The Gulf Coast has experienced a lot of tragedy in recent years. Sadly, things might get even worse. By 2030, the region could face average annual losses of up to $23 billion and a whopping $350 billion in cumulative economic damages from climate risks, according to new research from the Entergy Corporation and Swiss Re.
"The Entergy project confirmed our findings from previous adaptation studies, namely that there is a flip-side to the climate debate," said Andreas Spiegel, Swiss Re's senior climate change advisor. "Inaction at the global policy level to reduce greenhouse gas emissions, combined with economic growth that is not risk-adequate, will come at a cost. In the Gulf Coast region, such failures could result in annual average expected losses of 2% to 3% of GDP by 2030."
There is good news, however. The same researchers found that if $50 billion is invested in "cost-effective measures" (including improved building codes, beach nourishment and roof cover retrofits) over the next 20 years, Gulf Coast communities can avert up to $135 billion in annual losses. Insurance provides another solution, says the report. Four ways insurance can help: making premiums more affordable with adaptation measures, decreasing "under-insurance," promoting additional self-insurance and using cat bonds.Risk Management Magazine and Risk Management Monitor. Copyright 2013 Risk and Insurance Management Society, Inc. All rights reserved.