Disasters costThe economic cost of devastating hurricanes and other extreme weather events is even worse than we thought
June marks the official start of hurricane season. If recent history is any guide, it will prove to be another destructive year thanks to the worsening impact of climate change. If this is not bad enough, there is this: a meaningful assessment of the costs of climate change – using basic economic principles I teach to undergrads – paints a scary picture indeed.
June marks the official start of hurricane season. If recent history is any guide, it will prove to be another destructive year thanks to the worsening impact of climate change.
But beyond more intense hurricanes and explosive wildfires, the warming climate has been blamed for causing a sharp uptick in all types of extreme weather events across the country, such as severe flooding across the U.S. this spring and extensive drought in the Southwest in recent years.
Late last year, the media blared that these and other consequences of climate change could cut U.S. GDP by 10 percent by the end of the century – “more than double the losses of the Great Depression,” as The New York Times intoned. That figure was drawn from a single figure in the U.S. government’s Fourth National Climate Assessment. (Disclosure: I reviewed that report and was the vice chair on the third one, released in 2014.)
If that sounds scary, I have good news and bad news. The good news is that that figure was drawn incorrectly from a significant misreading of the report - which actually offered a range of a loss of GDP from as low as 6 percent to as high as 14 percent by 2090.
The bad news, however, is that a more meaningful assessment of the costs of climate change – using basic economic principles I teach to undergrads – is a hell of a lot scarier.
Tallying the costs
First, let’s look at how government agencies, insurance companies and the media calculate and report on the economic costs of disasters.
According to the National Oceanic and Atmospheric Administration, in 2018 hurricanes Michael and Florence each caused about $25 billion in damages, contributing to a total toll of $91 billion from that year’s weather and climate disasters. In 2017, the NOAA’s total was even bigger: $306 billion, due to the massive destruction from hurricanes Harvey, Irma and Maria.
