As climate change increases the intensity and (possibly) the frequency of major coastal storms, what will be the economic consequences?
Answering this question requires two big pieces of information: the economic consequences of such storms (typhoons, hurricanes, and tropical cyclones) and the patterns of those storms in the years ahead. As it turns out, it’s that first bit — the economic consequences of storms — that was difficult to pin down.
For years economists have debated whether destructive storms are even bad for a country’s economy. To a non-economist, the ill effects of a storm might seem intuitive, but economists have a knack for finding plausible counterintuitive explanations. When it comes to a major natural disaster, they had four competing hypotheses: Such a disaster might permanently set a country back; it might temporarily derail growth only to get back on course down the road; it might lead to even greater growth, as new investment pours in to replace destroyed assets; or, possibly, it might yet even better, not only stimulating growth but also ridding the country of whatever outdated infrastructure was holding it back. Woo... Read more