The Economics of Hurricanes and Implications of Global Warming

This study examines the economic impacts of US hurricanes. The major conclusions are the following: First, there are substantial vulnerabilities to intense hurricanes in the Atlantic coastal United States. Damages appear to rise with the ninth power of maximum wind speed. Second, greenhouse warming is likely to lead to stronger hurricanes, but the evidence on hurricane frequency is unclear. We estimate that the average annual US hurricane damages will increase by 10 billion at 2005 incomes (0. 08 percent of GDP) due to global warming. However, this number may be underestimated by current storm models. Third, 2005 appears to have been a quadruple hurricane outlier, involving a record number of North Atlantic tropical cyclones, a large fraction of intense storms, a large fraction of the intense storms making landfall in the United States, and an intense storm hitting the most vulnerable high-value region in the country.