Measuring The Cost Extreme Weather Has On The Economy
DAVID GREENE, HOST:
It was really cold in much of the country last week, like, really cold. Thief River Falls, Minn., recorded -77 Fahrenheit one night. But how can you measure the costs of extreme weather? Stacey Vanek Smith and Cardiff Garcia from Planet Money's The Indicator podcast tell us what happens to the economy when it rains or hails or gets really cold outside.
CARDIFF GARCIA, BYLINE: North Dakota, South Dakota, Iowa and New Hampshire all saw temperatures in the negative double digits last week.
STACEY VANEK SMITH, BYLINE: The culprit - the infamous polar vortex. Basically, a weather system that is usually above the North Pole came here to visit us in the U.S.
GARCIA: Andreas Prein is a research scientist at the Center for Atmospheric Research. He studies extreme weather for a living. And he looks at the different impacts that the weather can have.
VANEK SMITH: What is the economic effect of extreme weather?
ANDREAS PREIN: It's really big.
GARCIA: He says climate change is causing more intense, big storms, like hurricanes.
VANEK SMITH: And these storms are more expensive than they used to be both because they're more intense and also because there are more people moving to areas that are affected by extreme weather - places like New York and Florida.
PREIN: The biggest economic effect in the U.S. is coming from hurricanes. So, for example, if you talk to insurance industry, they're most concerned about Atlantic hurricanes when they hit the East Coast.
GARCIA: Andreas says that 17 of the 20 most expensive and damaging cyclones that we've had have occurred in the last 20 years. He says that Hurricanes Katrina, Sandy, Harvey and Maria all caused between roughly $70 billion and $125 billion each in damages. That was in destroyed property, flood damage, businesses being suspended or even permanently closed in some cases. He says hurricanes have emerged as the most economically destructive form of extreme weather in the U.S.
PREIN: The second is really heatwaves and droughts. And, of course, it's also the deadliest of natural disasters, I have to say.
VANEK SMITH: Andreas says the drought cost nearly $3 billion in lost employment on farms, insurance claims and lost agricultural productivity. The next one on the list...
PREIN: Floods, I would say.
GARCIA: He says extreme rainfall in the Northeast has increased by about 70 percent in the last 70 years. Also, Andreas says, commercial insurance generally does not cover flooding. So those costs can fall to homeowners and business owners.
VANEK SMITH: Which brings us to the fourth most economically damaging extreme weather event.
PREIN: I would say severe convective storms.
VANEK SMITH: Convective - like with a V.
PREIN: With a V, yeah.
VANEK SMITH: Convective, OK.
PREIN: The interesting thing about severe convective storms is that they can cause tornado or large hail or very strong winds.
VANEK SMITH: Andreas says convective storms and the tornadoes and hail they bring with them cause more than $11 billion in damage every year.
PREIN: And that brings us to the fifth and final kind of extreme weather. Last, and, I guess, in this case, least - but it doesn't feel like that at the moment.
VANEK SMITH: Especially not with windchill.
GARCIA: No - cold weather. Andreas says that cold weather has a different kind of economic cost than storms. There's less property damage, but the cold is kind of like hitting an economic pause button.
VANEK SMITH: One estimate put the economic impact of the polar vortex at about $5 billion. And Andreas says as we see more and more extreme weather events, it will start to be a bigger drag on the economy and on taxpayers. That's everything from insurance losses to property damage to business disruption. Stacey Vanek Smith.
GARCIA: Cardiff Garcia, NPR News.
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