The western coastal areas of Aceh, including the cities of Banda Aceh, Calang, and Meulaboh, were among the areas hardest-hit by the tsunami resulting from the Indian Ocean earthquake on 26 December 2004. While estimates vary, approximately 230,000 people were killed by the earthquake and tsunami in Aceh, and about 500,000 were left homeless. The tragedy of the tsunami was further compounded on March 26 when a second off-shore earthquake measuring 8.7 on the Richter scale struck the sea bed between the islands of Simeulue Island in Aceh and Nias in North Sumatra. This second quake killed a further 905 people on Nias and Simeulue, displaced tens of thousands more and caused the tsunami response to be expanded to include Nias.
The population of Aceh before the December 2004 tsunami was 4,271,000 (2004). The population as of 15 September 2005 was 4,031,589, a loss of almost 2% of the Indonesian population.
As of February 2006, more than a year after the tsunami, a large number of people are still living in barrack-style temporary living centers (TLC) or tents. Reconstruction is visible everywhere, but due to the sheer scale of the disaster, and logistical issues, progress is slow.
The ramifications of the tsunami went beyond the immediate impact to the lives and infrastructure of the Acehnese living on the coast. Since the disaster, the Acehnese rebel movement GAM, which had been fighting for independence against the Indonesian authorities for 29 years, has signed a peace deal (August 15, 2005). The perception that the tsunami was punishment for insufficient piety in this proudly Muslim province is partly behind the increased emphasis on the importance of religion post-tsunami. This has been most obvious in the increased implementation of Syariah law, including the introduction of the controversial 'WH' or Syariah police. As homes are being built and people's basic needs are met, the people are also looking to improve the quality of education, increase tourism, and develop responsible, sustainable industry. Well-qualified educators are in high demand in Aceh.
While parts of Banda Aceh, the capital, were unscathed, the areas closest to the water, especially the areas of Kampung Jawa and Meuraxa, were completely destroyed. Most of the rest of the western coast was severely damaged, and many towns completely disappeared. Other towns on Aceh's west coast hit by the disaster include Lhoknga, Leupung, Lamno, Patek, Calang, Teunom, and the island of Simeulue. Affected or destroyed towns on the region's north & east coast include Pidie Regency, Samalanga, and Lhokseumawe.
The area is slowly being rebuilt after the disaster. The government initially proposed the creation of a two-kilometer buffer zone along low-lying coastal areas, within which permanent construction is not permitted. This proposal was unpopular among some local inhabitants and proved impractical in most situations, especially fishing families that are dependent on living near to the sea.
Indonesian government has built special agency for Aceh reconstruction, called Badan Rehabilitasi dan Rekonstruksi (BRR/Agency of Rehabilitation and Reconstruction) headed by Kuntoro Mangkusubroto, former Indonesian Minister. This agency has ministry level of authority and incorporating officials, professionals and community leaders from all background.
Most of the reconstruction work is being performed by local people using a mix of traditional methods and partial prefabricated structures, with funding coming from many international organizations and individuals, governments, and the people themselves.
The Government of Indonesia estimated in their Preliminary Damage and Losses Assessment that damages amounted to US$4.5 billion (before inflation, and US$6.2 billion including inflation). Three years after the tsunami, reconstruction was still ongoing. The World Bank monitors funding for reconstruction in Aceh and reports that US$7.7 billion was earmarked for the reconstruction, whilst at June 2007, US$5.8 billion had been allocated to specific reconstruction projects, of which US$3.4 billion had actually been spent (58%).
In 2009, the government opened a US$5.6 million museum to commemorate the tsunami with photographs, stories, and a simulation of the earthquake that triggered the tsunami.