Damage Costs of Climate Change through Intensification of Tropical Cyclone Activities: An Application of FUND

Climate change may intensify tropical cyclone activities and amplify their negative

economic effects. We simulate the direct economic impact of tropical cyclones enhanced by

climate change with the integrated assessment model FUND 3.4. The results show that in the

base case, the direct economic damage of tropical cyclones ascribed to the effect of climate

change amounts to $19 billion globally (almost the same level as the baseline (current) global

damage of tropical cyclones) in the year 2100, while the ratio to world GDP is 0.006%. The

US and China account for much of the absolute damage, whereas small island states incur the

largest damage if evaluated as the share to GDP. The results also show that they are sensitive

to the choice of baseline and of the wind-speed elasticity of storm damage.