By Conor Dougherty
Society has become better at coping with floods, fires and other disasters, yet the damage from hurricanes is generally worse now than in previous generations, according to an oft-cited 2005 paper on the economic effects of hurricanes by Yale economics professor William Nordhaus. That’s a troubling development, given that the number and intensity of hurricanes has risen in recent decades.
“We appear to have become more vulnerable to hurricanes, all other things being equal,” said Mr. Nordhaus in an interview.
Mr. Nordhaus’s paper uses data from 233 hurricanes that have made landfall in the U.S. from 1900 to 2008 and creates gauges for measuring how economic losses increase in proportion to the intensity of a given storm. One surprising finding was that hurricane damage grows substantially with even modest increases in wind-speed beyond hurricane velocity (above 74 mph). For example, according to Mr. Nordhaus’s calculations, a hurricane with sustained winds of 108 mph would do roughly twice the damage as a hurricane with sustained winds of 100 mph. (This finding was doubted when Mr. Nordhaus published his paper, as other work on hurricanes had assumed that higher winds increased damages by a much smaller factor.) “There is a tremendous amplifier effect in these kinds of storms,” he said.
That’s good news for New York, as Irene has been downgraded to a tropical storm with winds around 65 mph. Forecasters have speculated that the most substantial damage may come from flooding.
It’s not precisely clear why hurricane damages rise so fast, but Mr. Nordaus believes it is most likely just physics. Take trees, for instance. The wind blows and trees bend. It blows a little harder and they wag, maybe even break a window. The wind blows harder and trees start to break – and suddenly the cost rises to several broken windows, a trashed car, blocked roads and a broken tree that some person or agency has to haul away.
Of course, it’s worth noting that over time the economic damage from hurricanes is often made up as government aid and insurance payments flow in. For instance, Hurricane Katrina, which hit in August 2005 and was by far the most costly natural disaster in recent history, resulted in $140 billion in damage and lost output, according to data from Moody’s Analytics and the Insurance Information Institute. But over the following months and years, businesses, residents and governments in the area collected a total $149.2 billion in aid and insurance payouts.