Billion-Dollar Natural Disasters: What Does the Future Look Like?
The average cost of natural disasters and damage to the U.S. economy has increased each year from approximately $35 billion in 1980 to $300 billion in 2017. This increase in the cost of natural disasters could be due to an increase in the strength and frequency of natural disasters and/or growth in the U.S. economy. We forecast the cost of natural disasters by fitting probability distributions to the historical cost of billion-dollar disasters. We model the cost of natural disasters based on all weather-related natural disasters that cost more than $1 billion since 1980 and based only on those natural disasters that cost more than $1 billion that occurred in the past 20 years. Using the data from 1980 to 2018, the model forecasts the annual expected cost to be $52 billion. However, if only the recent disaster data is used to the fit the model, we forecast the expected annual cost to be $93 billion.
The proceeding is published as Shukla, Charchit, and Cameron A. MacKenzie. "Billion-Dollar Natural Disasters: What Does the Future Look Like?" In: L. Cromarty, R. Shirwaiker, P. Wang, eds., IISE Annual Conference and Expo 2020. Proceedings of a meeting held May 3-June 2, 2020. Posted with permission.