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Costs and Benefits

Tropical cyclones' impact society through damage to property, expense of safeguarding life and property, human mortality, and the expense of the research and forecasting enterprise. Is the cost of the enterprise justified by reductions in hurricane effects?

Peilke and Landsea's normalization of historical damage provides a reliable estimate of expected annual property loss, $5B. This figure is larger than the $1-3B in damage experienced during most years because a few extreme events figure disproportionally in the total. A single $100B event once a century increases the average annual toll by $1B, as might a single $10B event once a decade.

Preparation costs average between $0.5 and $1.0M per mile of shoreline warned. On average, warnings extend 300-400 miles and are raised three times each season. The total warning and emergency response cost is 3x350x$0.75= $787.5M per year.

During the last thirty hurricane seasons of the 20th century, 587 U.S. residents died in hurricanes, or 19.6 annually. In policy calculations, the economic impact of a human death is usually reckoned at $5?10M. A dollar value assigned to human deaths is only the beginning of their impact. One must be wary of arguments that might lead to sacrifice of lives to save money. With this qualification, mortality typically contributes 19.6x$7.5M = $146.8M to hurricanes' impact.

The cost of the forecast enterprise is dominated by satellites and the expense of launching them, figured at either a single geostationary satellite or two polar orbiters annually, about $190M. The annual budgets for hurricane work at the Hurricane Center, Hurricane Research Division, Geophysical Fluid Dynamics Laboratory, Environmental Monitoring Center, and other research and forecasting organizations appear to total less than $25M, including aircraft operations.

Thus, a reasonable estimate of the annual average total costs that hurricanes impose on the U.S. economy is just under $6M. What would this impact be without forecasting and emergency preparation?

The amount of damage prevented by warnings is poorly defined. Estimates range from 10% to 50%. The low estimate $500M is equivalent to moderate damage to 10,000 upper middle class suburban homes or destruction of a half dozen first-line commercial airliners. A great deal of expensive property is mobile, and protection of windows and doors raises the wind speed threshold for major damage substantially. The 10% figure seems low. Probably the best, though still conservative, estimate of prevented damage is 20% or $1.0M hurricane cost/benefits

During the 40 years between 1930 and 1959, inclusive, 70 people a year died in the U.S. hurricanes. Since 1950, the midpoint of this interval, population in the 109 coastal counties between Texas and Virginia had increased by a factor of 3.4. If the forecaster's art had not improved during the last century, expected annual mortality to this larger population from hurricanes would be 238, with an economic impact of $1785M. By this estimate the stakes of the annual hurricane game are $8.9B, of which $2.8B, or 31%, is prevented through an investment of < $0.22B in forecasting and research, for a greater than twelve to one favorable benefit to cost ratio. The prevented impact is dominated by reduced mortality.

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