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Hurricanes are becoming too costly for the United States

Tropical cyclones are among the most costly and harmful of natural disasters. Annual global damages due to these meteorological events stand at more than $26bn and this only looks set to increase in future. In the US, tropical cyclones have caused more than half of all damages attributed to extreme weather since 1980. In a new study, published in Environmental Research Letters, scientists from Potsdam University in the Netherlands revisit Hurricane Harvey, one of the most destructive tropical cyclones to hit the U.S., and assess the possible economic repercussions under different scenarios of increased global warming. 

“Tropical cyclones draw their energy from ocean surface heat. Also, warmer air can hold more water which eventually can get released in heavy rains and flooding that often occur when a hurricane makes landfall,” said study lead author Robin Middelanis. “It’s thus clear since long that hurricane damages will become bigger if we continue to heat up our Earth system.” 

Hurricane Harvey made landfall along the Texas coast in August 2017 as a category four tropical cyclone. It hung around for four days releasing torrential rainfall and flooding large areas in the state of Texas, but also in Louisiana. Harvey resulted in 89 deaths and caused an estimated total damage of $125bn (in 2017 dollars). Adjusting for price inflation, this makes Harvey the second-costliest hurricane on record after Katrina (2005).

The scientists used information from Hurricane Harvey to model what the likely damages and costs would be today, under different global warming scenarios. At the time of Harvey, it was estimated that a significant share of Harvey’s economic costs could be attributed to the ∼1 C of global warming that had taken place by 2017, and the researchers wanted to highlight the potential impact of a repeat Harvey, but under future warming scenarios. 

The experts state that, even though the United Nations’ Intergovernmental Panel on Climate Change predicts that tropical cyclone frequency will remain stable or even decrease in future, it projects an increase in intensity and precipitation during the most severe events. 

When computing the national and global economic repercussions of Hurricane Harvey under more severe scenarios, the researchers considered not only the direct damages done, but also the economic consequences of local production losses from business interruption. These can propagate through the global supply chain network and lead to higher-order effects and associated economic repercussions elsewhere in the world. In their simulations of over 7000 regional economic sectors with more than 1.8 million supply chain connections, the scientists found that the US national economy’s supply chains cannot compensate future local production losses from hurricanes if climate change continues.

“We investigated global warming levels of up to 5°C – which unfortunately might be reached by the end of our century if climate policy fails us,” said study co-author Anders Levermann. “We do not want to quantify temperature thresholds for the limit of adaptation of the US economy’s national supply chains, since we feel there’s too much uncertainty involved. Yet we are certain that eventually the US economy’s supply chain capacities as they are now will not be enough if global warming continues. There is a limit of how much the US economy can take, we just don’t know exactly where it is.”

The projections were based on the expectation that precipitation will increase with global warming and that hurricanes may grow larger and have longer decay time on land, therefore affecting larger areas. They also considered three different scenarios in which wind speeds increase and assumed that damages would increase linearly with precipitation and that recovery time from business interruption would be proportional to damages. They state that the interruption of business while repairs are effected can lead to the redistribution of services, both locally and globally, which can affect quality and efficiency.

Ironically, in the case of hurricane Harvey it was particularly the oil and gas industry in Texas that suffered from the impacts. Global warming is driven by the emissions from burning oil and gas (and coal), and Texas is responsible for over 42 percent of U.S. crude oil production and 25 percent of natural gas production. The computer simulations showed that production losses in the U.S. fuel sector would be most strongly compensated by countries such as Canada, Norway, Venezuela and Indonesia, at the expense of the U.S. economy.

“When things break and production fails locally, there’s always someone in the world who is happy to make money by selling the replacement goods,” said Levermann. “So why worry? Well, reduced production means increasing prices, and even if that means it’s good for some economies, it is generally bad for the consumers – the people. Also from a global economic perspective, shifts due to disrupted supply chains can mean that less efficient producers step in. It’s a pragmatic, straightforward conclusion that we need to avoid increasing greenhouse gas emissions which amplify this kind of disruptions.”

The researchers conclude that, as the direct and indirect costs of tropical cyclone damage increase under future global warming, the U.S. will reach a point where it can no longer absorb or compensate for the losses. This will leave the U.S. at a competitive disadvantage as other, less affected countries step in to take over the services that have been disabled due to cyclone damage.

When considering the potentially larger impacts of future tropical cyclones, Middelanis said one of the important questions is whether can we deal with that, economically. “The answer is: not like this, we can’t. Our calculations show, for the first time, that the U.S. economy as one of the strongest on our planet, will eventually not be able to offset the losses in their supply chains on their own. Increasing hurricane damages will exceed the coping capacities of this economic super-power.”

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By Alison Bosman, Staff Writer

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