As El Niño continues to intensify in the coming months, it is expected that global drought losses will surpass the current forecast $8 billion in economic damage, according to a new report by Aon Benfield, the global reinsurance intermediary and capital advisor of risk management firm Aon.
The latest edition of the Global Catastrophe Recap report evaluated the impact of the natural disaster events that occurred worldwide during August 2015. It revealed that, in the United States, severe drought conditions persisted in western regions with total economic losses expected to reach at least $3 billion — mostly attributable to agricultural damage in California. Several Caribbean and Central American nations issued alerts as droughts worsened.
Drought conditions also affected Eastern Europe, Africa, the Caribbean, and Central America during August, the report said, with combined economic losses of more than $2.6 billion occurring in Romania, Czech Republic and Poland.
Also during August, Super Typhoon Soudelor tracked through Saipan, Taiwan and China causing economic losses in excess of $3.2 billion. Soudelor was followed by Typhoon Goni which wrought havoc in Philippines, the Korean peninsula, and Japan, killing at least 70 people, damaging tens of thousands of homes and causing economic losses well into the hundreds of millions of dollars.
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In the U.S., record flooding in the greater Tampa, Florida metro region caused widespread property and automobile damage, the report said. A severe weather outbreak prompted economic losses of $475 million and insured losses of $325 million in the U.S., mainly due to hail and damaging straight-line winds.
The western third of the U.S., Canada's British Columbia province, and southern and central portions of Europe all suffered damaging wildfire outbreaks during August. The costs of fighting the fires soared to well beyond $1 billion globally.
Largely due to the widespread damage inflicted by Superstorm Sandy, extreme weather events cost the United States $100 billion in 2012 — most of which went towards federal crop, flood, wildfire and disaster relief, according to a 2013 Ceres report. More recently, Citbank released a report, which found that taking action to mitigate climate change by investing in a low-carbon energy mix will save more money in the long run than inaction, even before accounting for savings from avoided climate damage costs.