The U.S. Gulf Coast may face $350 billion in economic damage by 2030 as extreme weather fueled by climate change wreaks havoc on the region, according to a study released today by Entergy Corp.
The estimate assumes severe weather similar to Hurricane Katrina -- a storm that crippled the region in 2005 -- will occur every generation rather than once a century, according to the study by Swiss Re, a Zurich-based reinsurer, and McKinsey & Co., a New York-based research firm. New Orleans-based Entergy, the second-largest U.S. producer of electricity from nuclear reactors behind Exelon Corp., commissioned the report.
The study recommends spending $50 billion for projects such as overhauling building codes and reinforcing beaches and wetlands to curb losses. The region, which suffers an average annual loss of $14 billion, may lose as much as $23 billion a year from “extreme” climate change, the report said.
“With the multiplier effect, the amount of economic loss to the Gulf Coast could rise to $700 billion, the gross domestic product for the entire region for one year,” Entergy Chief Executive Officer J. Wayne Leonard said today in a statement. The study is a “call to arms for policy makers,” he said.
Katrina, the third-deadliest U.S. hurricane, wiped out 80 square miles of marsh within hours when it struck five years ago, four times the average amount lost by all of Louisiana in a year. Scientists say climate change caused by burning fossil fuels such as oil and coal will lead to more frequent and severe storms, droughts and heat waves.
Further, the BP Plc oil spill in April in the Gulf of Mexico, the worst in the U.S., hurt the region’s economy and threatened already fragile ecosystems.
The Gulf Coast copes with erosion tied to decades of building canals, levees and dams to control flooding, ease navigation and aid oil-and-gas exploration. Such projects choke off the flow of Mississippi River sediment that sustains wetlands, which harbor plants and wildlife and function as natural sponges to protect coastlines.
Taking steps to protect the coastline may let Gulf Coast communities avoid about $135 billion in losses a year, according to the report.
The region has more than $2 trillion in assets, including 50,000 oil and gas structures such as pipelines and wells. That total is expected to increase to more than $3 trillion by 2030, according to the report, which was commissioned by Entergy with America’s Wetland Foundation, a New Orleans-based advocacy group focused on conserving coastal Louisiana.
Entergy rose 64 cents to $77.17 at 2:46 p.m. in New York Stock Exchange composite trading. The shares have fallen 6.5 percent this year through yesterday.