Here's what 2018 may bring for natural disasters

Natural disasters including devastating hurricanes and wildfires caused $306 billion in damage in the U.S. in 2017, making it the costliest year on record. The year also painted a grim picture of how climate change could further impact the trajectory of future disasters.

“It’s very clear that things are getting worse now than they have been in the past,” said Howard Kunreuther, Wharton professor of operations, information and decisions and co-director of the Wharton Risk Management and Decision Processes Center. “Particularly in Houston with respect to Hurricane Harvey, a lot of the losses from these disasters are now coming from urban flooding and things that had never been on the agenda before.”

According to the National Oceanic and Atmospheric Administration (NOAA), there were 16 U.S. natural disasters in 2017 that caused more than $1 billion in damage each. Hurricanes caused a total of $265 billion in damage, including $125 billion from Hurricane Harvey, $90 billion for Hurricane Maria and $50 billion from Hurricane Irma. The NOAA said that 2017 was also the third-warmest year on record.

Kunreuther and Billy Fleming, research coordinator of the Ian L. McHarg Center at the University of Pennyslvania’s School of Design, recently joined the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111, to discuss what lessons can be learned from 2017 and how that could impact natural disaster preparation and recovery in 2018 and beyond. (Listen to the full podcast at the top of this page.)

Kunreuther noted that while there aren’t necessarily more natural disasters occurring, those that do arise are more intense than in past years, “which is one reason we had this very, very large loss in 2017.”

He added that the case of Houston, in particular, is evidence of more natural disasters occurring in areas that previously thought they were immune. “Most of the people in Houston felt that they really didn’t have to take protective measures; most had not bought flood insurance because they didn’t see the likelihood of this disaster and it was a low probability event.”

Fleming noted that another factor contributing to the impact of hurricanes is that many coastal cities have an increasing amount of people and infrastructure located in the floodplain. “Climate change isn’t just sea level rise; we know that we’re putting more energy into the atmosphere and as a result, we’re having more intense events,” he said. “We’re not going to have more, but we’re going to have more intense events [in places] where we have less room for the water to go and where we’ve put a lot more people and a lot more public assets.”