The US Federal Emergency Management Agency (FEMA) is running out of money!
So far this year, ten weather disasters have each caused over a billion dollars of damage in the United States. This beats the record set in 2008, when there were nine. FEMA now has less than a billion dollars in its fund:
• Brian Naylor, Costs Of Irene Add Up As FEMA Runs Out Of Cash, Morning Edition, National Public Radio, 30 August 2011.
Let’s review these disasters:
10) Hurricane Irene, August 27-28: A large and powerful Atlantic hurricane that left extensive flood and wind damage along its path through the Caribbean, the east coast of the US and as far north as Atlantic Canada. Early estimates say Irene caused $7 billion in damages in the US.
9) Upper Midwest flooding, summer: An above-average snowpack across the northern Rocky Mountains, combined with rainstorms, caused the Missouri and Souris rivers to swell beyond their banks across the Upper Midwest. An estimated 11,000 people were forced to evacuate Minot, N.D. Numerous levees were breached along the Missouri River, flooding thousands of acres of farmland. Over $2 billion in damages.
8) Mississippi River flooding, spring-summer: Persistent rainfall (nearly triple the normal amount in the Ohio Valley), combined with melting snowpack, caused historical flooding along the Mississippi River and its tributaries. At least two people died. $2 to $4 billion in damages.
7) Southern Plains/Southwest drought, heat wave and wildfires, spring and summer: Drought, heat waves, and wildfires hit Texas, Oklahoma, New Mexico, Arizona, southern Kansas, western Arkansas and Louisiana this year. Wildfire fighting costs for the region are about $1 million per day, with over 2,000 homes and structures lost by mid-August. Over $5 billion in damages so far.
6) Midwest/Southeast tornadoes, May 22-27: Central and southern states saw approximately 180 twisters and 177 deaths within a week. A tornado in Joplin, Mo., caused at least 141 deaths—the deadliest single tornado to strike the United States since modern record keeping began in 1950. Over $7 billion in damages.
5) Southeast/Ohio Valley/Midwest tornadoes, April 25-30: This outbreak of tornadoes over central and southern states led to 327 deaths. Of those fatalities, 240 occurred in Alabama. The deadliest of the estimated 305 tornadoes in the outbreak was an EF-5 that hit northern Alabama, killing 78 people. Several big cities were directly affected by strong tornadoes, including Tuscaloosa, Birmingham and Huntsville in Alabama, and Chattanooga in Tennessee. Over $9 billion in damages.
4) Midwest/Southeast tornadoes, April 14-16: An outbreak over central and southern states produced an estimated 160 tornadoes. Thirty-eight people died, 22 of them in North Carolina. Over $2 billion in damages.
3) Southeast/Midwest tornadoes, April 8-11: An outbreak of tornadoes over central and southern states saw an estimated 59 tornadoes. Over $2.2 billion in damages.
2) Midwest/Southeast tornadoes, April 4-5: An outbreak of tornadoes over central and southern states saw an estimated 46 tornadoes. Nine people died. Over $2.3 billion in damages.
1) Blizzard, Jan 29-Feb 3: A large winter storm hit many central, eastern and northeastern states. 36 people died. Over $2 billion in damages.
I got most of this information from this article, which was written before Irene pushed 2011 into the lead:
• Brett Israel, 2011 ties for most billion-dollar weather disasters, Our Amazing Planet, 18 August 2011.
We can expect more weather disasters as global warming proceeds. The National Academy of Sciences says:
• Increases of precipitation at high latitudes and drying of the already semi-arid regions are projected with increasing global warming, with seasonal changes in several regions expected to be about 5-10% per degree of warming. However, patterns of precipitation show much larger variability across models than patterns of temperature.
• Large increases in the area burned by wildfire are expected in parts of Australia, western Canada, Eurasia and the United States.
• Extreme precipitation events—that is, days with the top 15% of rainfall—are expected to increase by 3-10% per degree of warming.
• In many regions the amount of flow in streams and rivers is expected to change by 5-15% per degree of warming, with decreases in some areas and increases in others.
• The total number of tropical cyclones should decrease slightly or remain unchanged. Their wind speed is expected to increase by 1-4% per degree of warming.
Some people worry about sea level rise, but I think the bite from weather disasters and ensuing crop failures will hurt much more, much sooner.
Since it doesn’t look like politicians will do enough to cut carbon emissions, insurance companies are moving to act on their own—not to prevent weather disasters, but to minimize their effect:
Swiss Re’s global headquarters face Lake Zurich, overlooking a small yacht harbor. Bresch and a colleague, Andreas Schraft, sometimes walk the 20 minutes to the train station together after work, past more yachts, an arboretum, and a series of bridges. In September 2005, probably on one of these walks, the two began to discuss what they now call “Faktor K,” for “Kultur”: the culture factor. Losses from Hurricanes Katrina, Rita, and Wilma had been much higher than expected in ways the existing windstorm models hadn’t predicted, and it wasn’t because they were far off on wind velocities.
The problem had to do more with how people on the Gulf Coast were assessing windstorm risk as a group. Mangrove swamps on the Louisiana coast had been cut down and used as fertilizer, stripping away a barrier that could have sapped the storm of some of its energy. Levees were underbuilt, not overbuilt. Reinsurers and modeling firms had focused on technology and the natural sciences; they were missing lessons from economists and social scientists. “We can’t just add another bell and whistle to the model,” says Bresch, “It’s about how societies tolerate risk.”
“We approach a lot of things as much as we can from the point of statistics and hard data,” says David Smith, head of model development for Eqecat, a natural hazards modeling firm. “It’s not the perfect expression.” The discrepancy between the loss his firm modeled for Katrina and the ultimate claims-based loss number for his clients was the largest Smith had seen. Like others in the industry, Eqecat had failed to anticipate the extent of levee failure. Construction quality in the Gulf states before Katrina was poorer than anticipated, and Eqecat was surprised by a surge in demand after the storm that inflated prices for labor and materials to rebuild. Smith recognizes that these are questions for sociologists and economists as well as engineers, and he consults with the softer sciences to get his models right. But his own market has its demands, too. “The more we can base the model on empirical data,” he says, “the more defendable it is.”
After their walk around the lake in 2005, Swiss Re’s Bresch and Schraft began meeting with social scientists and laying out two goals. First, they wanted to better understand the culture factor and, ultimately, the risks they were underwriting. Second, they wanted to use that understanding to help the insured prevent losses before they had to be paid for.
The business of insurers and reinsurers rests on balancing a risk between two extremes. If the risk isn’t probable enough, or the potential loss isn’t expensive enough, there’s no reason for anyone to buy insurance for it. If it’s too probable and the loss too expensive, the premium will be unaffordable. This is bad for both the insured and the insurer. So the insurance industry has an interest in what it calls “loss mitigation.” It encourages potential customers to keep their property from being destroyed in the first place. If Swiss Re is trying to affect the behavior of the property owners it underwrites, it’s sending a signal: Some behavior is so risky that it’s hard to price. Keep it up, and you’ll have no insurance and we’ll have no business. That’s bad for everyone.
To that end, Swiss Re has started speaking about climate risk, not climate change. That the climate is changing has been established in the eyes of the industry. “For a long time,” says Bresch, “people thought we only needed to do detailed modeling to truly understand in a specific region how the climate will change. … You can do that forever.” In many places, he says, climate change is only part of the story. The other part is economic development. In other words, we’re building in the wrong places in the wrong way, so wrong that what we build often isn’t even insurable. In an interview published by Swiss Re, Wolf Dombrowsky, of the Disaster Research Center at Kiel University in Germany, points out that it’s wrong to say that a natural disaster destroyed something; the destruction was not nature’s fault but our own.
In 1888 the city of Sundsvall in Sweden, built of wood, burned to the ground. A group of reinsurers, Swiss Re among them, let Sweden’s insurers know there was going to be a limit in the future on losses from wooden houses, and it was going to be low. Sweden began building with stone. Reinsurance is a product, but also a carrot in the negotiation between culture and reality; it lets societies know what habits are unsustainable.
More recently, the company has been working with McKinsey & Co., the European Commission, and several environmental groups to develop a methodology it calls the “economics of climate adaptation,” a way to encourage city planners to build in a way that will be insurable in the future. A study of the U.K. port of Hull looks at potential losses by 2030 under several different climate scenarios. Even under the most extreme, losses were expected to grow by $17 million due to climate change and by $23 million due to economic growth. How Hull builds in the next two decades matters more to it than the levels of carbon dioxide in the air. A similar study for Entergy (ETR), a New Orleans-based utility, concluded that adaptations on the Gulf Coast—such as tightening building codes, restoring wetlands and barrier islands, building levees around chemical plants, and requiring that new homes in high-risk areas be elevated—could almost completely offset the predicted cost of 100-year storms happening every 40 years.
I actually disagree somewhat with the statement “it’s wrong to say that a natural disaster destroyed something; the destruction was not nature’s fault but our own.” There’s some truth to this, but also some untruth. The question of “fault” or “blame” is a slippery one here, and there’s probably no way to completely settle it.
Is it the “fault” of people in Vermont that they weren’t fully prepared for a hurricane? After all, it’s rare—or at least it used to be rare—for hurricanes to make it that far north. The governor of Vermont, Peter Shumlin, recently said:
I find it extraordinary that so many political leaders won’t actually talk about the relationship between climate change, fossil fuels, our continuing irrational exuberance about burning fossil fuels, in light of these storm patterns that we’ve been experiencing.
We had storms this spring that flooded our downtowns and put us through many of the same exercises that we’re going through right now. We didn’t used to get weather patterns like this in Vermont. We didn’t get tropical storms. We didn’t get flash flooding.
We in the colder states are going to see the results of climate change first. Myself, Premier Charest up in Quebec, Governor Cuomo over in New York, we understand that the flooding and the extraordinary weather patterns that we’re seeing are a result of our burnings of fossil fuel. We’ve got to get off fossil fuels as quickly as we know how, to make this planet livable for our children and our grandchildren.
On the other hand, you could say that it is the fault of Vermonters, or at least humanity as a whole, for causing global warming in the first place.
But ultimately, pinning blame on someone or something is less important than figuring out how to solve the problems we face.