HOW SENSITIVE ARE US HURRICANE DAMAGES TO CLIMATE? COMMENT ON A PAPER BY W.D. NORDHAUS

An article by William D.Nordhaus (2010) in this journal examined the economic impacts by hurricanes in the USA, and the potential impacts of climate change on future hurricane damages. His analyses show that hurricane damages normalized over time for changes in GDP have increased significantly since the year 1900, at a rate of about 3.1% per year. Moreover, the results of Nordhaus show that hurricane damages increase with the ninth power of maximum wind speed, which is considerably higher than findings of other studies. We perform similar statistical analyses with different data series of hurricane damage, which are more accurately corrected for changes in exposure of assets over time. Our results do not indicate an upward trend in hurricane losses since 1900, which is in line with earlier studies, and indicates that climate change has not increased hurricane damage in the past. Moreover, although the relation between damage and maximum wind speed appears to be considerably higher than assumed by other studies, this elasticity is more likely to be the eighth-power of maximum wind speed. This finding is relevant since it implies that future climate change impacts on hurricane damage may be considerably lower than Nordhaus indicates.