Cost of War for Ukraine

Vincent van Gogh: Vase with Irises // Public domain

We are slowly but surely approaching the mark of a year and a half since Russia launched the full-scale invasion of Ukraine. During this time the necessity to track direct and indirect damage caused by it has become both a priority and an enormous challenge for numerous Ukrainian and international organizations. One thing is already clear – we will be doing the math long after the war is over.

Firstly, we do not have access to many impacted areas. Secondly, like any other war, it will have many long-lasting effects the costs of which are extremely difficult to predict and quantify, including the loss of human capital and potential. Here are some of the estimates that we have at our disposal.

General Economic Losses

As of March 24, direct losses caused to the infrastructure of Ukraine amounted to $63 billion, as estimated by the “Russia will pay” project of the analytical unit of the Kyiv School of Economics (KSE) and partner organizations^[1].

According to the estimates provided by the Ministry of Economy and the KSE, the total losses of Ukraine’s economy amount to $543-600 billion, taking into account drop in GDP, loss of investments, outflow of labor, additional costs for defense and social support, etc. In addition, since February 24, 2022, at least 4,431 residential buildings, 92 factories/enterprises, 378 educational institutions, 138 health care institutions, 8 civilian airports and 10 military airfields, 7 power plants, etc. have been damaged, destroyed or seized^[2].

Agricultural Sector

Direct damage caused to the agro-industrial complex of Ukraine has surpassed $8.7 billion, with the biggest losses inflicted due to the destruction and damage of agricultural machinery. The second biggest category is related to the destruction and theft of goods, specifically more than 4 million tons of agricultural produce^[3]. KSE experts have determined that the greatest damage to the Ukrainian agricultural sector has been caused in Luhansk, Kherson, Donetsk, Kharkiv and Zaporizhzhia regions that are quite understandably also in the top-5 in terms of the number of damaged and destroyed objects^[4].

Minefields

It is estimated that about 470,000 hectares of Ukrainian agricultural land have been turned into a literal minefield, and it may take decades to demine, according to the Ministry of Agriculture^[5]. Even though 2,600 specialists from public and private organizations are already working on this task.

Demographic Situation

The full-scale invasion may result in Ukraine’s population decreasing by a third, due to loss of life, forced displacement and emigration, lower birth rates, ecological issues, etc^[6]. The longer the war lasts, the more severe the demographic losses are going to be, especially if we attempt to take into account possible long-term effects connected with war-related health issues and injuries. And the fewer refugees will return home.

As a conclusion, the formula for calculating Ukraine’s losses due to war has a few crucial unknowns, like how long the war will last, and how bad its long-term effects are going to be. However, the biggest one certainly is who will be footing the ever-growing bill.