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In Hurricane Forecasting, Science is Far From Exact

By CARL BIALIK | The Numbers Guy | Wall Street Journal | June 2005

Hurricane season has officially begun in the U.S. -- and so has the annual guessing game, played out in the media, of just how many of the violent storms we'll see this year.

Each spring, climatologists take a stab at predicting how many hurricanes will threaten the Caribbean and Southeastern U.S. between June 1 and November 30. Routinely covered as heavily as Punxsutawney Phil's pronouncements, the forecasts were especially awaited this year with memories of 2004's hurricane devastation still fresh. Six hurricanes made landfall in the U.S. last year, causing more than $20 billion in damage by some estimates.

In recent weeks, CNN, MSNBC and CBS -- and dozens of newspapers around the country -- all reported forecasts by Colorado State professor William Gray, the pioneer of long-range hurricane predicting, of eight hurricanes this year (revised up from seven in April). Other forecasts from the National Oceanic and Atmospheric Administration, Florida State University and University College London project between six and eight hurricanes.

The Numbers Guy examines numbers and statistics in the news, business, politics and health. Some numbers are flat-out wrong, misleading or biased. Others are valid and useful, helping us to make informed decisions. As the Numbers Guy, I will try to sort through which numbers to trust, question or discard altogether. But my examination of forecasters' records over the past six years -- the period in which all four groups have been publicizing their predictions before the hurricane season begins -- shows that none do much better than a simple five-year average, a number that can be derived without expertise in climatology or statistics (more on this in a moment). Furthermore, despite all the press they generate, these forecasts aren't very useful to insurance companies, emergency planners and others who you might think would crave them. Researchers are recognizing this and moving away from the headline numbers to more complex forecasts that attempt to better capture hurricane season's impact.

First, it's important to understand what these numbers mean. The projections count all storms that form in the Atlantic basin -- the Atlantic Ocean north of the equator, the Caribbean and the Gulf of Mexico -- and that rise to the hurricane definition set by NOAA's National Hurricane Center: winds of 64 knots (73.6 miles per hour) that are sustained over a one-minute average period. The projections include storms that never touch ground.

To predict the future, hurricane forecasters look to the past. They analyze various weather parameters to see which have correlated best with hurricane activity. These include water temperature, wind speed and the size of the El Niño effect. Forecasters I spoke with said they create statistical models that best fit the historical data, and then turn the resulting crystal ball toward the future. This method could be replicated by a statistician who knows nothing about meteorology -- the models don't ask why a certain temperature creates a certain effect, they merely say that in the past it has been likely to do so. (Dr. Gray says he adjusts his results based on other climatological factors not included in his statistical model, like long-term changes in ocean conditions.)

Historical weather data are surprisingly detailed, researchers told me. Some forecasters go back to 1944, when pilots began flying into storms to measure them. (Since the 1960s, such data have been supplemented by satellites.) Newspaper accounts and other sources can help forecasters look back even further. Charles Watson, a University of Central Florida professor who predicts the probability that hurricanes will touch down in cities around the country, says that shippers and insurers had an incentive to create state-of-the-art measurements: "When there's money involved, people pay attention."

Researchers' methods may be complex and rigorous, but their results over the past six years -- at least for the total number of hurricanes -- haven't been much better than an educated guess. To evaluate the forecasts, I measured the average error for each one -- the difference each year between predicted hurricanes and the actual number. (Thanks to Iowa State statistics professor Philip Dixon and National Center for Atmospheric Research scientist Barbara Brown for advising me on this evaluation, and reader Paul Haskins for suggesting it.) I looked at forecasts made in May or earlier, before the start of hurricane season -- some researchers continue to update their predictions later in the year. It turns out that all four forecasts have missed by between 1.3 and 1.5 hurricanes each year. But a more simplistic method, a five-year moving average of hurricane counts, does just as well, missing by an average of 1.4 hurricanes each year. (To arrive at a five-year moving average, you simply add the counts for the previous five years and divide by five. For instance, to get a prediction for the number of hurricanes in 2000, I averaged the actual counts from 1995 through 1999. For 2001, I used counts from 1996 through 2000. I did this for each of the six years I evaluated.)

Even if forecasters improve their ability to predict hurricane counts, they may not be accomplishing a whole lot. There's little correlation between the number of hurricanes and the number that hit land in the U.S. (see NOAA's hurricane count and list of hurricanes that touched ground). There were at least eight hurricanes in each of 1990, 2000 and 2001, but none hit land. Each year between 1991 and 1993, there were four hurricanes and one hit land each year. Last year's devastating season featured nine hurricanes and six landfalls. Even the number of landfalls doesn't tell all; 1992's lone strike was named Andrew, and it caused roughly $20 billion in damages. Also, the forecasts don't say anything about when the storms will hit.

As a result, it's hard to find industry groups or government agencies who base planning decisions on the forecasts. Ayana McIntosh-Lee, a spokeswoman for BP Plc, said the energy company relies more on three-to-five-day forecasts for decisions about personnel on its offshore drilling operations. Same goes for the U.S. Navy's Second Fleet, Lieutenant Mike Kafka told me: "While we view long-range forecasts with interest, they do not play a large role in our decision to move assets." Coast Guard spokesman Ron Mench said, "We wait until there is actually an active storm."

Carolyn Gorman, vice president of the trade group Insurance Information Institute, told me insurers used to fund hurricane forecasting by researchers, including Dr. Gray. (She said insurers have "a lot of respect" for Dr. Gray's work.) But the companies have since pulled back. The forecasts come out too late for insurers to act on them: "They don't come out with anything like enough lead time to adjust insurance rates," she said. Even reinsurers can't benefit much because most of their contracts are signed by Jan. 1, says Richard Murnane, program manager at the Bermuda-based Risk Prediction Initiative, an insurance-industry-funded research group.

The forecasters are de-emphasizing the total hurricane count and instead working on projecting other, more-useful measures, like the number of landfalls and something called the accumulated cyclone energy index, which provides a measure of total storm intensity and duration. A Narragansett, R.I., company called Accurate Environmental Forecasting Inc. and Dr. Watson's team at Central Florida focus on the likelihood of storms touching down in various regions. (The most endangered cities have just a 10% chance of being struck by a hurricane this year, according to the forecasts. Central Florida stands at 4.9%.)

Ben Nelson, state meteorologist with the Florida Division of Emergency Management in Tallahassee, says the landfall predictions aren't yet good enough. "That part of the science hasn't been accurate enough for us to base protective actions on them, months in advance," he says. However, like other emergency managers, he values the yearly media hoopla around hurricane forecasts: "Above all, the forecasts that Dr. Gray put out each year raise public awareness. We're supportive of anything that raises public awareness before the hurricane season begins."

Those may not be stirring words for scientists, who are in the business of describing the physical world, not crafting public-awareness campaigns. And the support of emergency managers can be contingent: Dr. Watson points out that officials don't much care for forecasts of below-average activity, which have less public-relations value.

With memories of last year's grim season fresh and the 2005 outlooks particularly foreboding, this summer will be something of a proving ground for the researchers. This year, their forecasts are mostly in line -- ranging from six to eight hurricanes. "That would give you confidence we all have it right," says Christopher Landsea, an NOAA meteorologist. "Either that," he laughs, "or we'll all going to bomb."

[Note: The text was slightly shortened to comply with ASF requirements]
 
COMMENTARY

Hurricanes and Hot Air
By WILLIAM M. GRAY
WSJ, July 26, 2007

Though the 2007 hurricane season is off to a slow start, my colleague Phil Klotzbach and I will be updating our seasonal Atlantic Basin Hurricane Activity Forecast on Aug 3. We still anticipate another active season -- an above-average number of major hurricanes with maximum sustained winds in excess of 110 mph.

Since 1995, the Atlantic basin has experienced a significant increase in major hurricanes, with 47 major storms in the last 12 years. During the prior 25-year period, 1970 to 1994, there were only 38 major hurricanes, or, on an annual basis, slightly less than 40% as many. On a long period normalized basis, major hurricanes account for about 80% to 85% of all U.S. tropical cyclone-related destruction.

Some scientists, journalists and activists see a direct link between the post-1995 upswing in Atlantic hurricanes and global warming brought on by human-induced greenhouse gas increases. This belief, however, is unsupported by long-term Atlantic and global observations.

Consider, for example, the intensity of U.S. land-falling hurricanes over time -- keeping in mind that the periods must be long enough to reveal long-term trends. During the most recent 50-year period, 1957 to 2006, 83 hurricanes hit the United States, 34 of them major. In contrast, during the 50-year period from 1900 to 1949, 101 hurricanes (22% more) made U.S. landfall, including 39 (or 15% more) major hurricanes.

The hypothesis that increasing carbon dioxide in the atmosphere increases the number of hurricanes fails by an even wider margin when we compare two other multi-decade periods: 1925-1965 and 1966-2006. In the 41 years from 1925-1965, there were 39 U.S. land-falling major hurricanes. In the 1966-2006 period there were 22 such storms -- only 56% as many. Even though global mean temperatures have risen by an estimated 0.4 Celsius and CO2 by 20%, the number of major hurricanes hitting the U.S. declined.

If global warming isn't the cause of the increased Atlantic hurricane activity seen over the past dozen years, what is?

My Colorado State University colleagues and I attribute the increase in hurricane activity to the speed-up of water circulating in the Atlantic Ocean. This circulation began to strengthen in 1995 -- at exactly the same time that Atlantic hurricane activity showed a large upswing.

Here's how it works. Though most people don't realize it, the Atlantic Ocean is land-locked except on its far southern boundary. Due to significantly higher amounts of surface evaporation than precipitation, the Atlantic has the highest salinity of any of the global oceans. Saline water has a higher density than does fresh water. The Atlantic's higher salinity causes it to have a continuous northward flow of upper-ocean water that moves into the Atlantic's polar regions, where it cools and sinks due to its high density. After sinking to deep levels, the water then moves southward, and returns to the Atlantic's southern fringes, where it mixes again. This south-to-north upper-level water motion, and compensating north-to-south deep-level water motion, is called the thermohaline circulation (THC).

The strength of the Atlantic's THC shows distinct variations over time, due to naturally occurring salinity variations. When the THC is strong, the upper-ocean water becomes warmer than normal; atmospheric circulation changes occur; and more hurricanes form. The opposite occurs when the THC is weaker than average.

Since 1995, the Atlantic's THC has been significantly stronger than average. It was also stronger than average during the 1940s to early 1960s -- another period with a spike in major hurricane activity. It was distinctly weaker than average in the two quarter-century periods of 1970-1994 and 1900-1925, when there was less hurricane activity.

A number of my colleagues and I have discussed the physics of Atlantic THC variations in our seasonal hurricane forecasts and in various conference talks for many years. Those who are convinced that greenhouse gas increases provide the only plausible explanation for the recent increases in hurricane activity are either unaware of our work, or don't want to consider any alternative.

One reason may be that the advocates of warming tend to be climate modelers with little observational experience. Many of the modelers are not fully aware of how the real atmosphere and ocean function. They rely more on theory than on observation.

The warming theorists -- most of whom, no doubt, earnestly believe that human activity has triggered nature's wrath -- have the ears of the news media. But there is another plausible explanation, supported by decades of physical observation. The spate of recent destructive hurricanes may have little or nothing to do with greenhouse gases and climate change, and everything to do with the Atlantic Ocean's currents.

Mr. Gray, professor emeritus in the Department of Atmospheric Science at Colorado State University and a research fellow at the Independent Institute, has been issuing Atlantic basin seasonal hurricane forecasts for the past 24 years.
 
Insurance changes with the climate
Angela Macdonald-Smith
The Age
September 19, 2007

INSURED losses from natural catastrophes due to climate change are expected to rise 37 per cent in the next decade, resulting in the need for alternative ways to manage risk, according to Allianz SE, Europe's biggest insurer.

Annual insured losses from catastrophes such as floods and hurricanes could jump to $49 billion a year in 2010-2019, up from $36 billion a year in 2000-2006, and less than $6 billion before 1989, Munich-based Allianz said in a report released yesterday in Sydney. Total losses in any one year might be as much as $480 billion, said Clement Booth, a member of the management board.

The United Nations concluded earlier this year that climate change was probably caused by people and would increase floods and droughts, change growing seasons and harm wildlife.

Lloyd's of London chairman Peter Levene said in January climate change was the "number one" issue for the world's biggest insurance market because of the unpredictability and cost of potential weather-related claims.

"Insured damages from natural catastrophes at projected future levels will put pressure on catastrophe risk markets," Mr Booth said. "The insurance industry needs to continue to develop alternative approaches to risk transfer such as catastrophe bonds and risk partnerships between insurers and governments."

In 2005, hurricane Katrina caused more than $US41.1 billion of insured losses in New Orleans and along the US Gulf coast, destroying oil and gas platforms, pipelines and refineries and flooding houses and buildings. Total damage was $US170 billion.

Total damage from natural catastrophes might average $96 billion to $144 billion a year next decade, while losses in any particular year might be triple the average and have reached almost four times the trend average, based on past cases, Allianz said.

Private insurers would not be able to cover all the risks that would arise from a warming planet and would need to link with governments in alliances such as government reinsurance plans to provide catastrophe insurance in high-risk areas, Allianz said.

BLOOMBERG
 
Floods put reinsurers under the weather
20 Mar 2008, The Economic Times (Mumbai, India)

Reinsurers are feeling the heat of global warming, with the number of flood-related claims increasing. As temperatures rise globally, the water cycle is getting speeded up, resulting in heavier and more frequent rainfall and an increase in the number of severe floods.

According to world’s largest reinsurer Swiss Re, the increased losses mean that charges for flood cover is underpriced. In a recent report on natural disasters, Swiss Re said that the above-average frequency of floods has not been adequately factored into the current model.

Reinsurers, insurance associations and risk consultants have been following a ‘probabilistic flood model’, which takes into account a historic observation period. However, with fast-changing climatic conditions leading to irregular trends in natural catastrophes, the model is losing significance.

The report points out that insured flood losses worldwide have risen at an annual rate of 12% (or 7% when adjusted for inflation) since 1970. In 2007, Swiss Re saw 53 instances of major floods across the world, leading to insured losses of $6 billion. The figure is only second to that of storm-related losses, which stood at $14 billion for the year. The frequency of storms going up, of course, is another attribute of global warming.

Europe reported the highest insured catastrophe losses in 2007, accounting to 45% of the world’s total, at $12 billion. It is particularly surprising because Europe normally accounts for just 19% of the losses since 1970, says the report. North America, which normally accounts for two-thirds of the world’s insured losses, contributed just over a third of the losses at 31%.

This, according to the report, was mainly due to lower hurricane losses. Asia accounted for a majority catastrophes at over 43%. However, it accounted for just 13% of the world’s insured losses, probably due to the lower penetration of insurance products in the affected regions.

The report goes on to cite ‘obvious explanations’ for the rise-in-loss trend like the increase in insured values and higher vulnerability to floods in cases of underground garages, underground electricity supply, etc. But it pinpoints the increase in temperature caused by climate change as a cause of the increase in large flood events.

According to research quoted in the report, warm air can store more water vapour than cold air. The link between air temperature and absolute air humidity is exponential, resulting in an increase in the extremity of rain and hail storms.

Financially, to cope with the cost of catastrophe losses, insurers in Europe and the US have started making use of advanced financial market instruments like insurance-linked securities (ILS) and insurance-linked warranties (ILW).

Though these exchange-traded derivatives are still in their infancy, they are gaining popularity. According to the report, the outstanding number of ILS-bonds was $15 billion at the end of 2007 ”” an annual growth of over 35% compared with $0.7 billion in 1997.
 
Just wondering... Is it possible to trade in these derivatives? And is there one that is related to the amount of snowfalls? I'm asking because, back in my high school days when I went to the snow every year, I created a simple snowfall forecasting model that could predict snowfalls for up to 3 weeks in advance, and over the years, it has proved to be ~80% correct. :)
 
Just wondering... Is it possible to trade in these derivatives? And is there one that is related to the amount of snowfalls? I'm asking because, back in my high school days when I went to the snow every year, I created a simple snowfall forecasting model that could predict snowfalls for up to 3 weeks in advance, and over the years, it has proved to be ~80% correct. :)

I trust this information on snowfall insurance will also interest you:
http://www.guaranteedweather.com/content_page.aspx?content_id=1
 
Apologies for digging up an old thread.

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