Measures of Economic Impacts of Weather Extremes

Getting Better but Far from What Is Needed—A Call for Action

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One of the primary driving forces behind weather research and development has been the losses caused by weather extremes. Unfortunately, available loss values have been more qualitative than quantitative. There has never been a concerted, organized effort to collect and quality control economic impact data for weather extremes. Numerous studies have been made, resulting in widely varying estimates of losses, and these have been limited by 1) an inability to access certain types of loss data; 2) a lack of attention to indirect, delayed impacts, including benefits; and 3) diverse and inconsistent sources of loss data. Numerous problems have resulted from the poor estimates of loss and lack of understanding of the data uncertainties. Federal relief payments for major events have escalated partly as a result of insufficient data to detect and understand society's changing vulnerability to extremes. Controversies over relief payments for major damaging events have occurred as a result of imprecise loss estimates. The insurance industry suffered major storm-related losses in the 1990s because it lacked a database on weather-produced losses and was unable to anticipate time-shifting risks in setting rates. The absence of quality impact data has also led to questionable research priorities, and has generated incorrect perceptions in the public and media about the magnitude of impacts of events. The lack of precise loss values also limits adequate planning for future impacts, which is apt to lead to increased losses as society's vulnerability to extremes continues to increase. Recent pressures, including several major weather losses since 1988, and concern over the impacts of more extremes due to global warming, have led to better estimates of impacts. These pressures and government and insurance industry recognition of the need to better understand the ever-increasing costs have led to recent national assessments, calling for better impact data. The nation needs a continuing program to adequately measure losses from natural hazards and to maintain a quality database to guide government policies and private sector actions.

Changnon Climatologist, Mahomet, Illinois

CORRESPONDING AUTHOR: Stanley A. Changnon, Changnon Climatologist, 801 Buckthorn Circle, Mahomet, IL 61853, E-mail: schangno@uiuc.edu

One of the primary driving forces behind weather research and development has been the losses caused by weather extremes. Unfortunately, available loss values have been more qualitative than quantitative. There has never been a concerted, organized effort to collect and quality control economic impact data for weather extremes. Numerous studies have been made, resulting in widely varying estimates of losses, and these have been limited by 1) an inability to access certain types of loss data; 2) a lack of attention to indirect, delayed impacts, including benefits; and 3) diverse and inconsistent sources of loss data. Numerous problems have resulted from the poor estimates of loss and lack of understanding of the data uncertainties. Federal relief payments for major events have escalated partly as a result of insufficient data to detect and understand society's changing vulnerability to extremes. Controversies over relief payments for major damaging events have occurred as a result of imprecise loss estimates. The insurance industry suffered major storm-related losses in the 1990s because it lacked a database on weather-produced losses and was unable to anticipate time-shifting risks in setting rates. The absence of quality impact data has also led to questionable research priorities, and has generated incorrect perceptions in the public and media about the magnitude of impacts of events. The lack of precise loss values also limits adequate planning for future impacts, which is apt to lead to increased losses as society's vulnerability to extremes continues to increase. Recent pressures, including several major weather losses since 1988, and concern over the impacts of more extremes due to global warming, have led to better estimates of impacts. These pressures and government and insurance industry recognition of the need to better understand the ever-increasing costs have led to recent national assessments, calling for better impact data. The nation needs a continuing program to adequately measure losses from natural hazards and to maintain a quality database to guide government policies and private sector actions.

Changnon Climatologist, Mahomet, Illinois

CORRESPONDING AUTHOR: Stanley A. Changnon, Changnon Climatologist, 801 Buckthorn Circle, Mahomet, IL 61853, E-mail: schangno@uiuc.edu
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