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article imageFinancial losses from climate change for businesses

By Tim Sandle     Oct 14, 2017 in Environment
Among the myriad of factors that businesses need to consider when performing future financial modeling is the impact of changing climate, especially hurricane-related financial loss. A new method to calculate this has been put forward.
he method comes from the University of Vermont and the headline warming is that warming seas could lead to 70 percent increase in hurricane-related financial loss for businesses, together with municipalities. This is based on predictive modeling, assuming that by 2100 oceans warm at the worst-case-scenario rate.
The information about the potential rise in ocean temperatures comes from data supplied by the Intergovernmental Panel on Climate Change. In a new study, researchers base their hurricane modeling on the Federal Emergency Management Agency's HAZUS database (which provides a a zip-code-by-zip-code inventory of building types and occupancy). The resultant model is said to have an 80 percent confidence level.
The data used to develop the model was drawn from the U.S., where 13 coastal counties located in South Carolina, across 50 miles of the coastline were developed. The model simulated hurricane size, intensity, track and landfall locations. Here two scenarios were factored in. The first was if ocean temperatures remain unchanged between 2005 to 2100; and the second, if ocean temperatures warm at a rate predicted under the worst-case scenario.
These two scenarios came to different conclusions, although both are costly for exposed areas. Under the scenario where temperatures do not rise significantly more, then the expected loss in the region due to a hurricanes would be $7 billion (based on one severe hurricane occurring evry 50 years). With the scenario whereby warming oceans occurs there will be more hurricanes and the expected loss figure hikes up to $12 billion.
The implications are, according to lead researcher Dr. David Rosowky: "To be prepared, we need to build, design, zone, renovate and retrofit structures in vulnerable communities to accommodate that future."
The study has been published in the journal Sustainable and Resilient Infrastructure, with the research paper titled "Hazard-based regional loss estimation considering hurricane intensity, size and sea surface temperature change."
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