Projecting The Economic Cost Of Hurricane Irene


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Hurricane Irene, currently slamming the Bahamas as a powerful category 3 hurricane and barreling toward Florida, has residents as well as state and local officials along much of the northeast coast of the U.S. scrambling to prepare for major storm damage over the next few days.Even New York City Mayor Michael Bloomberg has begun urging residents of the city’s low-lying areas to figure out a place to stay on higher ground. Bloomberg said he would make a decision by Friday night about whether or not to evacuate neighborhoods in several boroughs that lie along the water. New Jersey Governor Chris Christie told reporters Thursday that he was not yet issuing evacuation orders. But, he said, “if I do order [an evacuation], I expect it to be complied with.”

Weather forecasters say that by Saturday afternoon, Irene may strike the Outer Banks of North Carolina with winds of around 115 mph and wind gusts of up to 138 mph. Roughly 180,000 tourists and residents of coastal Dare County, N.C., were ordered to evacuate Thursday morning, while forecasters issued a hurricane watch for much of the state’s coast.

[See our photo gallery of this country’s costliest natural disasters.]

“If they’re telling us to go, we’re going,” one North Carolina resident told MSNBC on Thursday. As many as 55 million people up and down the densely populated eastern seaboard could be affected by Hurricane Irene.

“This is just not a storm we’ve seen anything like,” Jamie Tunnell of North Carolina’s Hyde County Emergency Services told MSNBC shortly after noon today.

In Virginia, 64 Navy ships began leaving their ports in Norfolk and other areas on Thursday to ride out the storm at sea, while emergency officials as far north as New England were urging residents in vulnerable areas to gather supplies and begin planning to move to safer locations. 

Economic Damage from Weather Events:  A Harsh Reality

While many of the worst storms to strike in recent years have done billions of dollars’ worth of damage along the East Coast and the Gulf of Mexico regions, globally the insured losses from weather events have jumped to an average $27 billion annually from $5 billion over the past 40 years, adjusted for inflation. Rising property values account for part of the increase, but a growing share is driven by the intensification and rising frequency of weather disasters, according to an assessment of insured property damage by Swiss Re, a Zurich-based reinsurance provider.

The National Oceanic and Atmospheric Administration (NOAA) predicted an above-average hurricane season for 2011 in the entire Atlantic basin. The low number of landfalls during last year’s hurricanes actually spared many locations from significant economic or physical damage in 2010. But “we can’t count on luck to get us through this [year’s] season,” said Jane Lubchenco, Ph.D., undersecretary of Commerce for oceans and atmosphere and NOAA administrator, in a statement.

Scientists who claim that global warming is responsible for more volatile weather across the country have said that weather emergencies may get worse over time. According to a recent report by the United States Global Change Research Program, precipitation has increased about 5 per cent nationwide over the past 50 years, and this trend will continue. Downpours are predicted to be heavier; heat waves and droughts will be more intense; hurricanes will be stronger; and cold season storms are “likely to become stronger and more frequent.”

Washington has steadily increased funding for climate-related work over the past decade, from $4 billion in 1998 to $7.5 billion in 2009, according to the Congressional Budget Office. Including one-time programs worth $35.7 billion as part of last year’s economic stimulus program, climate-focused funding totaled $99 billion from 1998 through 2009, in 2009 dollars. The bulk of Washington’s climate spending has been focused on scientific research and efforts to mitigate further increases in greenhouse gases, through development of alternative energy technologies.

Tornadoes in April of this year were only the latest blow to already-battered insurance-company reserves. The East Coast winter storms in January, flooding in southern California in December, wildfires in Texas, and heavy rains and hail in the Midwest added to the long list of recent catastrophes that insurance companies have had to pay for. “If you combine it, the winter storms that we’ve had and other things that have gone on earlier this year, it’s been a very active year, not only in the U.S., but worldwide,” said Don Griffin, vice president at Property Casualty Insurers Association of America. “This may cause a gradual increase in premiums.”

As experts follow Irene and local and state officials make decisions about emergency preparedness, it’s too soon to know precisely how much economic damage Irene might wreak. But homeowners and others are advised to make sure they have proper insurance coverage. It’s (unfortunately) worth remembering the enormous damage done by Hurricane Katrina in 2005, which still ranks as the costliest natural disaster in U.S. history. It was responsible for total property damage estimated at $81 billion (in 2005 dollars). The worst property damage in Katrina occurred in coastal areas. Mississippi beachfront towns were flooded by 90 per cent in mere hours, with waters reaching 6 – 12 miles from the beach. By comparison, there were roughly $38 billion in total damages done by Hurricane Andrew in 1992, including both property loss and reduced economic activity. 

This post originally appeared on The Fiscal Times.