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The Economics of Hurricanes in the United States

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  • William D. Nordhaus

Abstract

The year 2005 brought record numbers of hurricanes and storm damages to the United States. Was this a foretaste of increasingly destructive hurricanes in an era of global warming? This study examines the economic impacts of U.S. hurricanes. The major conclusions are the following: First, there appears to be an increase in the frequency and intensity of tropical cyclones in the North Atlantic. Second, there are substantial vulnerabilities to intense hurricanes in the Atlantic coastal United States. Damages appear to rise with the eighth power of maximum wind speed. Third, greenhouse warming is likely to lead to stronger hurricanes, but the evidence on hurricane frequency is unclear. We estimate that the average annual U.S. hurricane damages will increase by $8 billion at 2005 incomes (0.06 percent of GDP) due to global warming. However, this number may be underestimated by current storm models. Fourth, 2005 appears to have been a quadruple outlier, involving a record number of North Atlantic tropical cyclones, a large fraction of intense storms, a large fraction of the intense storms making landfall in the United States, and an intense storm hitting the most vulnerable high-value region in the country.

Suggested Citation

  • William D. Nordhaus, 2006. "The Economics of Hurricanes in the United States," NBER Working Papers 12813, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:12813
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    Cited by:

    1. Deuchert, Eva & Felfe, Christina, 2015. "The tempest: Short- and long-term consequences of a natural disaster for children׳s development," European Economic Review, Elsevier, vol. 80(C), pages 280-294.
    2. Barthel, Fabian & Neumayer, Eric, 2010. "Normalizing economic loss from natural disasters: a global analysis," LSE Research Online Documents on Economics 37601, London School of Economics and Political Science, LSE Library.
    3. Elliott, Robert J.R. & Strobl, Eric & Sun, Puyang, 2015. "The local impact of typhoons on economic activity in China: A view from outer space," Journal of Urban Economics, Elsevier, vol. 88(C), pages 50-66.
    4. Silvio Schmidt & Claudia Kemfert & Peter Höppe, 2008. "Bereinigung sozioökonomischer Effekte bei Schäden tropischer Wirbelstürme für eine Analyse zum Einfluss des Klimawandels," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 77(4), pages 116-139.
    5. Eric Strobl, 2011. "The Economic Growth Impact of Hurricanes: Evidence from U.S. Coastal Counties," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 575-589, May.
    6. Tanaka, Ayumu, 2015. "The impacts of natural disasters on plants' growth: Evidence from the Great Hanshin-Awaji (Kobe) earthquake," Regional Science and Urban Economics, Elsevier, vol. 50(C), pages 31-41.
    7. Murphy, Anthony & Strobl, Eric, 2009. "The Impact of Hurricanes on Housing Prices: Evidence from US Coastal Cities," MPRA Paper 19353, University Library of Munich, Germany.
    8. Elena Rovenskaya, 2011. "One-step Optimization Model of Warming-driven Damage of Economic Growth," DEGIT Conference Papers c016_062, DEGIT, Dynamics, Economic Growth, and International Trade.
    9. Mendelsohn, Robert & Emanuel, Kerry & Chonabayashi, Shun, 2011. "The impact of climate change on hurricane damages in the United States," Policy Research Working Paper Series 5561, The World Bank.
    10. Craig E. Landry & Mohammad R. Jahan‐Parvar, 2011. "Flood Insurance Coverage in the Coastal Zone," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 78(2), pages 361-388, June.
    11. Jeffrey Czajkowski & Kevin Simmons & Daniel Sutter, 2011. "An analysis of coastal and inland fatalities in landfalling US hurricanes," 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. 59(3), pages 1513-1531, December.
    12. Peter Gordon & James E. Moore II & Jiyoung Park & Harry W. Richardson, 2010. "Short-Run Economic Impacts of Hurricane Katrina (and Rita)," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(2), pages 73-79, July.
    13. Christina Fong & Erzo Luttmer, 2007. "What determines giving to hurricane katrina victims? Experimental evidence on income, race, and fairness," Artefactual Field Experiments 00046, The Field Experiments Website.
    14. Joelle SAAD-LESSLER & George TSELIOUDIS, 2010. "Storms, Climate Change, And The Us Economy: A National Analysis," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 10(1).
    15. Ouattara, Bazoumana & Strobl, Eric, 2013. "The fiscal implications of hurricane strikes in the Caribbean," Ecological Economics, Elsevier, vol. 85(C), pages 105-115.
    16. Melissa Nursey-Bray & Boyd Blackwell & Ben Brooks & Marnie L. Campbell & Laurie Goldsworthy & Hilary Pateman & Ian Rodrigues & Melanie Roome & Jeffrey T. Wright & John Francis & Chad L. Hewitt, 2013. "Vulnerabilities and adaptation of ports to climate change," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 56(7), pages 1021-1045, September.
    17. Joelle SAAD-LESSLER & George TSELIOUDES, 2009. "Storms, Climate Change, and the US Economy: A National Analysis," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 9(1).
    18. repec:ipg:wpaper:2014-070 is not listed on IDEAS
    19. Felfe, Christina & Deuchert. Eva, 2011. "The tempest: Using a natural disaster to evaluate the link between wealth and child development," Economics Working Paper Series 1146, University of St. Gallen, School of Economics and Political Science.
    20. repec:spr:grdene:v::y::i::d:10.1007_s10726-017-9537-7 is not listed on IDEAS

    More about this item

    JEL classification:

    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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