Economic losses from hurricanes cannot be nationally offset under unabated warming

Abstract

Tropical cyclones range among the costliest of all meteorological events worldwide and planetary scale warming provides more energy and moisture to these storms. Modelling the national and global economic repercussions of 2017’s Hurricane Harvey, we find a qualitative change in the global economic response in an increasingly warmer world. While the United States were able to balance regional production failures by the original 2017 hurricane, this option becomes less viable under future warming. In our simulations of over 7000 regional economic sectors with more than 1.8 million supply chain connections, the US are not able to offset the losses by use of national efforts with intensifying hurricanes under unabated warming. At a certain warming level other countries have to step in to supply the necessary goods for production, which gives US economic sectors a competitive disadvantage. In the highly localized mining and quarrying sector—which here also comprises the oil and gas production industry—this disadvantage emerges already with the original Hurricane Harvey and intensifies under warming. Eventually, also other regions reach their limit of what they can offset. While we chose the example of a specific hurricane impacting a specific region, the mechanism is likely applicable to other climate-related events in other regions and other sectors. It is thus likely that the regional economic sectors that are best adapted to climate change gain significant advantage over their competitors under future warming.

Economic Impacts of Tropical Cyclone‐Induced Multiple Hazards in China

“…A single hazard of TCs may underestimate the realistic consequences, as further compounding effects may arise due to the increasing compound hazards of TCs (Bakkensen et al., 2018). Furthermore, most studies have focused on devastative mega cyclones causing huge economic losses, such as Harvey (Middelanis et al., 2022; Shughrue et al., 2020) and Sandy (Strauss et al., 2021), but few have uncovered the overall macroeconomic impact channels of all TCs. It is challenging to capture the impact of the simultaneous occurrence of TC precipitation, winds and storm surges on different economic sectors.…”

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Given the unprecedented rates of climate change (Masson-Delmotte et al, 2018;Neukom et al, 2019), the importance of assessing the damage to society from extreme weather events has grown because of their expected dramatic increase in intensity and extent (Mendelsohn et al, 2012;Middelanis et al, 2022;Patricola & Wehner, 2018). Tropical cyclones (TCs), one of the costliest and deadliest extreme hazards (Geiger et al, 2016;Grinsted et al, 2019), are intensely destructive and often accompanied by heavy precipitation, strong winds, and severe storm surges at the same time (Bakkensen et al, 2018;Gori et al, 2022).

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Stressed economies respond more strongly to climate extremes

“…Similar knock-on effects occur in response to climate extremes, whereby local production losses from disasters propagate along supply chains and cause additional indirect losses [8]. At the same time, unaffected production sites in the economic network can also flexibly mitigate direct production losses of individual disasters to a certain extent [25]. This becomes less viable in a situation of global economic stress like the pandemic, thus likely affecting indirect repercussions of local economic shocks due to climate extremes.…”