliency of its institutions and its people, and rebuild the assets that have been destroyed. To assist the Japanese people in responding to this triple disaster, the U.S. government provided $77,669,198 as of April 8, 2011 (through funding from USAID, the Office of Foreign Disaster Assistance (OFDA), and the U.S. Department of Defense) in addition to other government contributions and funding from the private sector, through the Red Cross, Save the Children, and other organizations. Given Japan's global leadership role, there will be repercussions from this disaster on many sectors worldwide including in the United States. This chart details some of the observed and potential ripple effects (Please note: Over time, with new developments in the region, some of this information may change. This article is adapted and updated from an analysis published by in the Wall Street Journal on March 25, 2011).

Health Effects

• Most U.S. health and nuclear safety experts agree that even though the Fukushima Daiichi nuclear plant disaster has been classified at Chernobyl-like levels, the radiation exposures should not pose a significant health hazard to America. On April 5, 2011, Federal health officials stated that due to distance and dispersal, Americans have no reason to fear any health effects from the Japanese nuclear plant accident, should take no protective measures and need not avoid any foods.

• However, radioactive iodine from the Japanese nuclear accident has been detected in the US and very low levels of radioactive cesium and strontium have been detected. All food shipped into the US from Japan is screened for radioactivity.

• Thyroid cancer is a risk from radioactive iodine emitted by Japan's nuclear accident to people in the vicinity, either inhaled or ingested through contaminated produce. No increase in thyroid cancer is expected in the U.S.

• There was a high level of fear and anxiety across the globe immediately following the disasters, as people were uncertain of the health and economic risks in their country. Japan has committed resources to address the mental health effects of the disaster and to promote resiliency.

Food and Water Safety

• Japan exports $3.27 billion worth of food a year.
• Food imports from Japan make up about 4% of all food imported to the U.S.
• Concerns have arisen over the safety of fish and other sea life including seaweed in the region, as highly radioactive water leaks into the ocean around the vicinity of the plant. Elevated levels of radiation have been found in marine life more than 12 miles off the coast of the Fukushima plant. This has precipitated fears in other countries about the safety of fish and seaweed from Japan. There is uncertainty about how the ocean currents will carry the radioactivity to distant shores. Seaweed can concentrate radioactive iodine for years.
• Radiation was found in the drinking water in Tokyo after the nuclear accident, although it is now below the legal limit for consumption by adults and infants. Concerns about the water supply increased demand for bottled water.
• Several nations including the U.S. were testing or suspending imports of dairy, fruits and vegetables, dry tea, artificial flavoring compounds, seafood and meat from the areas at risk of radiation contamination in Japan. The U.S. will not permit any products that the Government of Japan has restricted for export from entering America, including milk and several kinds of vegetables from the Fukushima Prefecture. The Food and Drug Administration (FDA) will examine other products to determine if testing or sampling is needed and ensure that all products meet U.S. health regulations. Visit the FDA's website for a description of the agency's review process.
• There was an increase in purchasing of seaweed in U.S. health food stores as a source of natural iodine; but seaweed can also absorb radioactive iodine. Scientists caution against eating large amounts of it.
• Following the nuclear incident, trace amounts of radioactive iodine were been found in air, water and milk in Washington State, Arizona and California. The amount was quite small -5,000 times lower than the level that would trigger FDA restrictions. The FDA asserts that the very miniscule amounts of radiation from Japan detected in the U.S. are not dangerous to the US food supply. The most recent review of radiation sampling from the EPA reveals that levels are well below public health concern to the US - and are continuing to decline with time.

Tourism and Travel

• 3.4 million Japanese tourists spent $13 billion in the U.S. last year on airfares, hotels, car rentals (about $4,400 per Japanese tourist) .

• Japanese people represent nearly 18% of Hawaii's 7.1 million annual tourists and represent that state's single largest source of visitors outside of the U.S .

• Hawaii, where Japanese visitors spent $1.9 billion in 2010, predicts a 45% drop in visitors over the next several months .

• Hawaii predicts a loss of $210.5 million in tourism through June .

• The global airlines industry could also suffer. Japan represents 6.5% of the world's air traffic and 10% of the airline industry's revenue.

• U.S. airlines have experienced what they predict will be a temporary slowdown in Japanese travel both domestically and abroad.
• Tourism accounts for 5.3% of Japan's GDP and supports over 4 million domestic jobs. But concerns over radiation, food safety, and possible future earthquakes have impacted tourism to Japan as a whole, not just the affected regions of Japan. The number of tourists visiting Japan was down 62.5% in April as compared to April 2010.

Automotive Industry

• 13% of the automotive industry in the U.S. has been affected. All U.S. automobiles have components made in Japan and consequently, there will be some disruption in U.S. plants.

• Some brands could begin having difficulty meeting demand in the months ahead because of production disruptions in Japan.

• Since March 11, some Japanese parts and auto plants have closed, cutting output by at least 100,000 vehicles.

• Toyota Motor Corporation temporarily halted operations at 18 factories that assemble vehicles in Japan as a result of damage to factories and suppliers, fuel shortages, and power outages in the Tokyo area that affect production and distribution. In the first quarter of 2011, Toyota's profits fell by 77% due to these disruptions. . Toyota recently announced that profits will be down an estimated 31% this year. While it will take months for production at its plants to return to pre-quake levels, there are signs that output is rebounding faster than expected.

• Toyota is delaying the launch of the Prius wagon and minivan models from the original plan for the end of April. For American consumers, that could mean fewer vehicles in the showroom to choose from, or longer waits for cars that have to be special-ordered.

• Nissan Motor Corporation resumed production at all assembly plants in Japan on March 24, while supplies of parts last. 23% of Nissan vehicles are manufactured in Japan. One day's lost production costs Nissan about 2 billion yen ($25 million) in profits.

Electronic Industry

• 20% of computers used in the U.S. have chips and parts made in Japan. The country also produces 60% of all silicon wafers and 90% of BT resin for circuit boards.

• The major impact on Japan's semiconductor production is not likely to be direct damage to production facilities, but disruption to the supply chain. Suppliers are likely to encounter difficulties in getting raw materials supplied and distributed as well as in shipping products out of the country.

• These production and shipping issues may cause a delay for consumers in the U.S. wishing to purchase computers and other electronic devices. For example, Sony has halted production of its products in several plants in Japan.

• Cameras, flash drives, and anything that uses small amounts of memory will be affected first because Japan accounts for over 40 percent of the world's flash memory.

• The daily spot market (the financial market where commodities are traded) for chips used to store data in cameras, smartphones and tablet computers rose 10-27%, increasing the price.

• Shortages of supplies and materials have resulted in a temporary suspension of production at some plants operated by Sony, Toshiba, Cannon, and Fuji. Sony Corporation, for example, reported shortages of parts and raw materials that forced it to suspend or reduce production at several plants in central and southern Japan making digital cameras, camera lenses, flat-screen televisions and other goods. Production at several sites in northern Japan has been halted since the quake. If shortages continue, some companies are considering temporarily shifting some of their production overseas.

• A few factors mitigate the potential impact on U.S. consumers, however. Many of the TVs and computers that are made by companies based in Japan are often assembled in other countries. Many of those items have also already been shipped for this selling cycle, reducing the short term disruption effects. However, retailers may be faced with higher costs for future orders.

• The earthquake and tsunami has frustrated Sony's efforts to turn around the company. After predicting a net profit for the year in February before the earthquake, Sony now expects to sustain a loss of $3.2 billion.

• There has been an increase in purchasing of radiation detection monitors.

Power

• Meltdowns have occurred in three nuclear reactors at Fukushima that produce 8% of Japan's electricity. Many other nuclear power plants in Japan have been temporarily closed as the country rethinks its nuclear policy. Power shortages in Japan are expected as key oil refineries have been damaged and nuclear plants shut down in precautionary measures combined with an increase demand for energy during the summer.

• Japan's automakers and other manufacturers are being asked to reduce energy consumption by 15% this summer.

• Japan's consumption of imported natural gas may increase by as much as one-third as a result.

• Japan's nuclear disaster will affect public perceptions about the safety of nuclear power plants in the U.S. and globally in the months and years ahead. Concerns about the safety of nuclear power plants have generated proposals for a moratorium on building new plants in the United States and a call for further inspections.


Financial Sector

• On the Monday following the earthquake, Nikkei closed for the day down 633.94 points at 9620.49, a fall of 6.18%.

• The Bank of Japan put $250 billion worth of liquidity into the Japanese economy soon after the earthquake. It will offer $11.7 billion to financial institutions to help them meet demand for future reconstruction.

• After a spike to a record high against the U.S. dollar, the yen fell 12% from mid-March to late May due to anticipation that the Bank of Japan would further loosen monetary policy to aid recovery.

Macro-
economics

• A factor that may lessen the long term impact on the Japanese economy is that, unlike the U.S., it exports more than it imports. Thus much of the demand for Japanese goods comes from outside the country.
• There is no reason to believe that demand from other countries (e.g., for cars or electronics) will drop because of the triple disaster.
• Though the Standard & Poor's rating for the Japanese economy remains at AA-minus, it lowered its outlook on Japan to negative, citing high rebuilding costs.
• As a result of the disaster, the International Monetary Fund predicted that the Japanese economy would shrink by 0.7% over the next year instead of growing by 1.4%.
• The estimated cost of the damage in Japan is $300 billion.

Construction/ Real Estate

• There will likely be a boom in Japanese real estate and infrastructure due to large-scale rebuilding efforts.

• Japanese and foreign insurance companies will likely pay for 10 - 20% of property damages that could exceed $200 billion total. The country's government may have to absorb additional losses. Insurance companies may be able to command higher premiums for property coverage in Japan in the future.

• Northeast Japan is not a major manufacturing base for the country. However many cement plants were damaged by earthquakes.

• Demand for cement and construction is expected to rise in Japan . Construction companies in Asia and Europe as well as heavy equipment makers and the lumber industry are also likely to benefit from this increased demand.

Shipping

• Parts of Japanese infrastructure destroyed in the tsunami and earthquake may come to rest on U.S. soil in the next few years. Floating debris in the ocean may pose a danger by hitting freight boats and ocean liners.

• After 1 year, some experts predict that debris including parts of homes, boats, and plastic toys will hit U.S. shores. After 2 years, fishing supplies and nets will wash ashore. After 3 years, shoes and plastic furniture will appear. The radioactivity levels of exposed items should be minimal when they wash ashore.

• It should be noted that the amount of tsunami debris pales in comparison to the debris that is dumped into oceans on a regular basis.

Retail

• Retail sales in Japan in March 2011 decreased 8.5% from the same period a year earlier, the largest drop in 13 years.

*Rear Admiral Susan Blumenthal, M.D., M.P.A. (ret.) is the Public Health Editor of the Huffington Post. She is also the Director of the Health and Medicine Program at the Center for the Study of the Presidency and Congress in Washington, D.C., a Clinical Professor at Georgetown and Tufts University Schools of Medicine, Chair of the Global Health Program at the Meridian International Center, and Senior Policy and Medical Advisor at amfAR, The Foundation for AIDS Research. Dr. Blumenthal served for more than 20 years in senior health leadership positions in the Federal government in the Administrations of four U.S. Presidents, including as Assistant Surgeon General of the United States, the first Deputy Assistant Secretary of Women's Health, as a White House Advisor on Health, and as Chief of the Behavioral Medicine and Basic Prevention Research Branch at the National Institutes of Health. Admiral Blumenthal has received numerous awards including honorary doctorates and has been decorated with the highest medals of the US Public Health Service for her pioneering leadership and significant contributions to advancing health in the United States and worldwide. She is the recipient of the 2009 Health Leader of the Year Award from the Commissioned Officers Association. Admiral Blumenthal was recently named a 2010 Rock Star of Science.
Sophie Turrell, a recent graduate of Yale University, is a Health Policy Research Associate at the Center for the Study of the Presidency and Congress in Washington, D.C.
Praveen Pendyala, a recent graduate of the University of California at Berkeley, serves as a Health Policy Fellow at the Center for the Study of Presidency and Congress in Washington D.C.
Katherine Warren, a student at Harvard University, serves as a Health Policy Intern at the Center for the Study of Presidency and Congress in Washington D.C.
Laura Macherelli, a recent graduate of the University of Maryland, served as a Health Policy Intern at the Center for the Study of Presidency and Congress in Washington D.C.

Footnotes:
1 Dowell, Andrew. "Japan: the Business Aftershocks." Wall Street Journal, March 25, 2011, available at http://online.wsj.com/article/SB10001424052748704461304576216950927404360.html.

2 Harlan, Chico. "Japan Rates Nuclear Crisis at Highest Severity Level." Washington Post, April 12, 2011, available at http://www.washingtonpost.com/world/japan-to-raise-rating-of-nuclear-crisis-to-highest-level/2011/04/11/AFxrFEND_print.html.

3 United States Agency for International Development (USAID). "Japan - Earthquake and Tsunami." April 8, 2011, available at http://www.usaid.gov/japanquake/04.08.11-USAID-DCHAJapanEQandTsunamiFactSheet15.pdf.

4 Brown, David. "Japanese Radioactive Releases Are No Threat to American Health, Federal Officials Say." Washington Post, April 6, 2011, available at http://www.washingtonpost.com/national/japanese-radioactive-releases-are-no-threat-to-american-health-federal-officials-say/2011/04/05/AFzoMflC_story.html.

5 "Greenpeace warns of radioactive sea life off Japan." Breitbart, May 26, 2011, available at http://www.breitbart.com/article.php?id=CNG.925fb1bc06c719f0ccd4c0a6da4f9506.331&show_article=1.

6 U.S. Food and Drug Administration. "Radiation Safety." April 2, 2011, available at http://www.fda.gov/newsevents/publichealthfocus/ucm247403.htm#importjapan.

7 U.S. Food and Drug Administration. "Radiation Safety." April 2, 2011, available at http://www.fda.gov/newsevents/publichealthfocus/ucm247403.htm.

8 US Environmental Protection Agency. "Japanese Nuclear Emergency: EPA's Radiation Monitoring." May 3, 2011, available at http://www.epa.gov/radiation/.

9 Spain, William and Mozee, Carla. "Japan's Quake to Be Felt in Travel Industry." The Oklahoman, March 27, 2011, available at http://newsok.com/japans-quake-to-be-felt-in-travel-industry/article/3551853.

10 Bly, Laura. "Hawaii Tourism Faces Economic Hit from Japan Disaster." USA Today, March 16, 2011, available at http://travel.usatoday.com/destinations/dispatches/post/2011/03/hawaii-tourism-faces-economic-hit-from-japan-disaster/147883/1.

11 Tang, Terry. "Hawaii to Spend $3M in Wake of Japan Tourism Fall." ABC News/Money, March 23, 2011, available at http://abcnews.go.com/Business/wireStory?id=13207508.

12 Kalani, Nanea. "Japan Disaster Will Cost Hawaii Tourism $200M." Honolulu Civil Beat, March 23, 2011, available at http://www.civilbeat.com/articles/2011/03/23/9864-japan-disaster-will-cost-hawaii-tourism-200m/.

13 Harlan, Chico. "Japan Struggles to Attract Tourists." Washington Post, June 15, 2010, available at http://www.washingtonpost.com/world/asia-pacific/japan-struggles-to-attract-tourists/2011/06/13/AG67h2VH_story.html.

14 Toyota Motor Corporation. New York Times, May 11, 2011. Available at http://topics.nytimes.com/top/news/business/companies/toyota_motor_corporation/index.html.

15 Helft, Miguel and Bunkley, Nick."Disaster in Japan Batters Suppliers." New York Times, March 14, 2011, available at http://www.nytimes.com/2011/03/15/business/global/15supply.html?pagewanted=1.

16 Kopytoff, Verne. "Japan's Nuclear Crisis Causes Run on Radiation Detectors." New York Times, March 21, 2011, available at http://www.nytimes.com/2011/03/22/business/22geiger.html?scp=1&sq=radiation%20detection%20monitors&st=cse.

17 Sanders, Ronald. "Japan's Tragedy." BBC News, March 22, 2011, available at http://www.bbc.co.uk/caribbean/news/story/2011/03/printable/110317_sanders_japan_earthquake.shtml.

18 Wassener, Bettina. "Bank of Japan Pledges Aid for Rebuilding from Quake." New York Times, April 7, 2011, available at http://www.nytimes.com/2011/04/08/business/global/08yen.html?ref=japan.

19 Frangos, Alex and Lauricella, Tom. "A Sharp, Swift Slide for Yen." Wall Street Journal, April 7, 2011, available at http://online.wsj.com/article/SB10001424052748704101604576246362091000214.html.

20 Wassener, Bettina. S&P Downgrades Japan's Outlook to Negative, April 26, 2011. New York Times, Available at http://www.nytimes.com/2011/04/28/business/global/28yen.html.

21 "Revised Data Show that Japan's Economy Shrank At a Slightly Milder Rate Than First Estimated." Washington Post, June 9, 2011, available at http://www.washingtonpost.com/business/economy/revised-data-show-japans-economy-shrank-at-a-slightly-milder-rate-than-initially-estimated/2011/06/08/AGXMcYMH_story.html.

22 "Revised Data Show that Japan's Economy Shrank At a Slightly Milder Rate Than First Estimated." Washington Post, June 9, 2011, available at http://www.washingtonpost.com/business/economy/revised-data-show-japans-economy-shrank-at-a-slightly-milder-rate-than-initially-estimated/2011/06/08/AGXMcYMH_story.html.

23 "Japanese Earthquake - Impact on the Construction Industry." Worldcement.com, March 16, 2011, available at http://www.worldcement.com/sectors/cement/articles/Japanese_earthquake%20%E2%80%93%20impact_on_the_construction_industry.aspx.

24 "Tsunami Debris Heading for US." ABC News Video, April 8, 2011, available at http://abcnews.go.com/WNT/video/japan-tsunami-debris-heading-american-shores-pacific-ocean-disaster-13332770.

25 "Debris from Japanese Tsunami to Hit US West Coast." ABC 7 News, April 1, 2011, available at http://abclocal.go.com/wls/story?section=news/national_world&id=8047164 and video available at http://abcnews.go.com/GMA/video/japan-tsunami-debris-headed-for-us-13316823.

26 Wassener, Bettina. S&P Downgrades Japan's Outlook to Negative, April 26, 2011. New York Times, Available at http://www.nytimes.com/2011/04/28/business/global/28yen.html.

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