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  • Writer's pictureSteffan Willis

Econ Insights: Tropical cyclones are increasing in number, power and causing more damage

In this series we look at interesting data sets to uncover hidden insights,


Discussions of climate change to often get lost in abstractions. Yes, the average temperature has increased by 2-degrees since pre-industrial times but what does that mean in practical terms? One of the key predictions is that as the climate warms up and sea temperatures rise the number of hurricanes, typhoons and tropical storms will increase in number. This is exactly what we see in the data. However, the scale of the increase shocked me. Between 1900 and 1950 the 10-year moving average increased from 40 tropical cyclones per year to 63. The second half of the 20th century saw that number double to 124 per year. The past two decades have seen the average increase by a further 12 percent - 2018 was the first year in which there were more than 150 tropical cyclones in a single year.

Chart showing the number of tropical cyclones over time

How should we interpret this chart from an economic perspective. The most straightforward consideration is the direct cost of damage associated with major storms. This appears to be increasing, not only because there are more storms but also because storms are causing more damage suggesting that they are increasing in intensity.


The chart below shows the cost of damage caused by tropical cyclones in 2019 US dollars. There is a clear upward trend driven by the increasing frequency of extreme events. Hurricane Katrina in 2005 caused more than $125 billion dollars in damage. In 2012, Hurricane Sandy caused almost $70 billion of damage and there were a series of storms that caused considerable damage in Japan and the Philippines. The average annual cost of tropical cyclones is around $50 billion.


If we assume that the relationship between the rate of warming and the number of storms remains constant over the next 30 years, a reasonable assumption given the current state of emissions reductions and existing stocks of atmospheric carbon, then the number of storms is set to increase significantly. Extrapolating the rate of growth over the past 20 years results in a forecast of 200 storms per year, this rises to 220 if we use the annual increase over the past decade.


Whilst an extremely rough, back of the envelope estimate, if the current trends continue, tropical cyclones could regularly be causing more an $1 trillion dollars in damage by the middle of the century. At present hurricanes that form in the North Atlantic and hit the United States are the most economically costly. However, as cities in Asia continue to develop it is likely we will see increasingly costly events occurring in the Pacific and Indian Oceans.





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