The increase of billion dollar weather disasters | Across the Sky podcast
The number of billion dollar weather disasters has jumped in recent years. Lead Scientist on the
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Episode transcript
Note: The following transcript was created by Adobe Premiere and may contain misspellings and other inaccuracies as it was generated automatically:
Hello, everybody. I'm meteorologist
Gentlemen, we've got a great guest this week. We've all heard about the billion dollar disasters report. Adam Smith from NCI. That's Noah.
Yeah. And most of us across the country have been hit by some billion dollar disasters since they've been tracking this year, going back to, I believe it was 1980. So it's something that probably has impacted you, whether you remember it or not. So we were happy to have Adam on in the end to drop his knowledge on us here for our podcast.
And really what caused us to reach out to Adam is when they came out with their report at the beginning of May, looking at just the for the first four months of the year, we've already had
And we've already had seven in the first four months. So that is not what we want to see. But that's been the recent trend because if you look at just the last five years, 2018 to 2022, we've had
So there is a clear uptick in the number of billion dollar disasters. So we had to get Adam on that talk about, yeah, fortunately he was telling us so much of this was driven by a very recent uptick in tropical cyclones slash hurricanes. We also talk about the droughts. You know, there's long term drought that until this past winter has been plaguing the western
So we get into all those things. We'll also talk about, you know, some of the intricacies of this and why it's sometimes the data is misinterpreted. So we'll get to all of that as we begin our conversation with Adam Smith at the
He is the lead researcher for the quarterly Billion dollar Disasters Report, and he has been involved in the nexus of climate and weather risk for more than a decade. Adam, welcome and thank you for taking the time with us on the podcast. Thank you for having me. So I wanted to started at the big level because a lot of this stuff is kind of esoteric or for the home listeners, home viewers.
So take us at a top down level. Our is this kind of stuff quantified in terms of this disaster? Is this amount of money? This disaster is this amount of money? You aggregate this up. So at the bigger level, how was this done? So to do this type of analysis require is a broad array of public and private sector partners.
For example, the insurance and reinsurance industry, of course, even the catastrophe modelers also federal agencies like
So this would be insured, under-insured and uninsured damages to homes, to businesses, to government buildings like schools, the contents of all of these structures. Even time element losses such as business interruption or loss of living quarters. When you're out of your home lost, being repaired or rebuilt. But there's other assets even that the private sectors that often pay attention to as comprehensively, for example, public assets, roads, bridges, levee systems, even the
And finally, the agriculture sector, of course, is heavily impacted by heat waves, cold waves and drought. So we look at crops, livestock being calls that increase in particular with drought damage to commercial timber, often with hurricanes in the southeast and wildfire fighting suppression costs. So those are the 16 different asset classes that we have homogeneous data over space and time.
Going back many decades. That's consistently available. But it's equally important to know what we are not able to capture. So that would be things like non-market losses to environmental damage, environmental degradation, a natural capital, those type of losses, mental and physical health care related costs, which are likely substantial in the downstream ripple effects outside of a hazard region.
There's also not quantified, so you could say this is a conservative but solid baseline estimate. Another piece of the puzzle would be one of the first key transformations we make would be the reciprocal of the insurance penetration rate, which varies by asset, by region and by hazard. Because we're looking at hurricanes, severe storm events like tornado hail and high wind events, heat waves, cold waves, winter storms, wildfire drought and urban flooding and river basin flooding.
And some of those are very discrete events. And M.S., a day to day, three days like a severe storm complex or a hail storm. But some we treat more seasonal like droughts and wildfires because they're often slow onset events that get more impactful, particularly in the fall as the West dries out, as we've seen many times in recent years.
Hey, Adam, it's Matt. So looking through April of this year, there were seven confirmed
So what's the what does it take to become a confirmed billion dollar disaster versus these preliminary ones? Yes, that's a great question. This is this is a new feature we just added in recent months based on user feedback and requests. So that has to do with the data latency across all these different public and private data sources. We partner with the data latency, basically a fancy word for how long it takes a data to mature and stabilize.
That varies based on the size and the impact, the intensity of an event. So we like to probe. Probably one month is about the bare minimum for the smallest billion dollar disaster event, like a hailstorm in
So this provides this section you're talking about the potential billion dollar disaster events. It kind of pulls back the curtain a little bit to say what events are we looking at as far as the data maturity that may be added to the list in the coming months? And correct me if I'm wrong, but if those three were confirmed, that would put us at ten through the first four months of year, which would be a new record because the current record is
That would be correct. So these are not yet confirmed, but if they were all confirmed, we would be on a record base. That's correct. I mean, I'm going to parlayed and said more of a, let's say, 30,000 feet view of this where we've been over the past couple of decades with these billion dollar disasters. And I'll note, I know you adjust for inflation so the numbers are accurate in terms of something in 2000 is the same as now.
But also furthermore, you know, where are we seeing what types of events are giving us our biggest increases and as are anything that we've seen, decreases that over time as well, a lot of these different hazards have had frequency and cost trends that are really going in the wrong direction in terms of they're getting worse for different parts of our nation.
So if you can remember, the last three hurricane season is 2020 through 2022 were quite active. I believe we had more Category four and Category five landfalling hurricanes on record in that period than most of what the record shows and heard. That and hurricanes to the point are the most costly of these extremes we measure and it makes sense are big, powerful storms.
So we have a lot of assets, a lot of population in harm's way along the
The water vapor increases and therefore it adds to the heavy rainfall potential, which we've seen. But of course, how we build, where we build the vulnerabilities there, the floodplains, those all go into the to the equations as well. But if we go to the
Yeah, just over the last four decades. Last year in 2022, thankfully, wasn't quite as bad in much of the West, with the exception of a few states like
We can learn from one way wrong, what we can do better in the future because we know these extremes. We're going to continue with exposure, with vulnerability, with climate change, all in the mix. And so I think the key is to learn from them and to mitigate future damages. So looking at 2022, for example, the most costly events were a hurricane in impacted, you know, southwest
And so it had the trifecta of impacts, a storm surge, the very high winds, but the flooding also well inland and really across
It was very expansive and expensive from
And as we know, the
And so we have to address our vulnerabilities. Yeah. Before we toss to break, I want to go back to the drought situation in the West because that is such a long evolution event. How our are you able to say, you know, well, this fits into this timeframe, You know, there's one drought or did the drought, you know, you know, we know it's a multi-year, almost multi-decade old drought or they ratification.
So how do you decide, okay, well, the drought we're going to fit into this quarter or this specific calendar year, How do you kind of get through that? For example, back in was the 2016 or 2017, there was like a flash drought that impacted
from D2 to D3 to D4 impacts. And a lot of the states are giving drought designations based on weather is data in the East or G-3 or higher in the West. And so we track, you know, using s and other great drought data and
You know, often what we've seen is drought in
So we look at cost per ton for things like corn or hay, silage and just that the delta between that year's drought impact price increase versus the five year state cost per ton increase for those feeding commodities. So there's a lot that goes into it and drought is one of the more complex assets to to analyze for as an event.
Yeah, because everybody gets a little bit differently I'm sure. All right. So we'll take a little bit of a break. And on the other side, we'll dig a little bit deeper into the weeds about some of the pitfalls and irregularities and difficulties in quantifying this information with Adam Smith from Noah and CGI on the Across the Sky podcast.
Stay with us. And we're back on the Across the Sky podcast. Our guest is Adam Smith, the
How do you handle all those things in the report? Historically, inflation using CPI, you A-Z as a means for doing so is what we do, and we adjust that monthly based on the end date of an event or for drought. We use the begin date. But I think a fair question has come up in recent years about adjusting for things like housing population, other assets in harm's way, because we do know that people are moving to the south and the southeast in the west, which are really hot spots for different hazards hurricanes, severe convective storms, drought, flooding, you name it.
And so we are actually embarking barking this late summer into fall and looking at some of the different assets and trying to add some additional adjustments. We do actually normalize for things like population or state level GDP. In our mapping section, you can look at any combination of years, any combination of hazards, any individual disaster. Of the 355 separate billion dollar disasters over the last 44 years, you can look at state level analysis that does normalized by population GDP.
We just haven't taken that through all of the different pools throughout the entire site. But we're going to do more work on that front. I think one of the challenges, though, is a lot of the literature does talk about using, you know, population density or housing density as ways to normalize. I think that's a start, but I don't think that's a complete answer because we are looking at 16 different asset classes that are highly variables in terms of their spatial distribution, how much the concentration and the value of those have changed where they've happened.
So we really need to come up with a more robust strategy to deal with the normalization in a in a really comprehensive way. But we have partners at
But it does raise the question of why 1980? So why is that the start point and could we look back farther than 1980? Is it possible can we try and calculate, well, how many billion dollar disasters that were in the seventies or sixties, or is there something that's preventing that? Yes, in 1980 when we started doing this work, and I think the reinsurance companies like Munich Reinsurance and Sports Reinsurance have actually looked back pre 1980.
But in
But, you know, if you look at some really extreme events like tornado outbreaks, which we had many in the 1970s, because they were so impactful, they killed so many people, they were there historical events, you could do some analysis. I think the caveat would be pre 1980, the farther you go back in time, the larger the error bars would be in terms of the uncertainty of the data in the assumptions and the impact those assumptions would make on the analysis.
And so what got you interested in getting into these EO, registering these billion dollar disasters or even working within NCI memory? Always interested and, you know, climate and this kind of information. What what was your journey that brought you here? Yes. So I've worked at NCI since really beginning Charles in five. And this this was kind of a legacy project actually predated my time, of course.
But the way it was structured, the data that went into it was it was a comprehensive it wasn't peer reviewed, it was embedded. It was it was not quite as comprehensive as it could have been. So we spent probably five years working at mini partners, developing different data relationships and understanding and writing some papers, having conferences, and then kind of made it more robust and did a reanalysis.
But I think in terms of my involvement with it, I've always been kind of a, a natural interdisciplinary thinker. I like I like thinking in that problem space, chaos and uncertainty don't really scare me as much as it might other people. And so I think it's a challenge and it's in frankly, it's just interesting. It's fun to do.
And as we've seen over the last seven years, from 2016 through 2022 and 43, these billion dollar disasters have cost over
There's been a proliferation of different tools, like
Adam, if you could kind of enlighten folks I know everybody's under everybody can understand what insurance is, but can you talk about what reinsurance is? Because that's a term that gets tossed around a lot that I don't think gets a lot of its a lot of explanation. So something like Munich Re Would you would you reference early what what is reinsurance.
So yeah, reinsurance is effectively insurance for insurance companies. It's it's when really impactful events like a hurricane Ian hits
Willis Reinsurance. But even the public sector, like
But the uninsured flood losses are several times often the the insured losses from these events. And Adam, of course, looking at the big picture, we're seeing the number of billion dollar disasters going up. But I wonder if we could dive in a little bit more and talk about regionally, what are these? Are we seeing a particular region that's seeing more events than in the past and also as far as that type of event?
So are we seeing a trend in the type of events that are causing billion dollar disasters compared to the eighties and nineties and what we're seeing now? So as far as types of events go in peculiar regions that are really seeing a particular uptick. So looking at the state scale,
And you can think back to 2020. We had, I think, four or five landfalling hurricanes make landfall and in
So this is an example of compound extremes with cascading impacts. And we're seeing that in the
Debris flows in the mountainsides from the burn scars in
And in
Can you link the two? Because we would think that we're trying to be a more weather ready nation at that. That's a
Well, when you move to a new place, I think it's one besides, you know, picking out where your your your location, where you want to live, you need to know your hazard. You need to know your natural born abilities, what has happened in the past. And you have so many great resources at the federal level, at the state level, academics have have published a lot of great papers looking at, you know, where the extremes and hazards are.
And it's not one hazard. Often it's different, it's multifaceted. And so educating yourself in terms of what can happen, but also educating yourself and preparing in case if you are confronted with a high risk and you can actually act on it and protect yourself, your family, your business, your home, your assets. And so it does ultimately come down to the individual.
But I think there's, you know, certainly an education process and understanding and some responsibility. And it's at all levels. And we have more than enough events in recent years to learn from and better prepare and for future extremes. Yeah, for sure. We get all kinds of weather across this country for, you know, everybody gets it a little bit differently.
And before we let you go, I anything else you want to share where people can find this information online and anything else that y'all are working on that we should look forward to. One thing I did not mention is we worked in recent last few years with
Yeah, just type. Billion-Dollar Disasters or weather costs in Google and it will come up. But we have many different tools and we're always trying to expand and add more nuance and depth and usefulness to the tools we we're working on developing user reports, dynamic reporting, so that can be developed and you know, like a PDF, you could just take it with you and read it separate from a web page.
But there's there's just so much to do in this space. And there, you know, it's not just us, as many different research groups across the federal government, private sector and academia who are doing very valuable and important work in this area. Excellent. And again, thanks so much for joining us on the podcast and for all the work you're doing there, Noah, and give our best to you, everybody who's working there at Noah, NCI in
A lot to take in there, guys. But I mean, Adam has been doing this for a long time and by that he admits that there's no perfect way to do this for sure. But, you know, I think it's clear that as the as the climate has warmed, we are more at risk. There are more people, there are more things at risk, there's more property risk.
And we're going to have to continue to guard against these kinds of weather. Sometimes are cold. Climate disasters are like environmental disasters. Kind of avoid avoid the political political nonsense with this stuff. But the end result, whether it's tropical cyclone, whether it's heavy rain, whether it is locally severe storms, whether it is the drought, flooding, all those things, we are more vulnerable than we have been in the past.
And Joe, you know, you brought up the weather resignation and how I do think, you know, we're getting better at communicating and keeping people safe from these extreme weather events. But what we can't do works for, you know, is when these hurricanes are making landfall or when a tornado is tracking across ground, we can get people out of the way of the hurricane.
We can get people out of the way of tornado, but we can't get their homes out of the way of these storms even there. And there can be preparations, you know, to make it. You know, we see people put a clipboard in the windows and such. But, you know, when it it's a high level event, there's going to be destruction.
And I think, you know, especially, you know, in kind of what Adam mentioned, too, there's a little bit of a concern that people are moving to these places that have more climate disasters. I mean, just historically,
So this is what happens. We end up getting more billion dollar disasters as people move to areas that experience more extreme weather. Yeah, and he kind of answered it when I was saying about, you know, emergency management and yeah, like we said, weather ready Nation. But to your point, you know, I mean I think
So a lot of those are going to the coast. Real estate is expensive in
So it's all these incremental things. And that's you know, we talk about climate change. A lot of this is coming in incremental steps. It's not the day after tomorrow where, you know, the Statue of Liberty is frozen in time. That that's how it is shown, right? Is that what happened? The Statue of Liberty? Oh, my God. They can't see me.
But I have the little torch in my head now. But what it is, you know, it's these incremental steps. It's, you know, hey, the water's now half a block up the street. This storm now it's a full block up the street. The next storm, you know, and those kind of things add up dollar wise and help create some of these billion dollar disasters as well.
You know, and there's a lot of focus on the, you know, tornado outbreaks and the hurricanes that are often the cause of billion dollar disasters. But you know what's interesting, I mean, so far this year, it's mainly just been some regular severe thunderstorm outbreaks, you know, that have been hail. People often forget about how costly ALA is. A lot of times people can get inside and you don't frequently die from hail.
You go inside, you're fine. But the damage the hail caused that's been real costly this year and just straight line wind damage, it doesn't take a tornado. You get 60, 70, 80 mile per hour straight line winds and that does a lot of damage. So you don't need tornadoes. You don't need hurricanes at billion dollar disasters. That's really been the biggest problem so far this year.
Yeah. Once that wind gets past 55 or 60 miles an hour, that's when we really start to see more physical damage to structures and the like. Gentlemen, I think that's going to be it for this week. But as as you know, and we'll let the folks at home know we've been working on another podcast next week. We're very excited to have the new director of the
I will be here to talk about some of the new products that they've got working for the for the new hurricane season starts
Joe, I know you've been working on a couple other things that you want to kind of ease the audiences to some things I know you've been working on. Yeah. So we'll start off with we did a collab with Front page Betts on our
It's something of a personal hero of mine,
It is definitely weather definitely makes a difference because I love having been there and seeing it on TV all these years. Those hot and humid days, just kind of hazy, different than those nice day for it's 82 degrees on the corner surf and still well in
I appreciate it. While I think about it, I would just do it this way. I think we're gonna take the reins on this day by. But yeah, we got a lot coming up and you know, we appreciate everyone listening and subscribing. You know, over the past year we've only been doing this for like 13 months. It feels like we've been doing it forever, but I bet we've been doing for 13 months.
So really appreciate all of you tuning in. If you know someone who likes weather, if you know someone you interesting climate, tell them about it too. You know, we'd really appreciate it. That's a labor of love, to be sure. Go ahead. Go ahead, Matt. No. Yeah, we just started last April. I can't believe it's been over a year, but we are past the year mark.
We have over 52 episodes now. So with APA, if you are, you have plenty of material to go back and listen to. If you're new to the podcast, we have plenty of episodes of scroll back in our history and I'm imagine there'll be a topic at some point. You'll scroll past. You want to click on and we'll have more and more in the weeks ahead.
So again, thank you for joining us. Thank you for listening, Thank you for subscribing and don't miss our conversation next week with
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