As another hurricane season approaches and government leaders debate
U.S. climate policy, a coalition of leading insurers, public officials,
risk experts, builders and conservation groups announced a blueprint of
policy changes and common sense actions that could reduce economic
losses from future storms and rising sea levels.
A 2008 assessment by the Wharton School’s Risk Center shows fast-rising
economic losses worldwide from hurricanes and other natural
catastrophes.
Losses have increased from just over $50 billion in the 1950s to nearly
$800 billion in the 1990s, with about $620.6 billion so far in the
current decade. Last year’s losses exceeded $200 billion, including $40
billion in losses from Hurricanes Gustav and Ike in the U.S. alone.
Directed by The Heinz Center and Ceres, the blueprint is endorsed by a
diverse group, including The Travelers Institute, The Nature
Conservancy, National Oceanic and Atmospheric Administration, the
Wharton School, and the Mayor of Charleston, S.C.
Through regulation, investment and other means the blueprint aims to
cut economic losses from future storms and rising sea levels by as much
as half along U.S. coastlines.
Specific recommendations include:
- Requiring risk-based land use planning
- Designing adaptable infrastructure and building code standards to meet future risk
- Strengthening ecosystems as part of a risk mitigation strategy
- Developing flexible adaptation plans
- Maintaining a viable private property and casualty insurance market
- Integrating climate change impacts into due diligence for investment and lending
"Our coasts are threatened, there are reasonable steps to
counter those threats, and we as a nation are not yet taking them,"
states the Resilient Coasts Blueprint.
An increasing number of studies underscore the value of reducing
coastal vulnerabilities. A Wharton study concludes that homeowners in
Florida could reduce losses from a severe hurricane by 61%,
resulting in $51 billion in savings, simply by building to strong
construction codes. South Carolina, New York and Texas would see
savings of 44%, 39% and 34%, respectively,
according to the same study.
Similarly, the National Institute
of Building Sciences shows that every dollar spent on mitigation saves
society about four dollars on recovery costs. Despite this evidence,
nearly all U.S. coastal cities and towns lack adequate land use
requirements and building code standards to realize these savings.
The
blueprint cites the example of 500 commercial clients of the insurer FM
Global, which experienced about 85% less damage from Hurricane
Katrina as similarly situated properties. The reduced losses were
directly the result of building retrofits and other hurricane loss
prevention and preparedness measures taken by the insurer’s 500
policyholders. The investment return was striking–a $2.5 million
investment in loss prevention resulted in $500 million in avoided
losses.
Noting that the Gulf and Atlantic coasts have nearly $9 trillion of
insured coastal property, coalition members called on investors to take
stock of their coastal exposure, especially in real estate and
infrastructure, and for banks to include climate risks in lending- and
investment-related due diligence.
"The Travelers Institute’s support of the Resilient Coasts Initiative
reflects its deep belief that loss mitigation, strong and well enforced
building codes, and sensible land use planning are critical to reducing
risk to life and property as well as to making private insurance more
plentiful in coastal areas," said Joan Woodward, Travelers executive
vice president of public policy.
Mindy S. Lubber, president of Ceres, a leading coalition of
investors
and environmental groups working on sustainability challenges such as
climate change, said, "Investors are increasingly exposed to economic
losses fueled by coastal development that ignores the intensifying
hazards from rising sea levels and stronger coastal storms. Reducing
risks along the coasts will protect vulnerable populations and the
long-term value of investments at the same time."
The blueprint document can be read at the link below.
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