CLIMATE COST

Natural disasters caused $160 billion in damage in 2018

Up in smoke.
Up in smoke.
Image: REUTERS/Jonathan Alcorn
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Natural disasters claimed 10,400 lives and imposed $160 billion worth of damage to the global economy last year, German reinsurer Munich Re said today. That’s down from $350 billion and 13,000 fatalities in 2017. The good news, such as it is, stops there.

Subject to yearly fluctuations, the cost of natural disasters is set to rise because they’re generally getting more frequent over time. Munich Re counted 850 “natural catastrophes” last year (pdf), up from 740 the year before. The average annual cost of disasters over the past 30 years, $140 billion, is still lower than last year’s relatively modest total.

Take the California wildfires that have raged in recent years. Increasingly dry and hot weather in the US state is sparking larger flames—three-quarters of the biggest fires there have taken place over the last two decades, according to National Geographic. “Such massive wildfires appear to be occurring more frequently as a result of climate change,” said Munich Re Board member Torsten Jeworrek.

Wildfires caused $24 billion in economic damage to California last year, three-quarters of which was insured, according to Munich Re. Entire cities were wiped out by the blazes, whose after-effects are continuing to hit private pocket books and corporate balance sheets.

For example, this week S&P downgraded the debt of California utility PG&E investment rating to “junk” status. The move is partly due to new regulatory pressures, but a larger part of the story is that the company’s equipment may be found liable for causing some of the fires, representing billions in potential liabilities.

The most sweeping study to date on the costs of climate change was published by Nature in May 2018, and it pegged the savings related to curbing emissions, of which avoided costs of disasters are a part, at a whopping $20 trillion.