Climate refugees' growing tab

THOSE OF US WHO TRACK the effects of global warming had assumed that the first large flow of climate refugees likely would be in the South Pacific with the abandonment of Tuvalu or other low-lying islands. We were wrong. The first massive movement of climate refugees has been that of people away from the Gulf Coast of the U.S. Hurricane Katrina, which made landfall in late August 2005, forced 1,000,000 people from New Orleans and the small towns on the Mississippi and Louisiana coasts to move inland, either within those borders or to neighboring states, such as Texas and Arkansas. Although nearly all planned to return, many have not.

Unlike in previous cases, when residents typically left areas threatened by hurricanes and returned when authorities declared it was safe to do so, many of these evacuees have found new homes. In this respect, the hurricane season of 2005 was different. Record-high temperatures in the Gulf of Mexico's surface waters helped Hurricane Katrina become the most financially destructive windstorm ever to make landfall anywhere. In some Mississippi Gulf Coast towns, Katrina's powerful 28-foot-high storm surge did not leave a single structure standing. There was nothing for evacuees to return to. The destruction of housing and infrastructure in St. Bernard Parish, a low-lying 40-mile-long peninsula extending southeast from New Orleans, rendered most of it uninhabitable. The Katrina storm surge that raised the water level in Lake Pontchartrain so high that it breached the levees and flooded New Orleans left much of the city unfit to live in. Even today, almost two years later, parts of the city are without basic infrastructure services such as water, power, sewage disposal, garbage collection, and telecommunications. Interestingly, the country to suffer the most damage from a hurricane also is primarily responsible for global warming.

Many evacuees were able to return in a matter of days, but many more were not. A year after Katrina struck, New Orleans, three nearby parishes (or counties), and three counties in Mississippi had lost a total of 375,000 residents because of the destruction. Some evacuees still are heading back, but the flow has slowed to a near trickle. We estimate that at least 250,000 of them have established homes elsewhere and will not return. They no longer want to face the danger and financial risks associated with rising seas and more destructive storms. These evacuees now are climate refugees.

While the numbers tell us how many people have not gone back home, they do not capture the personal trauma of exposure to a disaster that claimed 1,300 lives or the sense of loss from abruptly being uprooted from home and community, and separated from schools, jobs, and friends.

Hanging over the future of the hurricane-prone coastal regions of the Southeast is the difficulty in getting property insurance. In the wake of recent hurricane seasons, including 2004 when four hurricanes crossed Florida, reconstruction remains an ongoing process. Insurance costs are climbing, and private insurance companies are withdrawing from high-risk coastal areas.

The movement of insurers out of these regions started after Hurricane Andrew hit Florida in 1992, destroying 60,000 homes and bankrupting 11 local insurance companies. In response, governments in hurricane-prone states, including Florida, Mississippi, and Louisiana, each created a state-supported insurance company for homeowners unable to get private insurance. Florida's state insurer, Citizens Property Insurance Corporation, ran a deficit of $516,000,000 in 2004.

These deficits were repeated in Louisiana and at the national level with the National Flood Insurance Program, which ran a $23,000,000,000 deficit in 2005. The bottom line is that rates must rise as risk rises. This applies not only to property insurance, but to firms seeking to insure against losses from business interruption.

After a point, as storm risks multiply and insurance rates rise, real estate prices start to decline. To cite an extreme example, how much is a building lot worth in St. Bernard Parish, now largely abandoned, or in the low-lying parts of New Orleans? Some of the businesses in these hard-hit areas that are not tied directly to local customers, such as consulting firms, software companies, or publishing houses, have moved to more secure locations. New Orleans entrepreneur Ken Murray, who founded Parker, Murray and Associates, a sales and marketing company, is among those who have transferred their firms to Dallas.

Katrina took a heavy toll in the Louisiana and Mississippi coastal regions, but there are 35,000,000 people living along the hurricane-prone coast that stretches from North Carolina to Texas. Half of these live in Florida: 10,000,000 on the Atlantic Coast and 7,000,000 on the Gulf Coast.

As rising seas and more powerful hurricanes translate into higher insurance costs in these coastal communities, people are retreating inland--and just as companies migrate to regions with lower wages, they also migrate to regions with lower insurance costs. The experience with more destructive storms in recent years is only the beginning. Since 1970, the Earth's average temperature has risen by 1[degrees]F but, by 2100, it could balloon by up to 10[degrees]F.