The Hidden Costs of Extreme Weather: Long-Term Impact on Economies

November 27, 2023

A recent study sheds light on the long-term economic consequences of extreme weather events, particularly tropical cyclones, and their impact on the social cost of carbon. The social cost of carbon is a crucial metric in shaping climate policies, estimating the future costs societies will bear due to the emission of one additional tonne of carbon dioxide into the atmosphere.

India’s Economic Damages: Surprising Revelations

The study indicates that India’s long-term economic damages from tropical cyclones are projected to be higher than expected, ranging from $43-47 per tonne of carbon dioxide. This revelation raises concerns about the underestimated long-term effects of extreme weather events on economic development.

Global Ramifications: A 20 Percent Increase

Globally, the long-term impacts of tropical cyclones contribute to a more than 20 percent increase in the global social cost of carbon compared to previous estimates. Countries significantly affected by this increase include India, the United States, China, Taiwan, and Japan, collectively driving up the global social cost.

Unforeseen Consequences: Slowing Down Economic Development

According to Hazem Krichene, the study’s author and scientist at the Potsdam Institute for Climate Impact Research, intense tropical cyclones have the potential to impede a country’s economic development for over a decade. This analysis highlights the far-reaching consequences of extreme weather events beyond immediate damages.

Current Policies Falling Short

The study suggests that current climate policies may be insufficient as they do not adequately account for the long-term effects of extreme events. The social cost of carbon estimates, according to the researchers, fails to present a comprehensive picture of economic damages.

Global Warming Amplifies Challenges

As global warming intensifies, the study emphasizes that the frequency of intense tropical cyclones is likely to increase. This poses a significant challenge as economies may struggle to fully recover between successive storms, further amplifying the economic toll of extreme weather events.

Overlooked Growth Impacts: A New Approach

To gain insights, the researchers examined historical growth responses to tropical cyclones from 1981 to 2015 across 41 countries. They projected these responses for future global warming scenarios. The study reveals that the current social cost of carbon estimates does not fully capture the economic damages caused by extreme weather events.

Uniform Impact Across Income Groups

The economic damages from tropical cyclones affect all income groups, with growth losses recorded across high-income, upper-middle-income, lower-middle-income, and low-income countries. The study underscores that the share of losses is significant across the board, regardless of a country’s development level.

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