Evidence for sharp increase in the economic damages of extreme natural disasters

Date of Publication

2019 12:00 AM

Publication Date

October 22, 2019

Security Theme

Extreme Events

Keywords

Extreme Events, srhreports, naturaldisasters, climate change, natural disasters, economic damages, tail effects

Description

Climate change has increased the frequency and intensity of natural disasters. The study demonstrates a temporal increase in extreme damages, after controlling for a number of factors. We analyze event-level data using quantile regressions to capture patterns in the damage distribution (not just its mean) and find strong evidence of progressive rightward skewing and tail fattening over time. The effects on extreme damages are large, statistically significant, and growing with increasing percentiles. The results also indicate that the risk of extreme damages has increased more in temperate areas than in tropical ones. We use simulations to show that underreporting bias in the data does not weaken our inferences; in fact, it may make them overly conservative.

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Jan 1st, 12:00 AM

Evidence for sharp increase in the economic damages of extreme natural disasters

Climate change has increased the frequency and intensity of natural disasters. The study demonstrates a temporal increase in extreme damages, after controlling for a number of factors. We analyze event-level data using quantile regressions to capture patterns in the damage distribution (not just its mean) and find strong evidence of progressive rightward skewing and tail fattening over time. The effects on extreme damages are large, statistically significant, and growing with increasing percentiles. The results also indicate that the risk of extreme damages has increased more in temperate areas than in tropical ones. We use simulations to show that underreporting bias in the data does not weaken our inferences; in fact, it may make them overly conservative.