20 January 2012

Another Billionz Update: NOAA Discovers Inflation

[UPDATE 4/11: Here is the Federal Register announcement for the forthcoming NOAA workshop on "billion dollar disasters." Shouldn't the research take place before the press release and fancy website? ;-)]

Yesterday, NOAA issued a press release breathlessly announcing that they (through some creative effort) were able to cobble together 2 additional "billion dollar disasters" for 2011. If you think that identifying 2 additional billion-dollar disasters is big news worthy of a press release, then you might also conclude that locating 19 other billion-dollar disasters would be even bigger news. Well, you'd be wrong.

NOAA has quietly added 19 new disasters to their tally since 1980, apparently having discovered a quantity called inflation. The modification of their tally is (it seems) in response to a blog critique which was followed up by a Washington Post blogger. The new "billion dollar disaster" figure is at the top of this post, with the 19 new additions from NOAA in red.

NOAA has also added a new disclaimer to the webpage that hosts the list of disasters:
Caution should be used in interpreting any trends based on this graphic for a variety of reasons. For example, inflation has affected our ability to compare costs over time. The graphic now shows events that were reported to have less than a billion dollars in damage prior, but after adjusting for Consumer Price Index increases, they now exceed a billion in damages. There are nineteen new events as indicated by the shaded extensions of the bars. Continued assessment of these data are in process, as there are other factors as well that affect any rate of change interpretation. NCDC intends to include academic, federal, and private sector experts in such an assessment this year. Comparison of events for years closest to 2011 are most reliable.
An unvarnished translation would be -- "This graph means virtually nothing."

In addition to inflation, patterns of population growth, nature of economic development, accumulation of wealth all play a role in how extreme events distant in time would lead to economic impacts had they occurred with the same underlying societal conditions. (To understand why inflation is important but less so than other adjustments, in this paper in PDF compare the inflation-adjusted hurricane losses in Figure 3 and normalized hurricane losses in Figure 4.) As I wrote in my initial post on this topic, for 1980 there is certainly 4 (and maybe 5 or more) other events that occurred in 1980 but would exceed a billion dollar threshold had they occurred in 2011. So by adding one event to 1980, NOAA has recognized the general problem, but has not come close to actually dealing with it.

In the end, it is nice to see NOAA acknowledge their mistaken methodology and propose an expert assessment of this topic later this year -- a complete reanalysis of normalized disaster costs from 1980 to 2011 is a big job. Ultimately, the time for a federal science agency to get the science right is well before issuing breathless press releases. NOAA has dropped the ball on this one, as have virtually all of the media and bloggers who purport to care about science integrity.

Disclaimer: I am a Fellow of a NOAA cooperative institute here at the University of Colorado and the Center where I work receives NOAA funding.


  1. This is a step in the right direction. It is undeniable that a comprehensive characterization of a problem (or system) improves the quality of a risk assessment, increases the likelihood of correctly identifying and implementing mitigating measures, and optimizes allocation of resources. This is especially important when the behavioral envelope of the system cannot be accurately predicted.

  2. Their two new 2011 'disasters' look decidedly dubious. One is Tropical Storm Lee, whose impact was severe mainly because it followed Tropical Storm Irene, which had dumped heavy rainfall on the Northeast.

    So, for example, if a dam is severely damaged by a previous storm, and a small thunderstorm subsequently hits it, finally causing a breach, is the small thunderstorm a billion dollar disaster?

    The second is a cluster of thunderstorms which spanned a 5 day period. What is the justification for combining these storms? Why not add up all the thunderstorms in 2011, for heaven's sake, or better yet lump them each into $1 bn bins? You could get lots more disasters that way.

  3. Well it still is a valuable graph because it shows no disasters ever occurred prior to 1980 and as soon as CO2 hit 350 ppm in 1989, all hell broke loose. :-)

  4. It's just incompetence. Scientific standards have declined. It's very depressing.

  5. So are these people utterly incompetent, or are they fundamentally dishonest? Serious question.

  6. Maybe if NOAA moves to Interior, they will have better access to economists;).

  7. 5. Mark B. said...

    So are these people utterly incompetent, or are they fundamentally dishonest?

    The US EIA's projections for coal prices and usage in the US have been wrong every year except last year for a decade. The 'model' they have been using for 30 or 40 years failed to take into account trends in transportation costs.

    Adjusting for demographics and inflation would be the responsibility of the Census Bureau and Bureau of Labor Statistics.

    NOAA adjusting for inflation and demographics would mean they have to trample on two other bureaucratic turfs.

  8. @#5 & #7

    Maybe we need the Department of Government Waste, Incompetance and Taxpayer Fleecing to investiagte NOAA. Oh wait we don't have an agency like that. lol

    Roger, any idea what Lomborg might do now that he's losing his funding?