The economic impact of future increase in tropical cyclones in Japan

Abstract

This article estimates the non-first-order economic loss in Japan due to a future increase in tropical cyclones. One possible effect of global warming could be the increase in intensity of tropical cyclones. Using historical storm tracks between the years 1978 and 2007 and altering their intensities due to this potential increase in their intensity, this paper calculates the future potential regional GDP loss in a certain area that is affected by tropical cyclones. Most of the literature is concerned with physical damage and the loss of lives due to tropical cyclones. However, there are additional economic costs when sustained wind speeds are higher than 30 knots (55.56 km/h), a level that generally will lead to a precautionary cessation of many human activities. Using a Monte Carlo simulation, the paper calculates the potential economic costs for the year 2085 under a climate change scenario with a linear one-per cent yearly increase in CO2. Using a spatial distribution of economic activity in Japan, it is possible to forecast which parts of the country are likely to experience the highest loss risk.