Publication

Adaptation to Cyclone Risk: Evidence from the Global Cross-Section

Hsiang, S.M., D. Narita (2012). Adaptation to Cyclone Risk: Evidence from the Global Cross-Section. Climate Change Economics.

Abstract

Understanding the feasibility and cost of adaptation is essential to
management of the global climate. Unfortunately, we lack general estimates of
adaptive responses to almost all climatological processes. To address this for one
phenomenon, we estimate the extent of adaption to tropical cyclones (TCs) using the
global cross-section of countries. We reconstruct every TC observed during 1950-
2008 to parameterize countries’ TC climate and year-to-year TC exposure. We then
look for evidence of adaptation by comparing deaths and damages from physically
similar TC events across countries with different TC climatologies. We find that
countries with more intense TC climates suffer lower marginal losses from an actual
TC event, indicating that adaption to this climatological risk occurs but it is costly.
Overall, there is strong evidence that it is both feasible and cost-effective for countries
with intense TC climatologies to invest heavily in adaptation. However, marginal
changes from countries’ current TC climates generate persistent losses, of which only
~3% is “adapted away” in the long run. These findings are consistent with the
Envelope Theorem (Nordhaus, 2010).