The $9.7 Trillion Problem: Cyclones and Climate Change

Hurricane Sandy Debris Breezy Point — This image shows Hurricane Sandy debris and parts of destroyed houses in Breezy Point on Nov. 12, 2012 in the Queens, N.Y.

(Image credit: MISHELLA / Shutterstock.com)

You can do a lot with $9.7 trillion: buy all the real estate in Manhattan 12 times over, purchase 22 carbon copies of Apple, or an absurd quantity of apples.

It’s also the amount of money that tropical cyclones could cost the global economy over the next century, especially if climate projections of fewer but more intense cyclones are accurate. In comparison to those losses, the cost of action to reduce emissions and beef up coastal preparedness is relatively cheap say researchers.

Humanity and cyclones are no strangers to each other. Roughly 35 percent of the world’s 7 billion people are in the path of cyclones and coastal populations are expected to swell in the coming century. To understand the future damage that cyclones could inflict on ever-growing coastal cities, two researchers looked at 60 years of cyclone and economic data in a recent National Bureau of Economic Research study.

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They found that cyclones — known as hurricanes or typhoons depending on the ocean basin in which they form — left lasting impacts on the economies of the countries they hit. In the case of major events, such as 1-in-100 year storm like Hurricane Ivan in 2004, the impacts were worse and longer-lasting than a full-blown financial crisis. If that sounds shocking to you, you’re not the only one who felt that way.

Looking at “lost growth” gives a compelling snapshot of what our world could look like if we lived on a cyclone-free planet. Japan and the Philippines top the list of countries with the most exposure to cyclones. They also happen to have some of the most sluggish growth rates in Asia, but in a world without cyclones, their growth rates would have been on par with China, which has had some of the most torrid growth rates in Asia. The numbers also underscore how cyclones are just one among many factors — from policy to natural disasters to technology advancements — that can affect economic growth.

Kerry Emanuel, a hurricane researcher at MIT, said the study presented a “reasonable model” of accounting for wind speeds at different locations around the world, though he questioned how they arrived at the specific number of cyclones since data before 1980 — the advent of the satellite era — is less reliable. He suggested around 5,300 cyclones would be a more accurate number to work with.

Factoring in those changes, Jina and Hsiang estimate that the cost of cyclones to future generations could total $9.7 trillion by 2090. Countries in the northwest Pacific basin stand to lose the most, with 8 of the 10 biggest losers in that region including Japan, China, South Korea and Taiwan as the most exposed countries. The U.S. ranks fifth, with cyclone activity causing a nearly $900 billion hit on the country’s GDP through 2090.

The U.S. government currently estimates that a ton of carbon emitted today has a social cost of $37, a number that rises each year as the world gets richer and more infrastructure and people are at risk of the detrimental impacts of climate change. Those costs could, in theory, help set up a policy to reduce carbon emissions, such as a cap-and-trade system. Many, including Howard, have argued that the $37 figure is far too low, and the new study only adds to the argument that inaction on climate change could be an expensive proposition.

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