Low-probability, high-impact events are becoming more common, and are costing more, in the age of pervasive climate disruption. 20 years after Hurricane Katrina, we have not fully adjusted to this new reality.

This week marks 20 years since Hurricane Katrina struck the Gulf Coast of the United States, devastating New Orleans and other coastal communities. The great lesson of Katrina is that the everyday instruments of resilience and normalcy can collapse quickly, creating risks most virutally no people or institutions are prepared to manage.

As The Weather Channel reports, in its examination of two decades of rebuilding: 

The Category 3 storm made landfall just east of New Orleans, but its impact on the Crescent City was catastrophic: storm surge overwhelmed the levee system, 80% of the city flooded and more than 1,800 lives were lost across the region. Economic damages soared past $200 billion, and hundreds of thousands of residents were displaced, many permanently.

What many remember are scenes of desperate people seeking shelter inside the Superdome—the football stadium of the New Orleans Saints—while federal agencies dropped water, food, and other aid from the air, and armed individuals and groups tried to distribute aid fairly, in the absence of organized federal assistance.

Despite the many tragedies and the failures of governance that contributed to the disaster, the effort to rebuild and restore the city was serious and determined. As Grist reports: 

Rather than just patch up the damage, which would have left one of the country’s most iconic cities exposed to every future storm, the federal government doubled down on flood protection, building a new $14.4 billion levee system that ranks as one of the most sophisticated anywhere in the world.

20 years later, New Orleans has rebuilt, strengthened flood defenses, and has long since seen a return to normalcy in some ways. In others, the aftermath is still ongoing. 

The devastated Lower Ninth Ward has only one-third the population it had in 2005. There are still needs that have not been fully addressed; many have been unable to rebuild or return; stores remain closed, and infrastructure still needs to be reinforced. And that is not for lack of effort and investment. 

There are problems with infrastructure and funding, too. Grist cites Andy Horowitz, a historian at the University of Connecticut and the author of a book on Hurricane Katrina, who notes that “Since 2005, several storms have made landfall on the Gulf Coast that far exceed the stated design capacity of the new ‘risk reduction system’.”

Climate disruption is melting ice and raising sea levels, while the ocean reaches shocking temperatures. Some parts of the Arctic have seen sea surface temperatures this year more than 10ºC above normal (or 18ºF above normal). Marine heat waves are have tripled in frequency over the last 80 years and are projected to be 50 times more frequent by the end of this century than during pre-industrial times, and 10 times as intense.

Warmer waters make it easier for storms to form, across wider stretches of ocean. Excess heat also makes it more likely storms will get bigger, longer-lived, and more dangerous, with more precipitation and bigger storm surges. Building for the future means accounting for this unprecedented rate of increase in non-linear risk.

Climate-related risk is inherently non-linear and compounding, because so many facets of everyday resilience are implicated: Climate impacts on a given city or region can include wind, flooding, drought, fire, choking smoke from other regions, costly unplanned expenditures, such as the need for patching or upgrading infrastructure to cope with added stresses, and the effect such redirection of funds has on other services and planning. 

Since Katrina, there has been an effort to develop locally adapted climate risk accounting methods aligned with universal standards. The goal of such efforts is to ensure local, state, and federal decision-makers can organize the flow of resources to ensure optimal planning and delivery of needed infrastructure and services. 

One recent, tragic failure was the lack of sufficient early warning and emergency response to flooding along the Guadalupe River in the Hill Country of central Texas. As one local official said, “fiscal conservatism” was to blame for the lack of alert and response systems. 

This is a persistent problem with climate risk and preparedness: 

• Because climate risk is inherently nonlinear, it is hard to quantify in local budget terms. 
• Because numerous factors can compound that risk, it is difficult to judge how much more severe shock events will be than in the past.
• Higher authorities—at county, state, and federal levels—have the added problem of having to judge where to allocate resources across the uncertain map of nonlinear, compounding risk. 
• The result of these frustrating complexities is often that authorities decide to underinvest, hoping that disaster will not strike. 

The Lower Ninth Ward is a lower income neighborhood—a fact which compounded the difficulty of rebuilding—but many high-income neighborhoods sit along coastlines and waterways, and remain unprepared for the severity of compounding climate impacts. The public budget may remain intact so long as disaster does not strike, but homeowners and businesses will be affected even if no shock events hit their communities. 

All that is needed is for one or more major, climate-worsened shock events to strike a similar community for insurers and others to revalue risk and pull back from investment. Some regions are becoming uninsurable, and that is happening even as the current leadership of the U.S. Government looks to reduce funding and support for FEMA, the Federal Emergency Management Agency. 

The costs of climate pollution are severe and getting worse: 

• The 2022 Global Turning Point report found unchecked climate disruption would cost $178 trillion by 2070. 
• The Food System Economics Commission has tracked $143.25 trillion spent on the costs of unsustainable food systems, since April 2016. (If you were to round 0.25 to 0.2 or 0.3, that value difference is $50 billion.)
• The Commodity Futures Trading Commission found in 2020 that unchecked climate change would destabilize the financial system and undermine its ability to support the everyday economy.
• In 2021, the Financial Stability Oversight Council issued a similar finding, warning “Climate change is an emerging threat to the financial stability of the United States.”
• Since mid-2024, there have been two extreme weather events fueled by global heating that are projected to cost more than $250 billion each (Hurricane Helene and the Los Angeles fires), over the coming years and decades, as aftermath and rebuilding play out.
• The total cost of 403 disasters in the U.S. costing $1 billion or more since 1980 is reported to be $2.945 trillion. 17% of that cost over 45 years has been generated in the last 12 months. 

It would have been more fiscally conservative to act early to reduce climate-disrupting pollution and to drive the world to follow suit, through forward-looking investment and trade policy. Had this happened in the 1990s, as called for in the 1992 Climate Convention, the U.S. and other nations would likely have saved tens of trillions of dollars in preventable cost and waste. 

It did not happen, however, so now, jurisdictions at all levels need to weigh the probability that future risk and resilience costs will go down. There is no scenario currently playing out that suggests the costs of reducing risk and securing safe conditions will decline as time passes. The best time to address these needs—from a cost-effectiveness standpoint—is now.