Billion-dollar weather and climate disasters on the rise

Methodology and data sources
In 2012, NCEI — then known as National Climatic Data Center (NCDC) — reviewed its methodology on how it develops Billion-dollar Disasters. NCEI held a workshop with economic experts (May 2012) and worked with a consulting partner to examine possible inaccuracy and biases in the data sources and methodology used in developing the loss assessments (mid-2013). This ensures more consistency with the numbers NCEI provides on a yearly basis and give more confidence in the year-to-year comparison of information. Another outcome is a published peer-reviewed article “U.S. Billion-dollar Weather and Climate Disasters: Data Sources, Trends, Accuracy and Biases” (Smith and Katz, 2013). This research found the net effect of all biases appears to be an underestimation of average loss. In particular, it is shown that the factor approach can result in an underestimation of average loss of approximately 10–15 percent. This bias was corrected during a reanalysis of the loss data to reflect new loss totals.

It is also known that the uncertainty of loss estimates differs by disaster event type reflecting the quality and completeness of the data sources used in our loss estimation. In 2016, six of the fifteen billion-dollar events (that is, the four inland flooding events, drought and Hurricane Matthew) have higher potential uncertainty values around the loss estimates due to less coverage of insured assets. The remaining nine events (that is, eight severe storm events and wildfire) have lower potential uncertainty surrounding their estimate due to more complete insurance coverage. NCEI’s newest research defines the cost uncertainty using confidence intervals as discussed in the peer-reviewed article “Quantifying Uncertainty and Variable Sensitivity within the U.S. Billion-dollar Weather and Climate Disaster Cost Estimates” (Smith and Matthews, 2015). This research is a next step to enhance the value and usability of estimated disaster costs given data limitations and inherent complexities.

In performing these disaster cost assessments these statistics were taken from a wide variety of sources and represent, to the best of NCEI ability, the estimated total costs of these events — that is, the costs in terms of dollars that would not have been incurred had the event not taken place. Insured and uninsured losses are included in damage estimates. Sources include the National Weather Service, the Federal Emergency Management Agency, U.S. Department of Agriculture, National Interagency Fire Center, U.S. Army Corps, individual state emergency management agencies, state and regional climate centers, media reports, and insurance industry estimates.

More information can be found in Calculating the Cost of Weather and Climate Disasters.

— Read more in Adam B. Smith and Jessica L. Matthews, “Quantifying Uncertainty and Variable Sensitivity within the U.S. Billion-dollar Weather and Climate Disaster Cost Estimates,” Natural Hazards 77, no. 3 (July 2015): 1829-51 (DOI: 10.1007/s11069-015-1678-x); Adam B. Smith and Richard W. Katz, “U.S. Billion-dollar Weather and Climate Disasters: Data Sources, Trends, Accuracy and Biases,” Natural Hazards 67, no. 2 (June 2013): 387-410 (DOI: 10.1007/s11069-013-0566-5); Neal Lott and Tom Ross, “Tracking and evaluating U. S. billion dollar weather disasters, 1980-2005,” AMS Forum: Environmental Risk and Impacts on Society: Successes and Challenges, Atlanta, Georgia, American Meteorological Society, 1.2.; and Tom Ross and Neal Lott, 2003: A Climatology of 1980-2003 Extreme Weather and Climate Events, Technical Report (National Climatic Data Center, NOAA/NESDIS, December 2003)