Direct damage caused to Ukraine’s infrastructure during the war is $103.9 bln due to the last estimates

9 June 2022

As of June 8, the total adjusted amount of direct damage to Ukraine’s economy from damage and destruction of residential and non-residential buildings and infrastructure is $103.9 bln, or UAH 3 trillion. 

Some reduction in the total amount of direct infrastructure damage (by $2.6 billion) is due to the recalculation of losses caused to certain categories of the railway infrastructure, private cars, religious and cultural buildings. At the same time, the “organic” increase in the value of damaged/destroyed property as a result of hostilities over the past week is $1 billion. 

In the last week, the damage to enterprises, educational and healthcare institutions, kindergartens, administrative buildings, and warehousing infrastructure has increased. Damage caused to the destruction and damage to Ukrainian enterprises has already reached $11.5 bln, educational institutions — $1.6 bln, medical institutions —  $1.1 bln, and kindergartens — $576 mln.

Since the beginning of Russia’s war against Ukraine, at least 44.8 million square meters of housing, 256 enterprises, 656 medical institutions, 1,177 educational institutions, 668 kindergartens, 198 warehouses, 20 shopping centers and 28 oil depots have been damaged, destroyed or seized. 

At the same time, as of June 8, project analysts have clarified the amount of damage to railway infrastructure and rolling stock. Compared to the previous report, the damage in this category decreased by $1 billion and amounted to $2.7 billion for today. 

Clarifications are related to the adjustment of the rate of damage to property in uncontrolled areas. The recalculation was made on the basis of the approach that damaged 40% of the total value of the real estate (buildings, structures, tracks, real estate) and 100% of the value of the movable property (locomotives, cars, tools, computers). Regarding this assumption, there is a continuing discussion with Ukrzaliznytsia, as the UZ assumed all assets are 100% lost on uncontrolled territories. After the liberation of the territories and gaining access to the property on these territories, a recalculation will be made for a more accurate assessment of damages.

The reduction of damage to destroyed/damaged private cars exists due to the recalculation of average prices for this transport by region. Reduction of losses from damage, destruction, or loss of cars is associated with the recalculation of average prices for this transport, as well as obtaining more accurate data. In previous reports, the damage to car losses was calculated basis on the average price of cars in the country as a whole, while the current estimate is formed based on the breakdown of the average price by city. According to updated estimates, as a result of the war, Ukrainians lost almost 105,000 private cars, the total amount of such damage is $968 mln. These calculations do not take into account the number and value of cars not registered in Ukraine, so the actual amount of such damage may be higher.

The assessment was changed in terms of damage to religious and cultural buildings. Due to the specificity of this category, the availability of data on the value of religious sites is very limited. The latest interpretation of the methodology for a more objective assessment assumes that the value of large cultural facilities averages about UAH 100 million, while the average cost of smaller buildings is about UAH 20 million. 

According to the latest data, at least 141 religious and 203 cultural buildings have already been destroyed or damaged by the hostilities, direct damage caused to churches, laurels, and cathedrals is $81mln, as well as damage to cultural property, is $272 mln. The largest number of damaged religious, cultural, and sports facilities is in Kharkiv, Kyiv, and Donetsk regions.

Map of damage and destruction of religion, culture, and sports objects, breakdown by regions, number

As estimated by the Ministry of Economy and KSE, the overall Ukraine’s economic losses due to the war, taking into account both direct losses calculated in this project and indirect losses (GDP decline, investment cessation, outflow of labor, additional defense and social support costs, etc), range from $564 billion to $600 billion. 

The analysis is carried out by the KSE Institute team (the analytical unit of Kyiv School of Economics) with the support of the Presidential Office, the Ministry of Economy, the Ministry of Reintegration of Temporarily Occupied Territories, the Ministry of Infrastructure and the Ministry for Communities and Territories Development. The project team also includes volunteers from the Center for Economic Strategy, Dragon Capital, the Anti-Corruption Headquarters, Institute of Analysis and Advocacy, Transparency International Ukraine, Prozorro.Sale, Prozorro, Ukrainian Council of Shopping Centers, CoST Ukraine, Vkursi Agro, TVIS Ukraine, Retail Association of Ukraine, Culver Aviation, Center for Innovations Development. 

The project focuses on assessing the damage caused to Ukraine’s physical infrastructure during the war (destruction of residential buildings, utilities, roads, railways, educational and medical facilities, etc.); and estimating the financial value of these damages. The project does not assess total economic losses, including not only direct infrastructure losses but also numerous “incidental” costs to the economy due to the war (closure of many businesses; loss of hundreds of thousands of homes and jobs; termination of any investments; reduction of consumer demand, etc.).

Every citizen or legal entity can also submit information about the loss of physical infrastructure, including residential buildings, due to the war. For this purpose, the KSE Institute team has created the RUSSIA WILL PAY resource (https://damaged.in.ua/), where every citizen can submit data on damage to buildings, businesses, roads, and other facilities right now. Everyone can also submit information about damages using the chatbot.

Methods for evaluating financial losses from damage to the project:

These calculations are based on the analysis of several thousands of public notifications from Ukrainian citizens, the government, local authorities about losses and damages throughout the country, as well as indirect assessment methods such as calculating the estimated area of the war-damaged property in the most affected cities. 

The methodology also includes the World Bank’s experience in analyzing losses in Syria and Iraq, as well as the recommendations of the leading Ukrainian investment company Dragon Capital. We are going to continue this work in the future, which will allow us to detail the assessment of the object by regions and types of buildings, losses of utilities and infrastructure, etc.

Indirect methods of estimating the value of destroyed residential real estate have been used due to the lack of regular public updates on the total number of destroyed and damaged dwellings, in particular by region and the number of private / apartment buildings. Also, the assessment of the value of damaged and destroyed housing now also includes the assessment of the need for expenditures for the dismantling of destroyed buildings and repairs in the buildings to be built. The valuation of the assets of enterprises no longer takes into account depreciation and added work in progress and inventories. Receipt of updated and detailed data from the Ministry of Infrastructure on the current amount of damaged/ destroyed infrastructure objects, as well as their replacement value.

These estimates are not exhaustive: information on numerous damages and destruction may be missing due to the inability of citizens, and local and state authorities to promptly record the damage in each city and town. Also, due to the lack of information at this stage, the assessment includes only losses from destruction/ destruction of buildings, not taking into account the cost of equipment (including hospitals, research institutions, damaged vehicles, etc.). These estimates will be gradually added in the next stages of updating the indicator.

Currently, the evaluation does not take into account information on damage to natural resources, animal husbandry, stocks of companies (in warehouses, shops, etc.), moveable property, military property, telecommunication operators’ property, etc. caused by combat and mining operations. This information will be supplemented and clarified after the end of hostilities in the relevant regions of Ukraine.