Why the US has the second-largest weather damage in the world

Property damage from hurricanes, severe convective storms, flooding, and winter storms is equivalent to nearly 0.4% of the U.S. gross domestic product each year, the study found. This is nearly double the GDP-adjusted damage faced by China and nearly four times that of Canada.The only country surveyed was identified as facing a greater share of wealth The Philippines was affected and continues to suffer losses every year. This corresponds to approximately 3% of GDP.

Jerome Hegeli, chief economist at Swiss Re, said the United States is unusually exposed to a wide variety of weather disasters, from severe thunderstorms to floods and hurricanes. But the country’s wealth also means it stands to lose a lot when hurricanes and floods hit its homeland, he said, and “the United States suffers the highest economic losses from weather events in absolute terms in the world.” Ta.

Last year, the United States experienced $28 billion in disasters, including wildfires in Lahaina and severe hailstorms in Texas, according to the National Oceanic and Atmospheric Administration. All 28 disasters combined cost an estimated $93 billion.

Jesse Keenan, a professor of real estate and urban planning at Tulane University, said the results show how disasters can impede economic growth in the near term. “If you think that in the future we’re going to see relatively slow growth, 2 to 3 percent GDP growth, but this storm and this one sector alone are causing a loss of 0.4 percent of GDP. “It’s really true that it’s starting to have a negative impact on our growth,” he said. “That could really be something that reduces our economic strength.”

Keenan noted that Swiss Re’s report only included property damage and did not capture the full scope of climate-related losses. “Especially with flooding, there is almost as much vehicle damage as there is property loss,” Keenan said.

Americans face another challenge during severe weather: getting compensation for losses. The study found that only about half of recent property damage caused by severe weather in the U.S. was insured, and at the same time, large insurance companies are increasing the They say they are starting to cancel their insurance contracts. In California, where large-scale wildfires have occurred frequently over the past few years, some insurance companies have stopped offering home insurance. Some services may not cover areas within a certain distance from the coastline.

The remaining insurance policies are expensive. Federal Reserve Chairman Jerome H. Powell pointed out in Congressional testimony last week that rising auto and real estate prices are pushing up overall prices. “This has been an important driver of inflation over the past few years,” he said.

The average home insurance policy increased 21% between May 2022 and May 2023, according to insurance analysis group Policy Genius. Some homeowners have begun to forego insurance altogether, increasing disaster risk for Americans overall.

Part of the problem is that there are no state requirements to prevent building in disaster-prone areas. At the same time, high housing prices and limited inventory are forcing Americans to live wherever they can find affordable options. That means money for infrastructure and housing is being funneled into areas that could later be destroyed by wildfires, floods, and hurricanes.

“We are facing a fiscal crisis,” Keenan said. “No matter how you look at it, it will be a burden on the public debt.”

The report also highlights how adapting to climate change now can prevent future damage. Studies show that every dollar invested in adjusting construction to new building codes to make it more resistant to floods and hurricanes can save $6 to $10 in the future. But only 31 percent of U.S. jurisdictions have adopted the latest building codes, leaving many more areas vulnerable, Hegeli said.

Hegeli said the United States and the Philippines topped the list, but every country was affected. “There’s no country in Switzerland that hasn’t been exposed, whether it’s in the United States or China,” he said.