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 United States, such as severe flooding 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% by the end of the century – “more than double the losses of the Great Depression,” as The New York Times intoned.
According to the National Oceanic and Atmospheric Administration, in 2018 hurricanes Michael and Florence each caused about US$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.
But these tallies are not really valid measures of economic damage. Instead, they simply reflect estimates of what people think will need to be invested to rebuild what was damaged or destroyed in the storms, floods or fires. To really understand the economic costs of an extreme weather event, it’s important to consider all the investment that is being “crowded out” or lost to cover those rebuilding costs. Put another way, there’s only so much money to go around. And that $25 billion being used to rebuild means $25 billion is not being used for other public and private investment opportunities that are more forward-looking or more likely to promote growth.
If similar experiences in extreme events occur for the next 10 years – which is not a bad assumption given that four of the most expensive years in history have occurred in the last five – U.S. GDP in 2029 would be about 3.6% lower than it would have been otherwise, based on my calculations using growth accounting.
That amounts to an economy that’s $1 trillion poorer as result of these extreme weather events crowding out productive investment. This is the real cost of a world in which these types of massively destructive disasters happen more frequently.
[Prevention Web – Excerpts of article by Gary W. Yohe, Huffington Foundation Professor of Economics and Environmental Studies, Wesleyan University]
This entry was posted in Uncategorized by Grant Montgomery.