By Rob Savitsky | June 15, 2017

No pun intended, but there's no question that climate is a hot topic these days. Every week, you likely come across articles describing new research into the earth's warming, or how certain cyclical effects are having an impact on the weather. In this post, we're going to break down what is meant by "climate change" and by "climate variability."

Download our report to learn how climate change could result in increased insured losses for windstorms

First, however, let's discuss the differences between "weather" and "climate." "Weather" refers to the atmospheric conditions experienced or expected in a particular location during periods of hours or days, whereas "climate" typically refers to an average of how such atmospheric conditions behave over years or decades.

Climate Variability

While the climate tends to change quite slowly, that doesn't mean we don't experience shorter-term fluctuations on seasonal or multi-seasonal time scales. There are many things that can cause temperature, for example, to fluctuate around the average without causing the long-term average itself to change. This phenomenon is climate variability, and when scientists talk about it they are usually referring to time periods ranging from months to as many as 30 years.

For the most part, when discussing climate variability, we're describing natural (that is, non-man-made) processes that affect the atmosphere. For example, the North Atlantic Oscillation (NAO) refers to anomalous changes in atmospheric pressure at sea level that occur near Iceland and the Azores High. NAO-positive phases are often associated with above-average storm counts over parts of Europe and the U.S. You're also likely familiar with the El Niño Southern Oscillation (ENSO) phenomenon near the equatorial Pacific Ocean, where fluctuations of sea surface temperatures typically alternate every few years between a warming phase (El Niño) and cooling periods (La Niña), with a neutral phase in between. Many researchers have found that negative ENSO years are correlated with a higher probability of Atlantic hurricane formation, as well as warmer, dryer weather in northern states.

Climate Change

Alterations to the earth's atmosphere that occur over much longer periods—decades to millennia—are characterized as "climate change." While climate change can be caused by natural processes—such as volcanic activity, solar variability, plate tectonics, or shifts in the Earth's orbit—we are usually referring to changes attributable to human activity when talking about climate change, such as increased greenhouse gas emissions. The latest (Fifth) Assessment Report from the Intergovernmental Panel on Climate Change (IPCC 2013), for example, found that on average global temperatures increased about 0.85°C from 1880 to 2012, and concluded that more than half of the observed increase in global average temperatures was caused by elevated emissions of carbon dioxide and other greenhouse gases.

At AIR, we've done considerable research into how climate change impacts extreme weather, and in our new white paper, we examined how the frequency and intensity of both "weak to moderate" and "strong to extreme" events will change over time. For example, we found that while the overall number of tropical cyclones is likely to decrease, the most intense storms (Saffir Simpson Scale Categories 4 and 5) are likely to increase in frequency and become even more intense.

Reconciling Climate Variability and Climate Change

At this point you might be wondering which to blame when we experience a tropical cyclone season that's been particularly costly for insurers—climate change or climate variability. It's difficult to tell, as the atmosphere is highly complex and non-linear in how it reacts. Teasing out and attributing the effects of climate change and climate variability is no easy task, and an area of ongoing research across the greater scientific community.

Modern catastrophe models, however, often incorporate statistical and meteorological approaches that consider both climate change and climate variability. If a specific form of climate variability affects, say, environmental conditions supportive of severe thunderstorm formation, then that effect is implicitly included. If the effects of climate change impact those same environmental conditions, then they are also taken into account. AIR's models are regularly updated and incorporate clearly established findings using a more recent period of data to reflect risk in the current climate regime. Any climate change that has already occurred is implicitly accounted for and future changes will be taken into account as the models are updated. So remember, climate change and climate variability don't operate in isolation and each mechanism plays a role in shaping our climate; in doing so they both impact property risk.

How do you think about managing climate risk? Let us know in the comments below.

Download our report to learn how climate change could result in increased insured losses for windstorms

Categories: Climate Change

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