December 06, 2005
Preview of AGU Presentation -- The $500 Billion Hurricane
Posted to Author: Pielke Jr., R. | Disasters
On Wednesday at the annual fall meeting of the American Geophysical Union, along with Kerry Emanuel I'll be presiding over a special session on hurricane Katrina. As part of that session I will be presenting preliminary results of a comprehensive update of a 1998 paper that Chris Landsea and I collaborated on titled, "Normalized Hurricane Damages in the United States: 1925-95" (available here as PDF). On the update I am collaborating again with Chris, and also Joel Gratz from here at the University of Colorado.
First, some of the features of the updated analysis.
1. We have extended the dataset forward to 2005 from 1995 and back to 1900 from 1925, representing 35 years of additional data. (Our analysis of the period 1900-1924 is still in process.) NOTE! This data has not been peer reviewed and is preliminary. But it does give a sense of where we are at in the analysis and some early numbers.
2. We used updated inflation for all factors used in the normalization: inflation data (source: 2005 Economic Report of the President), population data (source: 2000 U.S. Census), and wealth data (Source: Bureau of Economic Analysis).
3. We have included 2005 storms damages as twice the current insured loss total, following the conventional practice of the National Hurricane Center (NHC). These numbers will be closely looked at, particularly Katrina. Generally, flood damage is not included in the hurricane damage tabulation, so how exactly to deal with New Orleans will be a subject of considerable attention. In what you see below, consider 2005 numbers preliminary, but are an effort to make an apples-to-apples comparison with the data 1900-2004.
4. We will be paying close attention to uncertainties in the data. In particular, we are investigating the possibility that pre- ~1960 data may significantly underestimate the actual losses for two reasons. One is that in this period there was very little or no public assistance provided after disasters (e.g., federal disaster assistance) and thus such costs would not have appeared in the totals during that period, yet they do appear in every large event today. Second, at some point before 1987 the NHC began using insured losses as the basis for calculating total losses, multiplying insured losses by a factor of two to arrive at a total estimate. This raises the possibility of a step function in the loss data when this practice began, meaning that earlier losses could in fact be significantly higher than we report, perhaps by as much as a factor of two. We are confident that the data since 1960 is fairly robust. Note that all of these errors work in the direction of magnifying losses earlier in the century. The possibility exists that we may continue to underestimate the hurricane loss potential
Top 10 Damaging Storms 1900-2005 (note 1900-1924 incomplete)
Note that Katrina I ranked number 2 here. Even with a larger estimate for Katrina this would hold. The 1926 Miami storm estimate may be conservative for reasons discussed above. Note that none of the 4 storms from 2004 or Wilma appears in the top 10. Andrew is ranked 4th. Andrew and Katrina are the only storms in the top 10 that occurred in the past 35 years.
Top 10 Years 1900-2005 (note 1900-1924 incomplete)
Looking at yearly damages, 1926 is number 1 with 2005 not far behind. 2004 is in 7th place and 1992 is in 4th. The next most recent year in the rankings in 1954.
Top 10 10-Year Periods 1935-2005
When we look at the cumulative damages over 10-year intervals 1935-2005 we see the effects of many large events in the 1940s and 1950s. When we eventually extend the database back to 1900 comprehensively, I expect to see additional years in this listing around 1926 and before 1910. The take-home point here is that single large events are not the only way to look at hurricane losses, but decadal periods with consistently high losses. The 1980s and 1990s appear at the bottom of such a ranking. Our thinking about hurricane damage is shaped by our experiences in an anomalous several decades of very low losses when considered in historical perspective.
Differences between 1998 and 2005 analyses, and a look to the future
Across the board the average per-storm increase in losses between our 1998 study and the present effort is 104%. Inflation accounts for about 13% of this increase, meaning that losses have increased in real terms by 91% or in other words, have just about doubled.
Consider this, if the pace of population growth and increasing wealth continues at these rates until 2020, then in 2004 dollars (i.e., today's dollars) we should expect a repeat of the 1926 storm to cause about $500 billion in damages in 2020, all else being equal. Katrina would be $320 billion, Andrew $200 billion. These numbers boggle the mind, but provide some indication where we are headed.Posted on December 6, 2005 08:54 AM
"Consider this, if the pace of population growth and increasing wealth continues at these rates until 2020, then in 2004 dollars (i.e., today's dollars) we should expect a repeat of the 1926 storm to cause about $500 billion in damages in 2020, all else being equal. Katrina would be $320 billion, Andrew $200 billion. These numbers boggle the mind, but provide some indication where we are headed."
It doesn't seem to me that we *have* to be headed in that direction.
What would a system that could be deployed in the Atlantic Basin that could reduce all hurricanes by a two Saffir-Simpson categories be worth (i.e., Category 5 to Category 3, Category 3 to Category 1))?
I think the answer is that such a system would be worth literally trillions of dollars (to the United States alone...neglecting other countries in the Atlantic Basin) over the next 20 years.
The United States spends hundreds of millions of dollars (if not billions) each year worrying about and implementing techniques to reduce CO2 emissions.
What is the current funding to research and develop a system to reduce hurricane strengths? Pretty close to zero, as far as I know...
Posted by: Mark Bahner at December 6, 2005 10:19 AM
Here is some basic info:
Have a look at this page:
and this article:
Posted by: Roger Pielke Jr. at December 6, 2005 10:27 AM
I've read about Project Stormfury. Everything I've read about it hasn't really impressed me. (Sorry, I'm a blunt guy.)
In my opinion, the proper way to go about research and development of a system to reduce hurricane stregths by two Saffir-Simpson categories is:
1) Brainstorm to identify ALL possible techniques by which the goal can be achieved.
2) Only after brainstorming has been completed, attempt to evaluate the strengths and weaknesses of each technique.
3) Most importantly, have the U.S. government offer a ***reward*** for the development of a system that can meet the objective (e.g. reduce by two Saffir-Simpson categories), and meet any other requirements (e.g. doesn't kill whales, doesn't lead to algal blooms, doesn't interfere with shipping, or whatever). The reward amount would be contingent on the amount that the U.S. government would save in avoided insurance/emergency response payouts. The U.S. government would calculate that amount, based on research just like yours. For example, if the U.S. government calculated a Net Present Value of $1 trillion for cutting all hurricanes down by two Saffir-Simpson categories over the next 20 years, they would offer a reward of, say, $300 billion for development and deployment of a system to reduce hurricanes by two Saffir-Simpson categories over the next 20 years.
This system, especially the reward aspect, allows private entities to accept the risks for research and development of systems that don't meet the specifications. It also can be a win-win-win situation:
1) The U.S. government wins, because the amount paid in the reward is LESS than they would pay for the emergency response and insurance (at least by calculations).
2) The private entities win, because they get the reward (which presumably is worth more than they invested in the research and development...at least for the winner of the reward).
3) The people on the coasts win, because hurricane intensities are reduced.
Posted by: Mark Bahner at December 6, 2005 10:47 AM
Note: I just pulled the NPV of $1 trillion out of the air. It appears that the actually value would be substantially less...maybe $300 billion?
The point is that it SHOULD be possible for the federal government (or someone working on their behalf) to calculate the value to the federal government (in terms of reduced insurance and emergency response costs) for a system that can reduce hurricanes by two Saffir-Simpson categories. The federal government can then offer a reward that's LESS than that amount...and if a private entity can develop a system and make a profit on the reward, then everybody wins.
Posted by: Mark Bahner at December 6, 2005 10:54 AM
Who picks up the bill for the destruction wrought by any 'chimera' storms that don't behave 'as modelled' during the (essential) real-world R&D?
The idea serves to remind me of the quote in 'At-Risk' (Wisner et al, 2003: 203) where the destruction caused during the 1993 Mississippi floods is squarely placed at the door of 'engineering hubris and disaster denial mentality'.
To paraphase our host...surely there are better ways to spend $300Bn in order to reduce our vulnerability to hurricanes than on further potentially ineffective moneypits that actually produce few 'winners'?
Posted by: Hugh at December 6, 2005 11:55 AM
"Who picks up the bill for the destruction wrought by any 'chimera' storms that don't behave 'as modelled' during the (essential) real-world R&D?"
The reward would be given for a technique that demonstrates it can reliably lower hurricane intensities by 2 Saffir-Simpson categories (to pick a somewhat-arbitrary goal).
This means that:
1) If ANY Category 4 or Category 5 hurricane landfalls on the U.S., whatever technique was being tried clearly didn't work (because only Category 3 or below could landfall, if the technique was working).
2) If Category 3 or 2 hurricanes made landfall, it would have to be established that the hurricane WOULD have been Category 5 or 4 (respectively), without the technique.
In answer to your question about "chimera" hurricanes (nothing like a pejorative phrase, eh?)…presumably, various entities would pay for the greatly REDUCED damage, just as they now pay much more when Category 4 and 5 hurricanes hit the U.S.
"To paraphrase our host...surely there are better ways to spend $300Bn in order to reduce our vulnerability to hurricanes than on further potentially ineffective moneypits that actually produce few 'winners'?"
Your question is completely illogical. My reward system produces MANY winners:
1) The federal government wins, because they pay ONLY if a reliable hurricane mitigation system can be demonstrated, and they are guaranteed to pay LESS than they have calculated they WOULD pay, in the absence of such a system. (By the way, the $300Bn was just a wild guess at the net present value of what the federal government WOULD pay, in the absence of such a system. The reward would presumably between that value and $0.)
2) The developers of the system would (probably) win, because they don't bother with spending on development and deployment of the system, unless they're reasonably certain that the reward is worth more than their development and deployment costs.
3) A hurricane reduction technique benefits ALL coastal residents (from Texas to Maine). This can be compared to, for example, shoring up the levees around New Orleans to be capable of withstanding a Category 4 or 5 hurricane. Doing that would cost tens or even hundreds of billions of dollars, and would only help ONE CITY.
Similarly, to shore up Miami, and Galveston, and Tampa, and Savannah, and Charleston (i.e., all the potentially cities on the East Coast) to withstand Category 4 or 5 hurricanes would cost literally trillions of dollars.
As an environmental engineer, one area I've worked in extensively is "pollution prevention." The idea behind pollution prevention is that it's better to prevent pollution in the first place, than to try to clean it up after it's been generated. In a very similar manner, it's better to develop a system to ensure that no Category 4 or Category 5 hurricanes make landfall, than to try to avoid damage when they hit, or to clean up damage after they hit.
Roger Pielke Jr. frequently makes the (completely correct) point that spending money on hurricane mitigation techniques is probably more cost-effective than spending money on reducing CO2 emissions (for the sake of reducing hurricane intensity).
But the U.S. federal government offering a reward for successful development and deployment of a hurricane reduction system is almost certainly much more cost effective than developing hurricane mitigation techniques. In fact, the cost to the federal government is essentially ZERO, if no private entity can develop and deploy a system that earns the reward. The only cost to the federal government would then be the analysis that they need to do to set the value for the reward, and to set the criteria for receiving the reward...including criteria such as not killing too many whales, or whatever.
Posted by: Mark Bahner at December 6, 2005 08:37 PM
By all means let us not discuss the slight detail of the utter technical infeasibility of this concept.
Posted by: Steve Bloom at December 7, 2005 02:37 AM
Thanks for your response. I have to agree your concept has an elegant simplicity when viewing it from the perspective of the ‘public purse’ i.e.
My argument is not that a system *demonstrated* as reliable may well result in ‘wins’ for the developers of the system; I have always considered these to be amongst the ‘few’ destined to benefit from participation in the project. It is that by imagining the ‘fault tree’ of potential problems in expecting 100% efficiency from this ‘device/system/whatever’ you must admit that it would be irresponsible not to continue to reduce vulnerability in less techno-centric ways e.g. through actual enforcement of mobile home building codes and planning laws?
Such vulnerability reduction would, of course, be ongoing during the privately financed project R&D phase?
I’m just concerned I guess that an optimistic bias could creep into the development decisions of certain city authorities, whereby it would be considered appropriate, now that a device/system/whatever is ‘on the way’, to only build to standard of protection for a Cat 3 storm…but no, that’s already done, what am I worrying about?
Whatever the strength of the ‘tamed’ energy that makes landfall there are always going to be those who lose, whether it is due to a barge slipping its mooring and breeching a levee or because 4 nails have been used to secure roofing panels rather than 36. I agree that consideration should be given to all possible means of damage mitigation. However, it is my opinion (which I assume you’ll agree I’m entitled to) that in the discontinuance of Project Stormfury a message was sent (whether heard or not) that adaptation in the path of certain natural hazards is more practical and achievable than is macro-scale climatic engineering. We are, after all, already doing that, and with no indication of 100% efficiency.
Just as an aside I quickly realised that my idea for hurricane intensity reduction was doomed to failure by your initial reward criteria. Refrigeration filament stretched across the surface of the Atlantic sounded to me an ideal solution, until I analogized it to drift net fishing, which as we all know is an industrial tool that does the oceans’ cetaceans and sea birds no favours at all.
Posted by: Hugh at December 7, 2005 03:15 AM
O, the information you've posted about the hurricanes' damages is quite curious... Is it credible?
Posted by: OutTime at December 7, 2005 03:43 AM
Thanks for your question. We do think that it is credible in the sense that the dataset that we have created -- in large part -- removes the signal of societal change from the damage database. We believe this for three reasons:
1. We do see climate data in the normalized dataset. A study by Katz (2002) and Pielke and Landsea (1999) clearly shows the ENSO signal on hurricanes in the damage data. This provides some strong confidence that we have to some degree successfully accounted for the societal factors.
2. The dataset is consistent with the results of catastrophe models, not so much the precise overall numbers for each storm but the relationship of storms to each other over time. We discuss this in Pielke et al. (2000).
3. We have done extensive work with flood loss data also collected by the US NWS (a much moe involved database) and feel that we understand the strengths and limitations of such datasets (see Downton and Pielke 2005)
There are of course considerable uncertainties in the data, and I believe that there is a significant possibility that pre-1950 losses err on the side of being too small when compared to post-1950 where data collection was more comprehensive. We continue to look at the data.
So bottom line, yes we think that this analysis provides a useful but not perfect way to look at trends in hurricane losses over a long time period.
Posted by: Roger Pielke Jr. at December 7, 2005 07:50 AM
Hurricanes existed during thousands of milleniums, but the recent events are also a result of pollution and global warming. I would vote for a law of a dramatic tax decrease for those who don't pollute our planet. What's the use calculating if the situation is gonna get worse and worse?
Posted by: Linda at December 7, 2005 09:13 AM
Storm is the way the nature shows us who is the master and who is the slave. We just need to be more carefull to the nature
Posted by: Eugene at December 7, 2005 11:10 AM
Posted by: John Vermylen at December 7, 2005 10:04 PM
Hi John- Thanks for the feedback. My purpose with the AGU talk was to provide an overview of the methodology and preliminary data involved with our comprehensive update and extension of Pielke and Landsea (1998). You are of course right that one of the of the applications of this methodology is to provide a sensitivity analysis of the relative roles of societal versus climate factors in future damages. And I'd agree strongly with your assertion that there is a lack of general understanding of the overwhelming dominance of societal factors in trends and projections of disaster losses. So perhaps I should have discused this more explicitly. But to develop that argument requires a few more steps (like discussing an actual sensitivity analsyis) which this time I decided to sacrifice in favor of the more detailed focus on the dataset and the methods, which, climate change aside, are also quite relevant to understanding catastrophe models and hurricane policies more generally. I am sure that as we write up the analysis over the next few months we will discuss the significance of this analysis for all three of these policy areas.
Posted by: Roger Pielke Jr. at December 8, 2005 06:23 AM
"By all means let us not discuss the slight detail of the utter technical infeasibility of this concept."
What concept? The concept of reducing hurricanes by two Saffir-Simpson categories?
If so, on what do you base your opinion of "utter technical infeasibility"? How many years/months have you studied the concept?
What ways have you identified, that you've rejected as "utterly technically infeasible"?
What is your background, such that you think you are qualified to judge what is or is not "technically feasible" in this area?
Posted by: Mark Bahner at December 8, 2005 05:41 PM
Hugh writes, "My argument is not that a system *demonstrated* as reliable may well result in ‘wins’ for the developers of the system; I have always considered these to be amongst the ‘few’ destined to benefit from participation in the project."
Yes, and I can tell that really burns you up. The very thought that someone might actually make money from saving U.S. citizens hundreds of billions or even trillions of dollars (through decreased tax payments for federal payouts, and through decreased private payments for insurance and repair of uninsured damages), really annoys you.
Hugh continues, "It is that by imagining the ‘fault tree’ of potential problems in expecting 100% efficiency from this ‘device/system/whatever’ you must admit that it would be irresponsible not to continue to reduce vulnerability in less techno-centric ways e.g. through actual enforcement of mobile home building codes and planning laws?"
I'm curious, Hugh. It appears you live in the U.K. What do you know about "actual enforcement of mobile home building codes and planning laws" in the United States? Do you know of any “mobile home building code” or “planning law” that is not enforced in the U.S.? If so, which code or law is not being “actually enforced,” and where?
“I’m just concerned I guess that an optimistic bias could creep into the development decisions of certain city authorities, whereby it would be considered appropriate, now that a device/system/whatever is ‘on the way’, to only build to standard of protection for a Cat 3 storm…”
I don’t know if you’ve looked at a map of the U.S. Gulf Coast and East Coast lately, Hugh, but suffice it to say that there are quite a number of cities from Brownsville, Texas to Miami, Florida (Gulf Coast) and Miami, Florida to East Port, Maine (East Coast). Now, maybe you think Corpus Christi, Galveston, Houston, New Orleans, Mobile, Miami, Tampa, Jacksonville, Savannah, Charleston, Wilmington, Virginia Beach, etc. etc. should all pay (and be paid) to take measures to withstand a Category 5 hurricane…even if a system exists such that Category 5 hurricanes will almost certainly not happen. But it takes a lot of money to do that for the 1600 miles of the U.S. Gulf Coast, and the 2100 miles of the U.S. East Coast. Maybe you think it’s less expensive to do that than to develop and deploy a system that ensures that a Category 4 or 5 hurricane doesn’t hit either of those coasts. If so, I’d like to see your estimates of costs for those two options.
Hugh continues, “Whatever the strength of the ‘tamed’ energy that makes landfall there are always going to be those who lose, whether it is due to a barge slipping its mooring and breeching a levee or because 4 nails have been used to secure roofing panels rather than 36.”
Again, I’d like to see your cost estimates for “tamed” versus “untamed” hurricanes. Roger Pielke Jr. has already made an estimate that, if the 1926 Great Miami hurricane were to hit Miami, FL in 2020, the cost would be $500 BILLION dollars (in year 2004 dollars). Are you saying that if that hurricane was reduced to a Category 2 hurricane, that there would not be a huge reduction in cost (i.e., over $200 billion for that one hurricane)?
I’d like to see your cost estimates. Or don’t you have any?
“However, it is my opinion (which I assume you’ll agree I’m entitled to) that in the discontinuance of Project Stormfury a message was sent (whether heard or not) that adaptation in the path of certain natural hazards is more practical and achievable than is macro-scale climatic engineering.”
I agree that you’re entitled to your opinion, even if it's wrong, and based primarily on ignorance. I hope you agree that I'm entitled to an opinion of your opinion. My opinion is that you probably have never had your life or property, or the life or property of any of your close relatives or friends, endangered by a strong hurricane.
Hugh concludes, “Just as an aside I quickly realised that my idea for hurricane intensity reduction was doomed to failure by your initial reward criteria. Refrigeration filament stretched across the surface of the Atlantic sounded to me an ideal solution, until I analogized it to drift net fishing, which as we all know is an industrial tool that does the oceans’ cetaceans and sea birds no favours at all.”
Well, that’s where a brainstorming session might help. Someone might think of the idea of mounting those refrigeration coils aboard the bottoms of barges, and having the barges travel across the ocean like teams of lawnmowers mowing a baseball outfield. That would eliminate the danger of whales getting caught in the coils.
Who knows what ideas could be developed, until such a brainstorming session is tried? I wonder if such brainstorming sessions, followed by technical and economic analyses of all options identified, were conducted before Project Stormfury?
My guess is that answer is "no." If so, it's very unfortunate. The concept of reducing hurricane strengths (and those of cyclones/typhoons), rather than simply cleaning up afterword, seems to me to be worthy of multiple international conferences, with literally hundreds of possible solutions identified, and analyzed for technical and economic feasibility. Category 3, 4, and 5 hurricanes (cyclones/typhoons) are clearly a worldwide problem, and will probably cause over a trillion dollars in damage over the next few decades.
Posted by: Mark Bahner at December 8, 2005 06:24 PM
From today's NYT:
Posted by: Roger Pielke Jr. at December 11, 2005 08:34 AM