John Rapley is an author and academic who divides his time among London, Johannesburg and Ottawa. His books include Why Empires Fall (Yale University Press, 2023) and Twilight of the Money Gods (Simon and Schuster, 2017).
Hot on the heels of Hurricanes Debby and Helene, Hurricane Milton shattered a Florida still reeling from its earlier disasters. With the first storm having caused an estimated US$28-billion and the second adding another US$47-billion to the bill, the total cost of these storms could approach a tenth of the state’s economic output.
But if this year is proving especially intense, it’s also shaping up to be the new normal. Hurricane seasons oscillate in long cycles of 20 to 40 years, between periods of intense and relatively dormant activity. After a long dormant period, the North Atlantic entered one of greater storm intensity in the 1990s, and has seen more yearly activity since.
But there’s something else going on. Even as we approached that latest period of intense activity, scientists were warning that the next cycle would see more destructive storms than in the past. Climate change was raising sea levels and temperatures, and the added energy and moisture would create storms more powerful than we were accustomed to dealing with, while making them come more frequently.
So it has come to pass. This development fits into a long trend. Of the 10 costliest years for extreme weather on record in the U.S., eight occurred in the last decade. In Europe, it was five. In Canada, of the 10 most costly years insurance companies have ever had to bear, nine occurred since 2011. We are only just starting to see the effects of such shocks show up in insurance policies, which will be re-priced as the cost of these contingencies is factored in.
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More broadly, asset markets have yet to seriously reprice for the effects extreme weather will have on them. Some real estate has already become worthless, much more will become so. Some infrastructure may be inadequate to the effects of weather it was never built to withstand. Some companies and households may need to invest aggressively to weatherproof their properties, or absorb the added expense.
Canada has already had a taste of such costs in the form of wildfires. Although they aren’t always considered extreme-weather events, they result in part from changing weather patterns, with the longer droughts associated with climate change creating a higher degree of risk. Last year’s wildfires knocked the economy back for a quarter, as a great deal of economic activity had to cease and the damage had to be covered.
Normally, such setbacks are cyclical – a reduction in activity during the event gives way to a bounceback afterward, as pent-up activity resumes. However, that rule may no longer apply because of the emergence of two new phenomenons. One is the persistence of effects after an event has passed, because of disruptions in supply. Crop-destroying events lead to shortages, particularly of food. That raises prices. With extreme-weather events becoming more frequent and intense, some economists estimate that inflation could rise permanently by as much as 1 per cent a year. Interestingly, that would amount to an effective added tax on Canadian households of roughly $1,400 a year – substantially more than the carbon tax currently costs them.
The other phenomenon is the emergence of “compound events,” extreme weather events that occur in rapid sequence and thus increase their costs exponentially rather than sequentially. The storms besieging Florida this year offer an example. Hurricane Helene left piles of rubble in its wake. Whereas this debris would normally get cleared in due course, the rapid arrival of Hurricane Milton churned them up, turned them into projectiles and intensified the destructive effects of the high winds and rising water.
It’s thus significant that the upward trend in extreme-weather events is not limited to a cycle of recent decades. Since the 1960s, the number of them recorded around the globe each year has risen sevenfold, with droughts, storms, floods, heatwaves and wildfires all becoming stronger and more common. The connection to climate change is inescapable. This happens to be the time that most of the carbon emissions humanity has ever produced were pumped into the atmosphere.
In effect, we put the postwar economic boom on the planetary tab and now the bill’s come due. Faced with it, fatalism may seem appealing – if we’re all going to burn we might as well have one last party. But there are better options. There is no shortage of economic opportunities in the transition to a carbon-free future, and many Canadian startups are in the forefront of this new age. Unfortunately, they have to compete with the siren-songs of denialism, which continue to lure some deeper into the crisis.
So the next time you hear someone say we can’t afford the measures used to halt climate change, ask them how they’re budgeting for the costs of living with it. Because they’ll keep rising, and no catchy slogan will change that.