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Insight: Better Safe Than Sorry

Conditions on Ragged Island in 2017 after Hurricane Irma.

Conditions on Ragged Island in 2017 after Hurricane Irma.

By Malcolm Strachan

THE 2017 Hurricane season was projected to be an active one by many of the top meteorological minds. The National Oceanic and Atmospheric Association predicted this hurricane season would be an “above average” year with 11 to 17 named storms, five to nine hurricanes – two of which being major ones. However, no one would have anticipated that three quarters of the way through the season there would have been this much devastation and loss at the hands of Category, 3, 4 and 5 storms.

One meteorologist from forecasting service Weather Underground, Bob Henson, said this season has been an “overachiever” based on predictions from most notable indexes. Families from the locales that were blasted by the season’s most dangerous hurricanes – Harvey, Irma and Maria - are left trying to make sense of it all. Cumulative damage of Harvey and Irma is already upwards of $70 billion, $62.7 billion with Irma’s cost likely to increase after our assessment is complete, and Hurricane Maria’s impact not yet determined. This season has already been recorded as the United States’ most costly in history - $293 billion in damage.

While being far from escaping unscathed, The Bahamas, in general, has been fortunate enough to avoid the terror experienced by people from Texas who endured Hurricane Harvey, which dumped record rainfall on the fourth largest city in the US. In less than a week. Hurricane Irma ripped through our chain of island states in the Caribbean before shifting to the north. However, by a stroke of luck or divine favour, the majority of Bahamians were spared the sheer heartache we’ve seen depicted through the media by survivors of this season’s deadliest hurricanes. Some of our brothers and sisters, too, have had their lives turned upside down this hurricane season, as Irma destroyed Ragged Island and caused extensive damage to Salina Point, Acklins and Inagua.

While we were relieved we were not victims of the full force Irma was capable of, we, as a nation still have to help our fellow countrymen and women pick up the shattered pieces of their lives. We also are going to be tasked with figuring out how to mitigate against the massive losses that may seem unpreventable. As unnerving as it may be to fathom, research shows it’s likely we will continue to experience stronger, more devastating hurricanes in the decades to come.

That being said, there are a few certainties. For one: we will need to come to grips with the fact our geographic location guarantees continued losses will occur. Second, we will need to have realistic and cost-efficient ways to rebuild the lives of our people, God forbid, the whole country ever experiences the mass destruction we’ve seen in the United states and throughout the Caribbean.

Research done by Massachusetts Institute of Technology (MIT) Professor of Atmospheric Sciences, Kerry Emannuel, contributed to the general consensus that climate change has a great impact on the severity of these storms. For instance, she studied the evolution of 6,000 simulated storms in efforts to compare the evolution of 20th century versus 21st century hurricanes with the condition that greenhouse gas emissions will continue to rise. What she found was very chilling – especially for countries like ours that have been threatened by more than one extremely dangerous and rapidly growing storm in the space of a week. The revelation her research produced showed a hurricane increased its intensity by 60 knots in the 24 hours leading up to its landfall may have come around once a century in the 1900s. By the end of this century, that may become a regular occurrence – taking place every five to 10 years, perhaps creating unimaginably terrifying circumstances.

In examining what made some of the most destructive hurricanes thus far in the season so powerful, the weather conditions must be considered and seen as a real precursor to the level of damage and frequency.

Accordingly, when considering our geographic location, one must be minded to pay close attention to the research that exists. Professor Emmanuel states plainly why island nations have much to fear with regards to the future of hurricanes.

“Hurricanes are powered by the evaporation of sea water.

“Water evaporates faster from a hot surface than a cold surface,” said Emmanuel.

The Bahamas’ placement in the world’s warmest ocean, the Atlantic, makes it evidently clear the future of hurricane activity in The Bahamas should not be treated as casually as it has been in the past. The horror stories of our brothers and sisters to the south should be evidence enough. If not, we don’t have to look much further than the past five years, where between hurricanes Joaquin, Matthew, Irma and Sandy (with Irma’s cost yet to be determined), we have easily spent well over a billion dollars in hurricane relief.

Now that we can all agree that hurricanes are not going anywhere; nor are they forecasted to get any weaker over time, we must be considering the most effective measures of mitigating damage and ensuring aid is readily available for the families whose lives have been disrupted. Climate change, while singularly cannot cause a hurricane, is certain to take an already bad storm and put it on steroids.

CRIFF Controversy

As the dawn of a new day ushered in a new era of governance, one of the shocks during the budget debate was the previous administration’s decision not to pay the 2016 premium for the Caribbean Catastrophic Risk Insurance Facility (CCRIF) which led to us not being able to receive a $32M insurance payout after Hurricane Matthew. That payment would have been the facility’s largest payout to date and double its cumulative payouts since its inception.

We have all heard the former prime minister’s justification for doing so, but I will give you the short version. The brain trust of the PLP thought paying a premium for nine years without ever receiving a substantial payout did not provide a satisfactory enough return on the government’s investment. This error in judgment led to the then government surrendering the opportunity to begin the recovery after Hurricane Matthew in a shorter time period.

Some other PLPs, namely Chester Cooper and Brave Davis, both of whom are vying for leadership positions at the party’s upcoming convention, have lashed out at the government for its decision to pay up the CCRIF policy.

A few things are wrong with the opposition’s approach.

It should be noted the CCRIF policy was not designed to be the cure-all after a devastating storm hits. Rather, it was designed as a cost-effective method for CARICOM countries to pool their resources and receive expedited funds. This is seen as an attractive option for countries that have less liquidity, as there would be no need for a loss assessment to take place as a result of the facility’s parametric insurance format. This means that once a trigger, or a pre-defined hazardous event - which is determined by hazard inputs such as wind speed and storm surge being applied to the pre-defined government exposure to produce a loss estimate

– takes place, the facility will kick in and disburse funds within 14 days to a month.

Some who sought the opportunity to politicize the government’s decision to continue with the parametric insurance facility are being disingenuous, to say the least. Considering other Caribbean countries would have suffered direct hits from Hurricane Irma, their payouts, it’s quite natural that the $400K payout dwarfs in comparison to that of other Caribbean countries. However, the very nature of investing insurance is all about risk. You pray you never have to use it, but ‘pity the fool’ caught without it – a valuable lesson we learned last year after the previous administration decided against being safe than sorry.

The fact remains the CCRIF alone will not mitigate against the losses that future hurricanes promise to bring with them. While generosity will always be welcomed, we still must come up with creative ways of guarding against a situation where we depend solely on donations or amassing debt to aid in hurricane relief efforts.

The government can perhaps consider allocating a fixed percentage of VAT to a hurricane relief fund. In November of last year, $850M had been collected in VAT revenue. The former government claimed to have apportioned some of that revenue towards Hurricane Matthew aid, but a fixed line item would lend itself to more proactive governance.

Also, as FDI comes into the country, the government can test the feasibility of negotiating a percentage of foreign company’s earning being directed to a hurricane relief fund as a measure of being a good corporate citizen.

Additionally, some of the country’s most profitable industry’s – for example the Web Shop industry, can also pool percentages of their annual earnings to aid in hurricane relief. It won’t be a one size fits all method that will protect us against potential losses in the event of a storm. It will be the concerted effort from all Bahamians working together, hand-in-hand, to rebuild our country if such an unfortunate event ever occurs.

Alas, as climate change would have its way, much of the say will not be up to us.

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