Environmental Behavioral Sciences Seminar with Fran Moore

The High Cost of Extreme Weather Under Climate Change

Climate change is already altering the frequency and intensity of weather extremes, with large and growing costs around the world. However, considering only realized losses understates the costs of climate-change driven extremes because it misses the substantial costs of preparing for and managing disaster risk. Climate change can greatly increase these costs by rendering past experience of weather potentially unrepresentative of current exposure, greatly increasing uncertainty in the extreme tail of the climate distribution. Here we quantify these ambiguity-related costs for urban flood damages in the United States. Using daily rainfall for 151 US cities from 1970 to 2024, we contrast the 2024 extreme rainfall distribution under a Bayesian model that assumes a stationary rainfall distribution with one that allows for time-evolving Generalized Extreme Value (GEV) parameters. Estimated tail-risks increase notably under a time-varying climate and are amplified by convex damage functions, which we estimate at the city level using flood insurance policy and claim data. The 99th percentile loss event - a regulatory standard for financial risk management - is 4-5 times larger under time-varying climate risk at all levels of geographic diversification, implying much larger capital holding requirements and insurance supply costs in a private market. We show that most (66%) of this effect comes from additional ambiguity in a time-varying climate, rather than correcting bias in the central estimate. Findings have important implications for the sustainability of private insurance markets in a changing climate and the government role in managing catastrophic climate risk.

Bio

Frances C. Moore is Professor and Hurlston Presidential Chair in the Environmental Science and Policy Department at the University of California Davis. Her work focuses on better understanding the social and economic costs of climate change, with applications to mitigation and adaptation policy. Her research encompasses a range of applied and theoretical problems at the intersection of climate science and environmental economics including estimating the social cost of carbon, the welfare consequences of climate impacts on natural capital, insurance and the management of catastrophic risk, and the value of climate information for adaptation and resilience decisions. In 2026-27, Fran is serving as the Policy Fellow at the Center for Advanced Study in the Behavioral Sciences at Stanford University where she is advancing modeling of the coupled climate-social system. In 2022-23 she served in the Biden Administration as the Senior Economist at the Council of Economic Advisers covering climate, clean energy and environmental issues.