Building Boom Is Driving Up Tally of Billion-Dollar Disasters: Current accounting doesn’t adjust for how growth has increased the potential for damages

By Jo Craven McGinty of the WSJ. Excerpts:

"“NOAA adjusts for inflation, which is wonderful, but it doesn’t make an adjustment for the amount of physical assets in the country,” said Jay Zagorsky, an economist at Ohio State University. “There are twice as many bridges, homes, factories and cars for a hurricane to destroy.”"

"He applies an additional adjustment to NOAA’s numbers using something called the chained fixed asset index from the Bureau of Economic Analysis to estimate how many fewer events would exceed the billion-dollar threshold if economic development had held steady at 1980 levels.

By his count, 77 fewer disasters would have made the cut."

"“NOAA estimates suggest the numbers are going up very quickly” Dr. Zagorsky said. “I’m just disagreeing with how fast it’s going up.”

His calculation is similar to applying the Consumer Price Index to adjust costs for inflation.

“If the CPI is 100 one year, and then it’s 110 in a later year, you know prices went up 10%,” Dr. Zagorsky said. “Without adjusting for inflation, disasters would consistently look more expensive over time and constantly shatter records for damage.”

To calculate the adjustment for economic growth, each year’s BEA value for fixed assets is divided by the 1980 value and multiplied by $1 billion. The results represent the annual figure that is the minimum amount of damage needed to be economically equivalent to $1 billion of destruction in 1980.

“For example, the figure for 2007 is $2.1 billion,” he said. “This means any storm in 2007 that caused less than $2.1 billion in damage would not have been economically important enough to make the billion dollar list using the 1980 standard.”"

"Miami went from 654,800 housing units in 1979 to 2 million in 2015. Houston went from 1.1 million to 2.2 million. And New York City from 4.2 million to 7.4 million."