Hurricane Harvey is approaching the Texas coast and is forecast to end an almost twelve-year span since a major hurricane (categories 3, 4, and 5 on the Saffir-Simpson hurricane intensity scale) made landfall in the United States. Prior to Harvey, the last major hurricane to strike the U.S. was Wilma, which struck Florida as a Category 3 storm in October 2005. The current major hurricane drought is the longest since the start of the modern records in 1851, exceeding the lengthiest prior gap (1860-1869) by three years.
The hurricane future appeared very different in 2005. Global warming was allegedly making hurricanes more frequent and devastating, and hurricanes were going to get worse.
The busy 2004 and 2005 seasons certainly made hurricanes seem more frequent. The 2005 Atlantic season featured 28 named storms (we ran through our alphabet and had to use Greek letters as names) and 15 hurricanes, both records. Katrina devastated New Orleans and the Mississippi coast that year. Seven major and thirteen total hurricanes struck the U.S. in 2004-05.
Hurricanes also seemed more devastating than ever. Katrina caused $100 billion in damage (adjusted for inflation), the highest figure ever, and the worst U.S. death toll since 1928. By the end of 2005, 6 of the 8 costliest hurricanes ever had occurred in the previous two years. This part of the tale, however, was misleading.
Economists know to adjust historical dollar figures for inflation. But adjusting for inflation does not make damage from past and present hurricanes fully comparable. Increases in population and wealth mean that hurricanes have a lot more property to destroy now. Damage normalizations assuming that damage will increase proportionally with population and wealth per person provide more accurate comparisons. Normalizations provide an educated guess about the damage we could expect if past hurricanes occurred today.
Normalization dramatically increases the damage measured in past hurricanes. Consider the “Great Miami Hurricane” of 1926. Miami Beach has grown from a population of 644 in 1920 to 90,000 today, and is home to some very expensive real estate. Normalized damage from the Great Miami Hurricane exceeds $200 billion, or more than double Katrina’s total.
Researchers have found that once normalized in this manner, hurricanes have not been causing greater losses over time. Increases in population and property at risk, or societal vulnerability, explain rising damages. Societal vulnerability has increased significantly. The population of Atlantic and Gulf coast counties, for example, has increased from under 6 million in 1900 to almost 38 million in 2010. The value of insured property at risk from hurricanes now exceeds $10 trillion.
Societal vulnerability is not necessarily bad. The U.S. population has more than quadrupled since 1900, and people must live somewhere. Areas which are safe from hurricanes can still face tornado, earthquake, or tsunami risk. Furthermore, Americans value living and vacationing near the ocean, while many industries must locate near the coast. We can now afford what previously would have been catastrophic losses. Coastal development is worthwhile as long as the value created exceeds the potential hurricane damage. The extra costs will be reflected in prices of rental or vacation properties, or goods like gasoline or chemicals.
Several government policies, however, subsidize hurricane losses and thus encourage development when the value created does not exceed the extra costs. The two most prominent policies are state homeowners insurance regulation and the National Flood Insurance Program. Both of these policies push some of the costs of insurance against hurricanes on to other Americans.
Does the U.S. hurricane drought prove that global warming is not occurring? Not necessarily. This past decade has witnessed several active Atlantic hurricane seasons, with Mexico being struck by two Category 5 hurricanes. The drought might just be luck.
And yet the hurricane drought, combined with the more than decade-long warming pause in satellite-measured temperature records, like the one maintained at the University of Alabama-Huntsville, should make us rethink global warming policy. President Obama’s Clean Power Plan, for instance, will cost us hundreds of billions of dollars, and yield few benefits if warming is not as bad as climate models project. On the other hand, the U.S. will be hit by major hurricanes in the future regardless of whether the climate warms. Eliminating inefficient government policies, like subsidized flood and wind insurance, will reduce the cost of the hurricanes which do occur, and the damage avoided will escalate if global warming happens to strengthen future hurricanes.
Daniel Sutter is Affiliated Senior Scholar at the Mercatus Center and Professor of Economics at the Manuel H. Johnson Center for Political Economy at Troy University.
