Pirate News: Somali piracy has staggering cost

NAIROBI, Kenya — Seven billion dollars is a huge sum of money and according to the research and advocacy organization One Earth Future that is what Somali piracy cost the world economy last year.

On the plus side it's as much as $5 billion less than piracy cost in 2010, according to the same researchers.

The new report 'Economic Cost of Piracy 2011' says, "Approximately 80 percent of all costs are borne by the shipping industry, while governments account for 20 percent of the expenditures associated with countering piracy attacks. The report estimates the 2011 economic cost of piracy was between $6.6 and $6.9 billion."

More from GlobalPost: Somali pirates coverage shows their human side

Some of the increased costs to industry are caused by ships travelling faster and taking longer routes to evade pirate skiffs, and hiring private armed security guards to protect the vessels.

According to the report, by the end of 2011 half of all ships plying the pirate waters were carrying armed guards, up from a quarter at the year's start.

These measures — expensive as they are — seem to be working with only around 1 out of every 10 pirate attacks leading to a hijacking.

But even as the number of successful hijackings falls ransoms are increasing, now averaging $5 million, meaning piracy is still a hugely attractive business for impoverished men with guns and few other options.

More from GlobalPost: Piracy boosts Somalia economy