28 September 2015 Insurance

El Niño to drive global drought losses of more than $8bn

Global drought losses will likely surpass the current forecast of $8 billion in economic damage, in part thanks to an intensifying El Niño in the coming months, according to Impact Forecasting, Aon Benfield’s catastrophe model development team.

A report by Impact Forecasting, examining the impact of natural disaster events worldwide during August 2015, also revealed that in the US, 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, with combined economic losses of more than $2.6 billion occurring in Romania, the Czech Republic, and Poland.

Steve Bowen, Impact Forecasting associate director and meteorologist, said: “As we continue to see the prospect of El Niño becoming one of the strongest in decades, more and more effects will be apparent around the world.

“This is already true in the form of global drought losses, as several countries have endured a severe lack of rainfall and agricultural impacts. On the flipside, tropical cyclone activity in the Pacific Ocean maintained its torrid pace in August due to above-average sea surface temperatures and favourable atmospheric conditions.

“Multiple landfalling storms in Asia-Pacific left considerable damage, and more activity is expected as we enter the peak of the cyclone season,” he said.

Elsewhere 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 the 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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