Did Climate Change Cause the Moore Tornado?

Harrowing details continue to emerge of the devastating tornado that took so many lives on Monday in Moore, Okla. As just one more in a series of increasingly damaging natural disasters, people have begun to ask the inevitable question of whether climate change is to blame. Let's be clear: No single weather event can be linked directly to climate change. Period.

Having said that, I'll borrow a great analogy from Joe Casola, staff scientist and program director for science and impacts at the Center for Climate and Energy Solutions. He explained that climate change is to weather events what steroids are to home runs. We cannot say that Barry Bonds hit his 39th home run because he was on steroids, but we can attribute his general increase in homers to the fact that he was doping.

And so goes the climate. Moore's tornado may or may not have had anything to do with global warming, but there is clear evidence that the frequency and intensity of extreme weather events is on the rise because of human-caused climate change. The science really is settled on this point, folks.

Actuarial cost
The year 2011 set grim records for losses attributable to natural catastrophes, according to "Physical Risks from Climate Change: A guide for companies and investors on disclosure and management of climate impacts." The report, published by Calvert Investments, Oxfam America, and Ceres, finds that extreme weather events accounted for "90 percent of 2011 disasters and eight of the 10 most costly, resulting in overall losses of more than $148 billion and insured losses of more than $55 billion."

But don't just take their word for it. On May 15, United Nations Secretary-General Ban Ki-moon said:

We have carried out a thorough review of disaster losses at national level and it is clear that direct losses from floods, earthquakes and drought have been under-estimated by at least 50%. So far this century, direct losses from disasters are in the range of $2.5 trillion. Economic losses from disasters are out of control and can only be reduced in partnership with the private sector which is responsible for 70% to 85% of all investment worldwide in new buildings, industry and small to medium sized enterprises. The principles of disaster risk reduction must be taught at business schools and become part of the investor's mind-set.

New normal
"We're in a new normal," said Dr. Rachel Cleetus, climate economist with the Union of Concerned Scientists, at The Motley Fool's recent Climate Change Summit. "We need to take climate change as a base condition. The canary in the coal mine is the insurance industry." Indeed, European reinsurers such as Swiss Re and Munich Re have seen the writing on the wall and have been making serious strides toward addressing climate change risk.

"Insurance is heavily dependent on scientific thought," Frank Nutter, president of the Reinsurance Association of America, told The New York Times recently. "It is not as amenable to politicized scientific thought."

Not convinced? Consider some actual examples, courtesy of the Physical Risks from Climate Change report.

  • Texas' record-setting 2011 heat wave created unprecedented electricity demand leading to price spikes, forcing Constellation Energy -- now part of Exelon (NYSE: EXC  ) -- to purchase incremental power in the real-time market at peak prices. The company suffered after-tax losses on third-quarter earnings of about $0.16 per share.
  • Drought reduced Southern's (NYSE: SO  ) 2008 hydroelectric power generation by roughly 50%, forcing the company to meet demand from other generating sources at a replacement cost of about $200 million.
  • Under Armour (NYSE: UA  ) experienced elevated retail inventory levels in the 2011-2012 winter due to "the impact of unseasonably warm weather," cutting into growth by as much as 2 percentage points. This was part of the reason the company had expected 2012 net revenues to come in at the low end of its long-term-growth target.
  • Droughts in Bunge's (NYSE: BG  ) main growing areas in Brazil drove a Q4 2010 loss of $56 million in the company's sugar and bioenergy segments.

Meanwhile, General Electric (NYSE: GE  ) is participating in a major risk assessment exercise with PricewaterhouseCoopers and the United Nations Office for Disaster Risk Reduction. The company was selected, along with 13 other companies, because of its influence on the global economy and exposure to climate change effects. The result is a landmark risk reduction report that should be the bible of all companies doing business on this warming orb.

Lest it sound all doomy and gloomy, there is plenty of investment opportunity out there in climate change solutions providers. But failure to consider risk would be a monumental error, and the stakes just keep getting higher.

The devastation in Moore is heartbreaking. Whether it be a direct result of climate change or not, the fact is that we have the tools at our disposal to mitigate the risk of more such tragedies, and private industry will play a tremendous role in that endeavor. We can and should invest in a brighter future for us all.

In the face of the climate change threat, Exelon has been repeatedly recognized for its tremendous progress in climate risk reduction. This strength, combined with an increased focus on balance sheet health and its recent merger with Constellation, places Exelon and its resized dividend on a short list of the top utilities. To determine if Exelon is a good long-term fit for your portfolio, you're invited to check out The Motley Fool's premium research report on the company. Simply click here now for instant access.


Read/Post Comments (7) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 21, 2013, at 7:12 PM, BillFromNY wrote:

    For some reason global climate change reminds me of "The Population Bomb" and "Nuclear Winter." Scientists who can't predict the weather twenty four hours in advance can somehow tell us the concentration of carbon dioxide in our air three million years ago.

    And it's a great gig for the scientists. They play up global warming and (1) no one can prove them wrong and (2) they get attention-getting articles in many publications and (3) they get healthy research grants from academia and the government to carry on. Opposing scientists get (1) thumbs down from the media and public and (2) no big research grants and (3) no one can ever prove them right in their lifetimes. They would be nuts to carry on vocally the case against global warming.

    And global climate change we know occurs without the intervention of our species. How did those Great Lakes get there?

  • Report this Comment On May 21, 2013, at 7:44 PM, NickD wrote:

    By ice ages way before we were around.

  • Report this Comment On May 21, 2013, at 9:44 PM, slowtrain79 wrote:

    "The science really is settled on this point, folks." - That's absurd. Only those interested in silencing those with different viewpoints make these type of statements.

    "Under Armour (NYSE: UA ) experienced elevated retail inventory levels in the 2011-2012 winter due to "the impact of unseasonably warm weather," " WOW...I'm sure that's never happened before.

  • Report this Comment On May 21, 2013, at 10:01 PM, szcz wrote:

    Based on several of the articles I have read on this site, it certainly does seem as if the Motley Fool is operated by young leftists or old hippies eager to spread the gospel of socialism.

    I'm am guessing that the writers at the Fool believe that the only way to stop "global warming" is to raise taxes, expand government and dramatically restrain capitalism.

  • Report this Comment On May 21, 2013, at 10:14 PM, khlebnikov wrote:

    Great post, Sara. I'm not what motivates the deniers, but it's clear that those seriously interested in running successful companies have made adaptive/mitigative strategies an important element of their business plans (as has the military BTW).

    And as you've pointed out, for individual investors, there are tremendous opportunities...

  • Report this Comment On May 22, 2013, at 10:32 PM, Mcxyz wrote:

    I think you should do some research in 5 minutes I found f3 and above tornadoes are trending down.

    http://www.ncdc.noaa.gov/oa/climate/severeweather/tornadoes....

    The number of tornadoes is flat but most likely trending down do to better reporting.

    The cost goes up thanks to an increase in population, the urban sprawl, and high inflation of building materials.

  • Report this Comment On May 27, 2013, at 11:25 AM, predfern wrote:

    Meteorologist Joe Bastardi posted recently that anyone who thinks global warming caused the recent tornado is ignorant of the facts. As the Weatherbell article explains, the climate pattern is similar to the 1950s. Tornadoes and hurricanes increase when you have a cold Pacific Decadal Oscillation and a warm Atlantic Multidecadal Oscillation. The Reference Frame also points out that the creation of a tornado out of global warming is a perpetual motion machine of the second kind because global warming is global.

    No Rest For Weather Weary: Expect More Extremes After Oklahoma Tornado

    5/22/2013 @ 1:13PM |1,321 views

    http://www.forbes.com/sites/weatherbell/2013/05/22/no-rest-f...

    Does global warming cause tornadoes?

    Luboš Motl

    http://motls.blogspot.com/2013/05/does-global-warming-cause-...

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