Recap:

The inspiration for these posts came from reading two articles about the rising cost of climate change. The articles in question were “Accounting for the Future” in the Summer 2021 issue of Environmental Defense Fund Solutions Newsletter and “What Are The Costs Of Climate Change?”, an online NPR piece dated September 16, 2020. Both articles claimed climate change had cost the “more than $500 billion” in the US over the past five years. Neither elaborated and neither provided a link or reference for the figure of $500 billion.

Both articles seemed to suggest that, thanks to climate change, weather-related damage is on the rise in the US and the increased cost of this damage is mostly due to changes in the weather. Is this actually the case?

How to Read Science News, Part I: The Cost of Climate Change (Initial Exploration) explored whether the cost of weather-related damage was indeed going up in the US. Per data provided by the NOAA National Centers for Environmental Information, and looking only at the most expensive disasters, the answer would seem to be yes. How to Read Science News, Part II: The Cost of Climate Change (Further Explorations) addressed whether the rising costs of weather-related damage in the US was due to changing weather patterns. Per Our World in Data, the answer would seem to be no.  To quote: 

“In recent decades there has been no clear trending increase in damages when we take account of economic growth over this period. This is also true when we look at damages specifically for weather-related disasters.”  - "Natural Disasters" by Hannah Ritchie and Max Roser/Our World in Data (2014). Last updated 2019.

Factors that contribute to increasing costs of weather-related damage in the US

Other than climate change, at least four factors contribute to the growing cost of weather-related events in the US: increasing density of coastal populations, exceptionally high inflation in the construction industry, rising value of assets, and changes in crop insurance.

First, Americans have been moving to the storm-prone coasts for decades and population density in these areas has risen considerably over the past 40 years:

___2021 US Coastal Pop Density Trends.png

Especially to the coasts, or near the coasts, of Florida and Texas:

More people living on the coasts means more buildings and infrastructure to repair or rebuild after weather damage. And the cost of doing that has been rising faster than overall inflation for decades. Per Construction Analytics, long-term construction cost inflation has been close to double consumer price index (CPI).

Then there’s wealth inflation, especially in housing. Thanks in part to low interest rates, new housing has gotten bigger and more expensive over the past few decades, which translates to larger insurance payouts after destructive weather events. A couple quotes:

“Comparing the amount of dollar damage between tornadoes of different eras without adjusting for the fact that values of property increase through time leads to a kind of “temporal myopia” that emphasizes only the most recent events…. We find nothing to suggest that damage from individual tornadoes has increased through time, except as a result of the increasing cost of goods and accumulation of wealth of the United States.” - Brooks and Doswell (2001) “Normalized damage from major tornadoes in the United States: 1890–1999.”

“A normalization provides an estimate of the damage that would occur if storms from the past made landfall under another year’s societal conditions….Our methods use changes in inflation and wealth at the national level and changes in population and housing units at the coastal county level. Across both normalization methods, there is no remaining trend of increasing absolute damage in the data set, which follows the lack of trends in landfall frequency or intensity observed over the twentieth century.”- Pielke et al (2008) “Normalized hurricane damage in the United States: 1900–2005.”

Plus factors that influence the cost of insuring crops and the size of insurance payouts after weather-damage:

“USDA crop insurance loss data has many complicating factors including increasing policy participation, insured acreage, value of crops, number of insurable crop types, changing policy structures, etc…The yield per acre production statistics for each of these crops also has a positive trend (by far the most rapid for corn) since the end of World War II, much of which is attributable to technological innovation…The combined effect of [these] identified sources contributing to increasing insured crop losses make any attribution to weather or climate, especially for billion-dollar disasters, difficult.” Smith and Katz (2013) “US billion-dollar weather and climate disasters: data sources, trends, accuracy and biases.”

Bottom line: it’s complicated.

References:

Brooks HE, Doswell CA (2001) Normalized damage from major tornadoes in the United States: 1890–1999. Weather Forecasting, 16, 168–176. https://doi.org/10.1175/1520-0434(2001)016<0168:NDFMTI>2.0.CO;2 

Category Archives: Inflation Indexing/Construction Analytics June 22, 2021 

Hannah Ritchie and Max Roser (2014) - "Natural Disasters". Published online at OurWorldInData.org. First published in 2014 and last revised in November 2019. Retrieved on August 17, 2021 from: https://ourworldindata.org/natural-disasters

Pielke RA Jr, Gratz J, Landsea CW, Collins D, Saunders MA, Musulin R (2008) Normalized hurricane damage in the United States: 1900–2005. Nat. Hazards Rev., 9, 29–42 https://ascelibrary.org/doi/abs/10.1061/(ASCE)1527-6988(2008)9:1(29)  

Smith, A.B., Katz, R.W. (2013) US billion-dollar weather and climate disasters: data sources, trends, accuracy and biases. Nat Hazards 67, 387–410 (2013). https://doi.org/10.1007/s11069-013-0566-5