Books
Plan B Updates
Book Bytes
Eco-Economy Indicators
Data Highlights
Plan B Documentary
Translations

Part 1. Facing the Climate Challenge: The Rising Costs of Climate Change

The benefits of burning fossil fuels are well known, but there are also enormous costs, many of which will be levied on future generations. Among these are changes in temperature that result in more destructive storms, rising seas, and crop-withering heat waves. More destructive storms are the product of the higher water surface temperatures, particularly in the tropical and subtropical regions, where hurricanes (typhoons in the Pacific) originate. These higher temperatures mean more energy is released into the atmosphere to drive storm systems. Rising global temperatures also mean rising seas from both thermal expansion and ice melting. Crop-withering heat waves are often accompanied by drought, with the two reinforcing each other.

At the end of 2001, Munich Re, the world’s largest reinsurer (a company that helps spread risk among the various insurance companies), compiled a list of all natural catastrophes on record with insured losses of $1 billion or more. (See Table 1–7.) The first such disaster came in 1983, when Hurricane Alicia racked up $1.3 billion worth of insured damages in the United States. By the end of 2001, the list of catastrophes with insured damages of $1 billion or more had reached 34. Of these, 32 were storms, floods, and other atmospherically related events. The other two were earthquakes.

Insured damage from storms is rising for four reasons. One, more property is covered by insurance today than in the past. Two, the value of the property (as measured in dollars) has increased. Three, there is more building in coastal regions, on river floodplains, and in other high-risk areas. And four, storms are both more frequent and more powerful.

In the last 15 years, Europe has experienced a greater frequency of highly destructive winter storms. From 1987 to 2001 the continent was battered by eight storms with insured damage of $1 billion or more. The first, in 1987, led to $3.1 billion in insured losses. In 1990 there was a clustering of four storms with damages ranging from $1.3 billion to $5.1 billion. Lothar, one of three storms to hit Europe in the winter of 1999, had insured losses of $5.9 billion and total losses of $11.5 billion, making it the most costly storm on record in Europe. Until recently, such destructive storms had been largely confined to the hurricane belt. 7

The most destructive storm on record, Hurricane Andrew, struck Florida in 1992, racking up $17 billion in insured losses and an estimated $30 billion in total losses. Damage from this storm sent seven local insurance companies into bankruptcy. Climate analyst Jeremy Leggett points out that if Hurricane Andrew had struck land 20 miles further north, hitting Miami, total losses could have reached $75 billion. In second place among tropical storms in damages is Typhoon Mireille, which hit Japan in 1991. It caused $5.4 billion in insured damage and left Japan with a total bill of $10 billion. 8

One of the most destructive floods on record hit China’s Yangtze River basin during the summer of 1998. Although insured damage was barely $1 billion, total damage was calculated at $30 billion, and this did not include the indirect costs associated with the resultant economic disruption. This extensive flood, which lasted for several weeks and directly affected 120 million of the 400 million people living in the Yangtze River basin, came close to destabilizing the Chinese economy as riverside factories were forced to close until the floodwaters receded. 9

The insurance industry is concerned about the effect of global warming on storm intensity. As early as 1990, Munich Re observed, “If water temperatures increase by 0.5 to 1 degrees Celsius in the course of the next few decades, we can expect an extension of the hurricane season by several weeks and a considerable increase in the frequency and intensity of hurricanes....A warmer atmosphere and warmer seas result in greater exchange of energy and add momentum to the vertical exchange processes so crucial to the development of tropical cyclones, tornadoes, thunderstorms, and hailstorms.” Trends over the last decade have borne out their concerns. In May 1991 the strongest cyclone on record for the twentieth century wrought death and destruction in Bangladesh, leaving 139,000 dead. 10

The same increase in temperature that leads to more frequent, more powerful storms is also raising sea level. Higher temperatures lead to ocean thermal expansion and ice melting. These two trends, both contributing to rising sea level, are creating a new set of challenges that will not be limited to coastal communities. Attempting to cope with rising sea level will place serious financial burdens on coastal countries. Inland communities will be crowded with refugees from areas that are no longer habitable. Food production will be affected. The loss of output as rice-growing river deltas and floodplains are inundated and as local populations expand could lead to a worldwide shortage of rice.

Few countries have researched extensively the effect of rising seas on their economies and population distribution. A World Bank report concludes that a 1-meter sea level rise would inundate half of Bangladesh’s riceland. For a country with 133 million people projected to reach 209 million by 2050, the prospect of losing half of its rice harvest is not a pleasant one. 11

Other Asian countries where rice is grown on low-lying river floodplains include China, India, Indonesia, Myanmar, the Philippines, South Korea, Thailand, and Viet Nam. For Asia, which produces 90 percent of the world’s rice and is home to over half its people, rising seas could mean rising rice prices. 12

Three countries—Thailand, Viet Nam, and the United States—account for two thirds of world rice exports that meet the needs of the 36 rice-importing countries. In these three, only U.S. rice production is relatively immune to the adverse effects of rising seas. The inundation of deltas and river floodplains in Thailand and Viet Nam could easily eliminate their exportable surpluses. Rising sea level has many agricultural consequences, but its potential effect on the world’s rice harvest is generating concern about climate change in Asia. 13

For the United States, which has a coastline of 20,000 kilometers (12,000 miles), a 1-meter rise in sea level—the upper end of the possible projected rise for this century—would inundate 35,000 square kilometers (13,000 square miles). The regions most affected would be the East Coast, from Massachusetts south to Florida, and the Gulf Coast, from Florida to Texas. Except for a few areas, such as the San Francisco Bay area, the West Coast has much steeper, coastal topographic profiles, which limits the damage and disruption from rising seas. 14

A study from several years ago indicates that even a half-meter rise in sea level would lead to damage and loss of U.S. coastal property totaling $20–150 billion. This figure is rising as the population in coastal counties, now 53 percent of the national total, increases. Unfortunately, growth is most rapid in coastal communities in the south, the region most vulnerable to rising seas and storm surges. 15

Among the low-lying cities that need to invest heavily in flood defenses in the event of a 1-meter rise in sea level are New Orleans, Miami, Washington, D.C., and New York. Who will bear the cost of building the fortifications against the sea: the cities or the federal government? Should cities begin accumulating funds in advance of potential inundation to ensure that they have the financial wherewithal to build the dams to hold out the sea? If coastal communities are abandoned, are the property owners responsible for dismantling the buildings in the areas that are being inundated? Or can they just leave them as ghost towns that will gradually break up over time as they are battered by the rising sea?

A 1-meter rise in sea level would create millions of refugees. In Bangladesh alone, tens of millions of people would be displaced. Would they move into the already overpopulated interior? Or would they try to migrate to Europe or to the less densely populated countries like the United States, Canada, Australia, Russia, and Brazil?

What will happen to the major coastal cities that could be partly inundated by a 1-meter rise in sea level, such as Shanghai? Again, will the central government finance the construction of fortifications to protect Shanghai from rising seas and storm surges, or must Shanghai fend for itself? These are questions with no easy answers. Will this generation’s legacy to future generations be millions of rising-sea refugees and mega-scale public works projects as coastal communities try to protect themselves from the rising sea level set in motion today?

Intense heat waves can exact a heavy toll in human suffering and even death. A heat wave with temperatures reaching 45 degrees Celsius (113 degrees Fahrenheit) in eastern India in May 2002 took 1,030 lives in the state of Andhra Pradesh alone. Many more died in West Bengal and other neighboring states. To the northwest, in Islamabad, Pakistan, the temperature on June 14 reached a searing 48 degrees Celsius (118 degrees Fahrenheit). 16

Heat waves can also devastate crops. In the summer of 1988, the United States experienced drought and crop-withering heat simultaneously in its midwestern agricultural heartland. Together they reduced the U.S. grain harvest below domestic consumption for the first time in history. 17

Fortunately for the more than 100 countries dependent on U.S. grain, the United States was able to satisfy domestic demand by drawing down its vast grain reserves. If such a shortfall were to occur in 2002, the world would be in trouble because the United States no longer has such extensive grain reserves. A similar harvest reduction would translate into reduced exports and in all likelihood a dramatic climb in world grain prices.

Climate change is now a global food security issue. Higher temperatures mean more extreme climate events. Whether they be droughts, heat waves, storms, or floods, all have the potential of disrupting production and destabilizing grain markets.

One of the difficulties in doing a cost-benefit analysis on the burning of fossil fuels is that those benefiting and those bearing the costs may live on opposite sides of the planet. The United States is the principal source of atmospheric carbon emissions from fossil fuel burning. Bangladesh, a low-lying country, may be one of the principal victims.

The costs and benefits of burning fossil fuels are also separated by time. The benefits from burning fossil fuels are immediate, but the more destructive storms or rising sea level caused by their use may lag by decades, generations, or even centuries. Fortunately, we can now gain the same benefits from more benign energy sources.

 

Table 1–7. Atmospherically Related Catastrophes with Over $1 Billion in Insured Losses through 2001
Year	Event	Location	Insured Losses	Economic Losses
			(billion dollars)	(billion dollars)
1983	Hurricane Alicia	United States	1.3	3.0
1987	Winter storm	Western Europe	3.1	3.7
1989	Hurricane Hugo	Caribbean, United States	4.5	9.0
1990	Winter Storm Daria	Europe	5.1	6.8
1990	Winter Storm Herta	Europe	1.3	2.0
1990	Winter Storm Vivian	Europe	2.1	3.2
1990	Winter Storm Wiebke	Europe	1.3	2.3
1991	Typhoon Mireille	Japan	5.4	10.0
1991	Oakland forest fire	United States	1.8	2.0
1992	Hurricane Andrew	United States	17.0	30.0
1992	Hurricane Iniki	Hawaii	1.6	3.0
1993	Snow storm	United States	1.8	5.0
1993	Flood	United States	1.0	16.0
1995	Hail	United States	1.1	2.0
1995	Hurricane Luis	Caribbean	1.5	2.5
1995	Hurricane Opal	United States	2.1	3.0
1996	Hurricane Fran	United States	1.6	5.2
1998	Ice storm	Canada, United States	1.2	2.5
1998	Floods	China	1.0	30.0
1998	Hail, severe storm	United States	1.4	1.8
1998	Hurricane Georges	Caribbean, United States	4.0	10.0
1999	Hail storm	Australia	1.1	1.5
1999	Tornadoes	United States	1.5	2.0
1999	Hurricane Floyd	United States	2.2	4.5
1999	Typhoon Bart	Japan	3.5	5.0
1999	Winter Storm Anatol	Europe	2.4	2.9
1999	Winter Storm Lothar	Europe	5.9	11.5
1999	Winter Storm Martin	Europe	2.5	4.0
2000	Typhoon Saomai	Japan	1.0	1.5
2000	Floods	United Kingdom	1.1	1.5
2001	Hail, severe storm	United States	1.9	2.5
2001	Tropical Storm Allison	United States	3.5	6.0
Source: Munich Re, Topics Annual Review: Natural Catastrophe 2001 (Munich, Germany: 2002), pp. 16–17.

 

ENDNOTES:
7. Munich Re, Topics Annual Review: Natural Catastrophes 2001 (Munich, Germany: 2002), pp. 16–17.

8. Jeremy Leggett, “The Emerging Response of the Insurance Industry to the Threat of Climate Change,” UNEP Industry and Environment, January–March 1994, p. 41; Munich Re, op. cit. note 7.

9. Munich Re, op. cit. note 7; Doug Rekenthaler, “China Survives Fourth Yangtze Flood Crest as Fifth Begins its Journey,” Disaster Relief, 11 August 1998; Munich Re, “Munich Re’s Review of Natural Catastophes in 1998,” press release (Munich: 19 December 1998); Erik Eckholm, “Chinese Leaders Vow to Mend Ecological Ways,” New York Times, 30 August 1998.

10. Munich Re quoted in Leggett, op. cit. note 8, p. 42.

11. World Bank, World Development Report 1999/2000 (New York: Oxford University Press, 2000), p. 100.

12. Rice exports from U.S. Department of Agriculture (USDA), Foreign Agricultural Service, Grain: World Markets and Trade, April 2002, p. 13; population from United Nations, World Population Prospects: The 2000 Revision (New York: February 2001).

13. USDA, op. cit. note 12.

14. U.S. coastal property damage from James E. Neumann et al., Sealevel Rise & Global Climate Change: A Review of Impacts to U.S. Coasts (Arlington, VA: Pew Center on Global Climate Change, 2000), pp. 4, 31.

15. Ibid.; coastal counties population from National Oceanic and Atmospheric Administration, State of the Coast Report, “Population: Distribution, Density, and Growth,” at <state-of-coast.noaa.gov/bulletins/html/pop_01/national.html>, viewed 25 June 2002.

16. “Heat Wave Deaths Top 1,000,” Associated Press, 23 May 2002; “India: Heat Toll Up to 760,” Agence France-Presse, 22 May 2002; Islamabad from World Weather Forecast, Washington Post, 15 June 2002.

17. USDA, Production, Supply, and Distribution, electronic database, Washington, DC, updated May 2002.

 

Copyright © 2002 Earth Policy Institute