Natural disaster losses and climate change

The economic cost of natural disasters due to extreme weather - tropical cyclones, floods, bushfires and storms - is rising in concert with growing concentrations of population and wealth in disaster-prone regions. Analyses of long-term trends in insurance or economic disaster loss histories have so far not been attributed to anthropogenic climate change. This is the case for multiple natural perils and across different jurisdictions. Moreover, recent studies suggest that we may be several decades to centuries away from being able to detect an anthropogenic climate change signal in US tropical cyclone loss data. Extreme events are, by definition, rare events, and so detecting a signal of change in loss data is particularly difficult. In many regions societal factors will be the main driver of future increases in loss due to some hazards. Anthropogenic climate change may exacerbate this trend. Addressing the vulnerability of society to natural hazards will have short- and long-term benefits but this will require hard and potentially unpopular political decisions. Without efforts to address this, losses will continue to rise rapidly. Hazard-resilient construction standards, defence measures and risk-informed land use planning are key elements to reducing the toll of natural disasters. Cost-benefit analyses of such measures must include the expected change in cost of risk transfer over the lifetime of buildings to reflect the current and potential future impact of large disaster losses on the overall economy. Since this cost is affected by the aggregate level of risk in an area it will increase if the surrounding area is subject to significant exposure growth or adverse anthropogenic climate change effects. The potential economic damage from natural disasters can become very significant at a macroeconomic level as exposure grows disproportionately in areas of high risk.