Last weekend marked ten years since Hurricane Wilma struck Florida as a Category 3 storm on the Saffir-Simpson hurricane intensity scale. Wilma was the last major hurricane (categories 3, 4 and 5) to strike the U.S. Ten years is the longest span between major hurricane landfalls since 1851, exceeding the longest prior drought (1860-1869) by over a year.
The hurricane future appeared very different ten years ago. Global warming was allegedly making hurricanes more frequent and devastating, and hurricanes were going to get worse.
The busy 2004 and 2005 seasons certainly made hurricanes seem more frequent. The 2005 Atlantic season featured 28 named storms (we ran through our alphabet and had to use Greek letters as names) and 15 hurricanes, both records. Katrina devastated New Orleans and the Mississippi coast that year. Seven major and thirteen total hurricanes struck the U.S. in 2004-05.
Hurricanes also seemed more devastating than ever. Katrina caused $100 billion in damage (adjusted for inflation) and the highest U.S. death toll since 1928. At the end of 2005, 6 of the 8 costliest hurricanes on record had occurred in the previous two years. This part of the tale, however, was misleading.
Economists know to adjust historical dollar figures for inflation. But adjusting for inflation does not make damage from past and present hurricanes fully comparable. Increases in population and wealth mean that hurricanes have a lot more property to destroy now. Damage normalizations assuming that damage will increase proportionally with population and wealth per person provide more accurate comparisons. Normalizations provide an educated guess about the damage we could expect if past hurricanes occurred today.
Normalization dramatically increases the damage measured in past hurricanes. Consider the “Great Miami Hurricane” of 1926. Miami Beach has grown from a population of 644 in 1920 to 90,000 today, and is home to some very expensive real estate. Normalized damage from the Great Miami Hurricane exceeds $200 billion, or more than double Katrina’s total.
Once normalized, hurricane damage has not been increasing over time. Increases in population and property at risk, what researchers call societal vulnerability, explain rising damages. Societal vulnerability has increased significantly. The population of Atlantic and Gulf coast counties, for example, has increased from under 6 million in 1900 to almost 38 million in 2010. The value of insured property at risk from hurricanes now exceeds $10 trillion.
Societal vulnerability is not necessarily bad. The U.S. population has more than quadrupled since 1900, and people must live somewhere. Areas safe from hurricanes can face tornado, earthquake, or tsunami risk. Furthermore, Americans value living and vacationing near the ocean, while many industries must locate near the coast. We can now afford what previously would have been catastrophic losses. Coastal development is worthwhile as long as the value created exceeds the potential hurricane damage. The extra costs will be reflected in prices of rental or vacation properties, or goods like gasoline or chemicals.
Several government policies, however, subsidize hurricane losses and thus encourage development when the value created does not exceed the extra costs. The two most prominent policies are state homeowners insurance regulation and the National Flood Insurance Program. Both of these policies push some of the costs of insurance against hurricanes on to other Americans.
Does the U.S. hurricane drought prove that global warming is not occurring? Not necessarily. This past decade has witnessed some active Atlantic hurricane seasons, and Mexico has been hit be two Category 5 hurricanes, including Patricia this past weekend. The drought might just be luck.
And yet the hurricane drought, combined with the more than decade-long warming pause in satellite-measured temperature records, like the one maintained at the University of Alabama-Huntsville, should make us rethink global warming policy. The Clean Power Plan, for instance, will cost us hundreds of billions of dollars, and yield few benefits if warming is not as bad as climate models forecast. On the other hand, the U.S. will be hit by major hurricanes in the future regardless of whether the climate warms. Eliminating inefficient government policies will reduce the cost of hurricanes, and the damage avoided will escalate if global warming strengthens future hurricanes.
Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. Respond to him at dsutter@troy.edu and like the Johnson Center on Facebook.