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Storms, floods, droughts, or other severe weather events can cause great damage to society and economy. But can we quantify the impact of climate change on these events?
“The climate crisis is changing the frequency of these events, and they are becoming more intense and more damaging to the economy,” says Professor Ilan Noy, Chair in the Economics of Disasters and Climate Change at Te Herenga Waka—Victoria University of Wellington’s Wellington School of Business and Government.
His ResearchIt covers everything, from climate change to earthquakes to COVID-19.
Noy calculates the economic impact of climate change by combining an economic assessment for damage from extreme weather events and an atmospheric science assessment about the increased likelihood of these events.
“We can measure the economic damage caused by floods in New Zealand by climate change.
Noy and her colleagues used the same approach in the United States to Hurricane Harvey. It struck Houston, Texas in 2017. The storm caused widespread flooding and caused around $90 Billion in damage. About two-thirds ($67 billion) of this cost was attributed to climate change.
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Professor Ilan Nutty, Chair in Economics of Disasters and Climate Changes at the Wellington School of Business and Government.
A costly retreat
Many major cities are located on the coasts, so rising sea levels could cause significant damage.
In the Asia–Pacific region, the looming threat of inundation has already led to an announcement by the Indonesian Government that the capital will be moved from Jakarta to an inland location on the island of Borneo.
“Jakarta’s elevation is lower than the sea level, and flooding events are increasing rapidly, so the move is about avoiding this risk. This is a costly move. It will cost tens to billions of dollars, which is a good example of the price of climate crisis.”
Professor Noy said that anticipatory action is better then dealing with the aftermath of disasters. This is true even though it comes with potential financial costs. However, it might be much more difficult to convince a community that they should abandon their homes and move away from the coast.
“The cost of this managed retreat’ is high, but not insurmountable for a country such as New Zealand. It is considerably less than the cost of the Canterbury earthquake recovery.
Following the 2011 Christchurch earthquake 20,000 people were relocated from the affected areas and paid by the government. Professor Noy agrees that it was a well-managed move.
“We need to think about similar policies for the impact of climate change. It is vital that policymakers do quantification because they need to know what will occur and what it will cost if these issues are ignored.
“It’s better for us, the government and future generations and governments if we act now rather than waiting for climate change to happen.”
To find out more about world-leading research, go to Te Herenga Waka—Victoria University of Wellington’s website, wgtn.ac.nz/wellington
