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US billion-dollar weather and climate disasters: data sources, trends, accuracy and biases

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  • Adam Smith

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  • Richard Katz

Abstract

This paper focuses on the US Billion-dollar Weather/Climate Disaster report by the National Oceanic and Atmospheric Administration’s National Climatic Data Center. The current methodology for the production of this loss dataset is described, highlighting its strengths and limitations including sources of uncertainty and bias. The Insurance Services Office/Property Claims Service, the US Federal Emergency Management Agency’s National Flood Insurance Program and the US Department of Agriculture’s crop insurance program are key sources of quantified disaster loss data, among others. The methodology uses a factor approach to convert from insured losses to total direct losses, one potential limitation. An increasing trend in annual aggregate losses is shown to be primarily attributable to a statistically significant increasing trend of about 5 % per year in the frequency of billion-dollar disasters. So the question arises of how such trend estimates are affected by uncertainties and biases in the billion-dollar disaster data. The net effect of all biases appears to be an underestimation of average loss. In particular, it is shown that the factor approach can result in a considerable underestimation of average loss of roughly 10–15 %. Because this bias is systematic, any trends in losses from tropical cyclones appear to be robust to variations in insurance participation rates. Any attribution of the marked increasing trends in crop losses is complicated by a major expansion of the federally subsidized crop insurance program, as a consequence encompassing more marginal land. Recommendations concerning how the current methodology can be improved to increase the quality of the billion-dollar disaster dataset include refining the factor approach to more realistically take into account spatial and temporal variations in insurance participation rates. Copyright US Government 2013

Suggested Citation

  • Adam Smith & Richard Katz, 2013. "US billion-dollar weather and climate disasters: data sources, trends, accuracy and biases," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 67(2), pages 387-410, June.
  • Handle: RePEc:spr:nathaz:v:67:y:2013:i:2:p:387-410
    DOI: 10.1007/s11069-013-0566-5
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    References listed on IDEAS

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    1. Fabian Barthel & Eric Neumayer, 2012. "A trend analysis of normalized insured damage from natural disasters," Climatic Change, Springer, vol. 113(2), pages 215-237, July.
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    Cited by:

    1. Olen, Beau & Wu, JunJie, 2015. "Impacts of Water Scarcity and Climate on Land Use for Irrigated Agriculture in the U.S. West Coast," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205719, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    2. Jorge A. Ramirez & Michal Lichter & Tom J. Coulthard & Chris Skinner, 2016. "Hyper-resolution mapping of regional storm surge and tide flooding: comparison of static and dynamic models," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 82(1), pages 571-590, May.
    3. Adam Smith & Jessica Matthews, 2015. "Quantifying uncertainty and variable sensitivity within the US billion-dollar weather and climate disaster cost estimates," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 77(3), pages 1829-1851, July.
    4. Ahmadiani, Mona & Ferreira, Susana, 2016. "Well-being Effects of Extreme Weather Events in the US," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236259, Agricultural and Applied Economics Association.
    5. repec:spr:nathaz:v:91:y:2018:i:2:d:10.1007_s11069-017-3149-z is not listed on IDEAS
    6. Bourdeau-Brien, Michael & Kryzanowski, Lawrence, 2017. "The impact of natural disasters on the stock returns and volatilities of local firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 63(C), pages 259-270.
    7. repec:gam:jsusta:v:10:y:2018:i:4:p:933-:d:137688 is not listed on IDEAS
    8. Xiangyang Guan & Cynthia Chen, 2014. "Using social media data to understand and assess disasters," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 74(2), pages 837-850, November.
    9. Nam, Won-Ho & Hayes, Michael J. & Svoboda, Mark D. & Tadesse, Tsegaye & Wilhite, Donald A., 2015. "Drought hazard assessment in the context of climate change for South Korea," Agricultural Water Management, Elsevier, vol. 160(C), pages 106-117.
    10. repec:eee:apmaco:v:267:y:2015:i:c:p:742-749 is not listed on IDEAS
    11. repec:spr:climat:v:145:y:2017:i:1:d:10.1007_s10584-017-2075-0 is not listed on IDEAS
    12. Evan Mills & Richard B Jones, 2016. "An Insurance Perspective on U.S. Electric Grid Disruption Costs," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 41(4), pages 555-586, October.
    13. Troy Rosencrants & Walker Ashley, 2015. "Spatiotemporal analysis of tornado exposure in five US metropolitan areas," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 78(1), pages 121-140, August.
    14. repec:spr:climat:v:146:y:2018:i:3:d:10.1007_s10584-015-1513-0 is not listed on IDEAS
    15. Bin Pei & Weichiang Pang & Firat Testik & Nadarajah Ravichandran & Fangqian Liu, 2014. "Mapping joint hurricane wind and surge hazards for Charleston, South Carolina," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 74(2), pages 375-403, November.
    16. Madeleine Lopeman & George Deodatis & Guillermo Franco, 2015. "Extreme storm surge hazard estimation in lower Manhattan," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 78(1), pages 355-391, August.
    17. Marc N. Conte & David L. Kelly, 2016. "An Imperfect Storm: Fat-Tailed Hurricane Damages, Insurance and Climate Policy," Working Papers 2016-01, University of Miami, Department of Economics.
    18. repec:eee:ecolec:v:138:y:2017:i:c:p:186-198 is not listed on IDEAS
    19. Xavier Romão & Esmeralda Paupério, 2016. "A framework to assess quality and uncertainty in disaster loss data," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 83(2), pages 1077-1102, September.

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