The Economic Consequences of Climate Change
What are the chances that three Category 4 hurricanes crashing into the United States within days of each other, and extreme flooding in South Asia, are unrelated to each other, and independent of global warming? Well, you don’t have to be a meteorologist to know that the chances are less than desirable.
This year’s hurricane season has given rise to several monstrous storms that have displaced millions in the U.S and in Caribbean countries. Hurricane Harvey alone dropped a staggering 27 trillion gallons of water in Louisiana and Texas, breaking the record for most rainfall in the continental US. It caused the deaths of at least 70 people, along with billions of dollars in damage. Without reprieve, Hurricane Irma slammed into the Caribbean and U.S. Gulf Coast, claiming another 60 lives while devastating millions more. Then, even though Puerto Rico was still recovering from the aftermath of Irma, Hurricane Maria barreled through and brought down the entire island’s power grid, creating a massive humanitarian crisis. On the other side of the world, historic monsoons are enveloping South Asian countries and wiping out the homes of thousands of families. Deaths in India, Pakistan, Bangladesh, and Nepal are reaching as high as 1,300, with 30 to 40 percent reportedly children. These floods are the worst the region has experienced in 40 years, and it is the beginning of a progression in worsening floods and tropical storms worldwide. Global warming’s rising momentum only promises worser natural disasters, and with it enormous economic costs for world governments.
It’s too soon to know with certainty the economic consequences of Hurricanes Harvey and Irma, however economists estimate the direct damage is upwards to $200 billion and $150 billion respectively. The prolonged disruptions to local businesses and damage to infrastructure, transportation, and property have left thousands of people unemployed, which is beginning to seep into the national unemployment rate. Meanwhile, Hurricane Maria’s blow to Puerto Rico’s already struggling economy is estimated to be around $55 billion in property damage and $40 billion in lost economic output. 3.5 million Americans will be without power for weeks, lacking basic amenities, like access to food and water. These levels of pervasive direct damage caused from the storms will have severe economic repercussions for local economies in the years to come. For instance, the current rising unemployment, damage to infrastructure, and crop losses in Puerto Rico and along the Gulf Coast will surely burden those economies for who knows how long.
Fortunately, glimpses of how economic development will recover after these storms can be gleaned by analyzing the post-disaster periods of catastrophic storms from the past; New Orleans, for example, still hasn’t entirely recovered after Katrina in 2005. Twelve years after the disastrous hurricane, the city’s population is still 20% less than it was pre-Katrina, and it is unlikely that it will ever rebound from the dramatic exodus anytime soon. Thus, similar emigration from Houston, Puerto Rico, and parts of Florida can also be expected after Harvey and Irma. Reports detailing the economic consequences of the South Asian floods are lacking, however, estimates can be gauged. Nepal’s poorest areas, which mostly consists of farmland where the majority of families depend on subsistence farming, were directly impacted by flooding; 2.4 million hectares of cropland were lost to floods, raising concerns for food shortages. In Bangladesh, a third of its land is underwater, raising similar agricultural concerns. Meanwhile, cities in Pakistan, India, and across South Asia have lost power and risk developing public health issues from exposure to contaminated rain water. Overall, total economic damage is estimated to be in the hundreds of millions.
These storms and flood surges are among the worst disasters recorded, however the battle has only begun; sea temperatures and levels are only getting higher, inevitably generating stronger storms. Climate change’s threat grows by the day, and if world leaders choose to neglect what little time we have to prepare, consequences will be catastrophic. Governments around the world risk losing billions in economic growth due to the effects of global warming; a reported $1.8 billion dollars will be lost from the world economy by 2030 in lost productivity due to rising temperatures alone, to say nothing of rising sea levels. Across South Asia, where a fourth of the world’s population lives, floods are estimated to cost upwards to $215 billion dollars each year by 2030, which will also impact international companies that use raw products from the region. Moreover, these issues will only worsen tropical storms endangering coastal cities and promise more forest fires, threatening lives, wildlife, and property. In other words, no corner will be left untouched by the consequences of global warming.
What is to be done? On top of significantly scaling back our dependence on fossil fuels, a complete restructuring of how governments plan infrastructure is necessary. The design of most cities fail to take into account risk to natural disasters, jeopardizing sustainable security from inevitable future disasters; thus, engineering resilient infrastructure is the best long-term solution. For example, the reason flooding is as disastrous as it is in Southeast Asia is because of the design of cities, or the lack of it; slums and shoddy settlements across the region and its 130 million inhabitants stand to lose the most if adapting to global warming is put off any longer.
Fortunately, countries like India, Nepal, and Bangladesh are investing in city infrastructure resilient to climate change; other countries are considering similar solutions, such as elevating houses and the construction of new levee systems. Similarly, Puerto Rico can seize the opportunity to modernize their energy infrastructure towards a reliance of solar and wind energy. It is time to adapt to the new normal of extremes, in a pronounced endeavor to protect the livelihoods of all in this generation, and the next.