In brief
As the Eastern United States grapples with a devastating winter storm characterized by ice, snow, and low temperatures, economists and meteorologists are trying to assess its economic impact. The potential GDP reduction from such weather events could be between $150 billion and $600 billion annually. While AccuWeather has provided an estimate of $105-$115 billion in damages, other analysts contest these figures, highlighting the complexity of quantifying economic losses from winter storms, particularly when many losses are indirect and harder to gauge.
HOUSTON (AP) — The deadly and widespread winter storm paralyzing much of the American East with ice, snow, and cold is also taking a multi-billion dollar bite out of the U.S. economy, experts figure.Economists and meteorologists are attempting to quantify the disruption costs of winter weather disasters, which are more challenging to calculate compared to tangible damages inflicted by hurricanes, floods, and fires. Jacob Fooks, a research economist for the Cooperative Institute for Research in the Atmosphere at Colorado State University, pointed out the interconnectedness of our economy with weather conditions. He suggested that severe weather events might collectively reduce gross domestic product (GDP) by 0.5% to 2% annually, which is quite substantial given that the U.S. GDP is around $30 trillion.The preliminary estimate from AccuWeather indicates that the recent storm, which has already grounded around 11,400 flights and tragically resulted in at least 25 deaths, may cost between $105 billion and $115 billion. However, this figure has been met with skepticism from several economists who consider it exaggerated. Climate economist Adam Smith noted that while the storm will indeed result in multi-billion dollar losses, he believes AccuWeather's estimates are overly high and lack sufficient detail.Comparing the winter storm's potential economic burden, Smith cited the 2021 Texas ice storm, which was the most costly winter storm in the U.S. history, causing approximately $26 billion in damages. Furthermore, he expressed that the current storm could rival this cost when considering its geographical spread.Interestingly, the losses attributed to winter storms often differ from those related to hurricanes or floods since much of it encompasses lost opportunity costs, which are less quantifiable. Additionally, while some businesses may prosper during such storms (like hardware stores selling shovels and salt), the overall disruption of supply chains and business operations tends to overshadow these gains.With climate change continuing to exacerbate the frequency and severity of such weather events, the looming economic impacts of this winter storm are just the latest indication of the financial dangers posed by our changing climate.
