Ukraine. What do we lose?

Putin’s war is not just a crime against Ukraine
It’s also a crime against the home we all share: planet Earth.
Thomas L. Friedman

The war in Ukraine, or its active phase, which began on February 24, 2022, revealed many problems and questions that must be answered. Currently, much attention is paid to military actions, economic consequences, and how to support Ukraine. However, there is another essential aspect of this war that no one can ignore – the consequences, particularly the losses and damages.

Let’s start with a general definition to outline the subject of our analysis. Damages are the loss of assets or money caused by someone’s wrongful actions. In general, it includes direct damage, additional costs (costs that are the cause of someone’s actions, but they are supplemental in nature, for example, unplanned work), foregone benefit (income that a person or enterprise does not receive compared to normal conditions), and moral damage. War damage means damage caused by or in repelling enemy action or measures taken to avoid spreading the consequences of damage caused by or in repelling enemy action [1].

Currently, several problems have arisen:

Establish a cause-and-effect relationship, or casualness, between event A (the “cause”) and another event B (the “effect”), which necessarily follows the first or flows from it.
Assess the scale of consequences (direct and indirect), and
Give a monetary assessment of the consequences.

The last point requires officially developed and tested methods, which are currently being developed by Ukraine (for example, [2]). Still, we need an analysis of what is happening and in which areas we will feel these consequences.

This analysis will not only visualize what is happening now but also illustrate how difficult it is to calculate and estimate (in monetary units) all the losses.

To simplify the presentation of the material, we divided it into such areas as the economy, social dimension, and environment, highlighting the global level to illustrate the pervasiveness of the consequences of the war in Ukraine. Any division, like any model, is a certain simplification, but without it, it is impossible to build a complete picture of the world. So, let’s go to each of the spheres.

Economics. Economic losses have been repeatedly tried to be calculated. In particular, the total losses confirmed by the World Bank are more than 340 billion U.S. dollars today. The amount of funds that has been verified and is necessary for recovery is about 105 billion dollars, but it will change because the war continues, and the destruction continues [3].

According to the Ukraine rapid damage and needs assessment (R.D.N.A.), considering the impact of the war between February 24 and June 1, 2022, the damage across sectors covered in the is estimated at approximately US$97 billion (fig. 1), and aggregate losses total almost US$252 billion (fig.2)

Source: https://www.worldbank.org/en/news/press-release/2022/09/09/ukraine-recovery-and-reconstruction-needs-estimated-349-billion

If the answers to the questions are about reconstruction, restoring public infrastructure is somewhat understandable, mainly because the infrastructure objects were recorded and had a fixed value. The issue of compensation for damages to citizens whose property was damaged and destroyed during the war needs clarification. The critical problem here is precisely the “verification” of damages, the first step has been taken, and a portal was created [4] for data collection. Also, Verkhovna Rada of Ukraine is discussing a draft law “On compensation for damage and destruction of certain categories of immovable property as a result of hostilities, acts of terrorism, sabotage caused by the military aggression of the Russian Federation.”[5]

The question of compensation lies not only in the plane – where to get the money for it and how to evaluate it and adequately document it. In addition, the problems with restoring destroyed objects are that they must first be disassembled and taken to a special landfill. It requires time, money, specialists, and dumps (ideally, recycling, reuse, or disposal technologies). After the liberation of settlements, a lot of war waste remains – military and civilian burned and broken equipment, destroyed buildings, etc. Currently, 50 locations have already been created in the Kyiv region to remove construction waste from infrastructure facilities destroyed by hostilities.

The next crucial economic issue is the closing of businesses or their relocation to other regions of Ukraine or abroad. It is difficult to estimate the destroyed production facilities and the resulting lost profit; also, destroyed infrastructure does not provide an opportunity to restore production quickly.

The logistics flows of supplies of raw materials, components, and finished products currently require significant correction, and their complete restoration is not always possible.

The consequences of this destruction will be felt not only in Ukraine. The most striking example is the blockade of ports and the inability to export grain crops and sunflowers, which put the world on the brink of a food crisis[6]. Another point, over the past three years, Ukraine has been increasing the volume of chicken exports, remaining in the top five global suppliers of poultry meat. Ukraine ranks 3rd in terms of sales volume in the ranking of chicken suppliers to the countries of the European Union[7]. If the Russian Federation continues to destroy capacity methodically [8], this will affect the volume of supplies and, thus, the prices on the European markets (also currently growing due to inflation).

The reduced purchasing power of the population due to war, loss of property, jobs, relocation, rising inflation (22.2% in July[9]), and uncertainty about the financial future is also affecting the economy.

People are buying less, which means manufacturers are reducing production, affecting workers’ wages, receiving less money and reducing consumption. The snowball of such negative consequences cannot be overcome solely with financial aid or subsidies. The communication component is essential – it is necessary to explain to people what is happening, what the consequences will be, and why it is crucial not only to work but also to spend.

Environment. At a meeting of the Committee on Environment, Public Health and Food Safety of the European Parliament, the Minister of Environmental Protection and Natural Resources of Ukraine, Ruslan Strelets, emphasized that Ukraine will initiate the creation of a Global Platform for the development of international methods for assessing environmental damage from military actions [10] and crimes (fig. 3).

According to preliminary estimates of the Ministry, the assessment of damage to the environment of Ukraine as a result of the war has already exceeded 36 billion euros.

E.U. support in preparing Ukrainian nature protection projects is currently important for Ukraine. Before the war, Ukraine had significant ancient forests, which have been left untouched by human impact, according to the World Wide Fund for Nature [11]. Since the invasion, Russian military activity has damaged 900 protected natural areas, according to an O.E.C.D. report [12] issued in July, and an estimated 1.2 million hectares, or about 30 percent of all protected areas of Ukraine.

In 2021, Russia, Belarus, and Ukraine accounted for a quarter of the world’s timber trade. Due to the war and sanctions against Russia, other timber-producing countries and exporters have redoubled efforts to fill the deficit by relaxing environmental protection measures. The Financial Times [13] says that soon after the February invasion, Kyiv revoked a decree banning the felling of trees in forests in the spring and early summer to help raise money for the war. Environmental groups fear the decision could lead to large-scale losses in areas where illegal logging and unmanaged forests are already common. Deforestation, pollution, and destruction of reserves will have long-term consequences at the global level and will affect climate change and environmental quality, not only in Ukraine.

Environmental impacts such as littering of the territory with military and domestic debris and pollution from accidents caused by hostilities [14] will have long-term consequences.

Poisoned soils and underground and surface water will have long-term effects on the environment, population, and production, which cannot be quickly and easily eliminated.

All this will affect the population’s health (this impact is difficult to assess due to the remoteness of the consequences and the cumulative effect of many factors) and economic development (including the inability to comply with environmental and technical standards for production). The impossibility of supplying quality products to international markets will provoke shortages and rising prices.

The socio-cultural component is also broad and challenging to assess. For example, how to assess the significance of the destruction of Maria Prymachenko’s paintings for the world community [15].

Destruction and damage to cultural heritage cannot be evaluated exclusively in monetary terms, and these are losses not only for one country.

Ukrainian artists [16] die at the front, and the tradition of destroying Ukrainian culture started by the Soviet Union [17] continues in the 21st century.

Ukraine is suffering heavy civilian and military casualties, which are increasing daily. In addition, for six months after the invasion of Ukraine by the Russian Federation, the Ukraine refugee situation remains one of the most significant forced displacement crises in the world today. As of mid-September, over 7 million people – 90 percent of women and children – have fled into neighboring countries, with many continuing their journey onwards to other destinations.[18]

The average portrait of a refugee is a woman 30-45 years old with a child who has a higher education and was working before the full-scale invasion [19] (Fig.4). If at the beginning of 2022, according to official data, the population of Ukraine was 41.1 million people [20], then 17% of the population left.

Migrants will integrate into the labor market in different countries, and children will go to school, creating a demand for educational services. At the same time, Ukraine is losing not only qualified workers but also potential apprentices and students.

Figure 4. Refugee profile

How much the gender-age composition of the population will change is currently difficult to predict. Still, it is clear that under the conditions of a low birth rate until 2022 and a significant number of children and young people who have moved abroad, the population will age and lose part of its potential for development.

The existing education system is also a deepening problem because it will not reflect the need for specialties and specialists to reconstruct the country. Ukraine will need plasterers, builders, electricians, etc., and it is necessary to prepare for this now because training specialists takes time.

The education system must react proactively. The availability of high-quality education – preschool, school, professional, and higher education in Ukraine – is a potent tool for the return of Ukrainians home and a foundation for development.

War always brings poverty, which affects all spheres of socio-economic life. It is predicted that in 2022 the poverty level ($5.5 per capita per day) will increase tenfold and reach 21% [21]. The poverty level will be even higher in war-torn regions. The increase in poverty is caused by the considerable loss of human lives and livelihoods. The projected growth in poverty is expected to be much higher if existing financing gaps are not closed through increased external financing.

In conclusion, we note that this is only a short list of problems facing Ukraine and the world, which illustrates several problems in assessing the situation:

Identification and monetary evaluation of consequences (the latter requires more detailed methods approved by law and accepted at the international level).
- Skills and possibilities of documentation of events and damages and losses. In Ukraine, the website “Russia will pay” [4] was launched, which will collect data on the damage caused by the Russian army to citizens and the state. The Ukrainian government needs these data to assess the losses suffered by the state and citizens of Ukraine as a result of Russian aggression and the formation of lawsuits against Russia in international courts for compensation for these losses, the official website of the project says.
- Establishing a cause-and-effect relationship between events and determining consequences remote in space and time.
- Realizing that not all consequences can be assessed in detail and losses to the global community can be determined

It is clear that Russia’s war against Ukraine is not limited to the losses of only these parties but will affect the whole world in different ways.

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