Wednesday, November 28, 2012

SANDY | Compared with Katrina

New York Governor Andrew Cuomo has "raised eyebrows" with his claim that Superstorm Sandy suffered worse property damage than Katrina. The New York Times today sorta debunked this claim with a side-by-side comparison of the two storms, although on electrical outages Sandy wins hands down.

No question that Katrina was a worse storm by meteorological standards, and the deaths were much greater, which Governor Cuomo concedes. What he argued (based on my having seen the replay of his remarks on MSNBC) is that the scope of the damage was greater. He didn't actually say that the  dollar value of the damage in New York, New Jersey and the other states that have been hit by Sandy is greater. Let's look at an updated chart of the top 20 storms in the U.S. since 1900 in current dollars.

Top 20 U.S. Storms Since 1900, 2012 $
DAMAGE
RANK STORM NAME  Bil. 2012 $ YEAR
1 Great Miami $180.22 1926
2Galveston $105.57 1900
3 Galveston $84.91 1915
4 Katrina $84.62 2005
5 Andrew $64.41 1992
6 Storm 11, SW FL$53.94 1944
7 Donna $49.81 1960
8 New England $46.84 1938
9 Lake Okeechobee $44.89 1928
10 Wilma $25.96 2005
11 Hazel $24.26 1954
12 Diane $24.11 1955
13 Camille $23.04 1969
14 Charley $20.38 2004
15 Ike $20.37 2008
16 Hugo $20.02 1989
17 Carol $19.29 1954
18 Agnes $19.01 1972
19 Ivan $18.59 2004
20 Storm 2 $18.51 1949
Source: Roger Pielke Jr.'s blogsite

In my recent posts I attempted to update a 2010 table of the top storms. Through a  comment on my last post I was sent to this table, for which I am grateful. It is updated by the person who prepared the original table, Roger Pielke, Jr. The method he uses is described in a 2008 paper cited in the footnote to the table in last post. I cited this work frequently in examining the Hurricane Irene damage data. The numbers above are easy to use. Just plug in a number for the estimated damage in current dollars and you have the ranking of Superstorm Sandy in fair historical terms.

If you add together the $32.8 billion New York damage and the $29.4 New Jersey damage, the $62.2 billion total takes you to the #6 spot. Definitely, the NY $9.1 billion aid request for flood surge prevention (and the New Jersey equivalent) should be excluded from the total.

Pielke argues that to be consistent, one should also exclude from damage numbers any business interruption costs, because storm damage estimates historically only included the value of destroyed assets. If business interruption is excluded, much of  the $62.2 billion will be excluded. But there are other states affected by Sandy (the Connecticut shoreline was badly hit in some places), and adding in their damage will top up the final number.

Where I come out is this:
1. There is a bias against long-ago storm-damage numbers, but there is also the bias of ignorance that governments operated under 112 years ago. They knew less about weather patterns and were less prepared. So in comparing the viciousness of the storms, they seem less terrible today for the same level of severity because we know how to prepare. If no one was ready for Superstorm Sandy, can anyone doubt that the death rates would have been much higher along the shore - more than 200 miles of shoreline from Cape May through to Montauk?

2. Adjusting for inflation is a no-brainer. But Pielke has adjusted for more than that, for the value of property because of rising density. Someone could argue he has over-adjusted.

3. Katrina was recent, so the business-interruption problem doesn't apply. Recent practice is for business-interruption and loss-of-use to be insurable and to be a legitimate damage. Think of it this way: When your house collapses in a storm, you have two problems. One is you need to rebuild. The second is that you need a place to stay. Insurance companies tend to pay for both. The same applies to business. If my store is flooded, I lose inventory and I have to spend money repairing electrical wiring and walls etc. Meanwhile I also lose business while I am fussing about these problems. Insurance policies tend to pay for both of these problems. I think that business-interruption is  reasonable damage cost to include in these estimates.

4. But Governor Cuomo's request for $9.1 billion relates to a different kind of problem. The storm reveals inadequacy in the infrastructure and makes it imperative to address it. Think of the homeowner whose house is destroyed. The town decides not to let the beach-dwellers rebuild, or to require higher standards of construction. The town may offer the homeowner some compensation for what amounts to a taking way of a right to use of property. But an insurance company could refuse to reinsure, which might amount to the same thing if a homeowner needed to borrow to rebuild (banks typically want their mortgaged properties to be insured). The point is that remediation of adverse conditions is not a new piece of damage - the damage merely exposed a problem that was there all along. That's why I don't think it should be included in damage estimates.

Bottom line, I think that the damage caused by Katrina was similar to that caused by Sandy, apart from loss of life where there is no comparison. The reason is that Sandy affected a larger area and it hit two of the five biggest business central business districts in the nation - downtown and much of midtown.

It may not be social justice, but economics uses the yardstick of dollars rather than windspeed or pain and suffering. Governor Cuomo may have a case that the dollar value of the cost of damage to property was greater for Sandy. A counterargument is that the levees were broken around New Orleans and that will take a huge amount to replace. But isn't the additional cost similar to the problem with flood prevention in New York? To rebuild the levees, they will have to be higher and stronger. It's not just the damage we are talking about, it's the revelation that prior defenses were inadequate. The whole issue of infrastructure "needs" is hugely important, but it is separate from the assessment of damage as traditionally computed.