In an op-ed for the New York Times, Lab co-directors Solomon Hsiang and Trevor Houser quantify the potential cost Hurricane Maria for the Puerto Rican economy, and highlight the importance of a large, timely, sustained and well-designed disaster relief aid package in mitigating that impact.

Maria was a record-breaking storm. To see just how powerful it was, Sol ran Maria’s track datathrough an updated version of his LICRICE model, which reconstructs the experience of individuals on the surface as a cyclone passes overhead (see Figure 1). Measured against a database of 13,000 cyclone events around the world since 1950 (one event is one cyclone striking one country), it ranks 6th in terms of average wind speed experienced across an entire geographic territory (Table 1). During Maria, maximum experienced wind speeds, averaged across all of Puerto Rico, were 123 miles per hour (essentially Category 3 wind speeds), with some parts enduring 158 mph winds.

Figure 1: Maximum surface wind speeds during Hurricane Maria

This kind of event, where an entire territory is uniformly blasted with this kind of intense wind, is really, really rare—especially for a territory that is so large and home to millions of people. Of the five events since 1950 that top Maria by this metric, all were on much smaller locations (Guam, Hong Kong, and the Northern Mariana Islands) making it easier to achieve high intensity scores per area of land affected. Even more notably, all five were in the Pacific Ocean, the size and temperature of which has historically led to more intense storms. In more than sixty years of data, there has never been an Atlantic hurricane event as intense as Maria’s strike on Puerto Rico.  The Atlantic is the new Pacific.

Table 1: Top 10 strongest cyclone years since 1950 by average wind speed over land

To estimate the impact of Maria on Puerto Rico’s economy, the op-ed by Sol and Trevor uses the econometric model developed by Hsiang and Impact Lab partner and University of Chicago Professor Amir Jina (see their 2014 NBER paper here) and applies it to Maria’s storm characteristics and Puerto Rico’s pre-storm economic conditions. There is a theory that hurricanes and other natural disasters lead to an increase in economic growth through construction-driven stimulus in the short term and “creative distruction” of existing capital that paves the way for investment that’s more productive over the medium and long term. Hsiang and Jina’s work demonstrate’s that this theory has no empirical support in the real world. The average cyclone event since 1950 has reduced per capita GDP in the impacted country or territory by 4% in the years following the storm, on par with a modest economic recession. A 1-in-10 probability cyclone event reduced per capita GDP by 7%, on par with the average economic impact of a banking or financial crisis, or a larger economic recession (Figure 2).

But Maria was not an average cyclone event, a 1-in-10 event or even a 1-in-100 event. Considering both her physics and how she mapped on the Puerto Rican territory, Maria was more like a a 1-in-3,000 event (and that’s before factoring in Irma as prologue). And this superlatively is reflected in the severity of her potential long-run economic impact. Maria has the potential to reduce Puerto Rican economic output by 21% within the next 15 years on a per capita basis. That’s comparable to some of the worst economic crisis in recent history – including the impact of the 1997 Asian Financial Crisis on Thailand and Indonesia – and the impact of the Great Recession on the most heavily impacted US states (Figure 2).

Figure 2: Major economic disasters ranked by impact on real per capita GDP

Figure 3: The impact of Hurricane Maria on the Puerto Rican economy (per capita GDP in real 2009 USD)

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