May 28, 2022

Caribbean risk outlook: Hurricane season has arrived

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HurricaneFrom Global News Matters

Hurricane season is here: What risks does the Caribbean face?

A “near or below normal” hurricane season has been forecast by the US National Oceanic & Atmospheric Administration (NOAA). Eight to thirteen tropical storms and three to six hurricanes are expected for the 2014 Atlantic hurricane season. NOAA points to cooler tropical Atlantic waters and expectations for El Niño to form this year as contributors to the milder activity. The University of Colorado’s weather analysts have predicted nine tropical storms and three hurricanes, with one breaching Category 3.

What does this mean for the Caribbean?

The season began on June 1 and is considered active through November 30, and for many islands in the hurricane belt, this heightens exposure to the risk of natural disaster. This makes it timely to evaluate what hurricanes mean for Caribbean business.

Puerto Rico was granted federal funding as reimbursement for repairs of roads and bridges damaged in Hurricanes Irene (2011) and Otto (2010) amounting to over US $22MM. St Lucia’s 2012/2013 budget called for EC $56.2MM for recovery efforts following Hurricane Tomas, after dedicating some EC $240MM to reconstruction the prior fiscal year. Jamaica’s Annotto Bay Hospital was recently completed, after refurbishments were required following Hurricane Sandy (2012).

The funds required to repair infrastructure are not the only cost associated with high winds and heavy rains brought on by hurricanes. While the infrastructure itself has a clear dollar value associated with repairs, it is much more difficult to calculate the value of foregone production resulting from power losses, the impact of a temporary stop in activities, or crop losses where the roads to market were washed away.

Opportunity costs for sectors such as commerce, trade, manufacturing and agriculture, as a result of damaged infrastructure, can be quite high. Power outages, and damages to water and sewerage infrastructure can trickle down into other economic sectors just as quickly as impairment of ports, highways and rural roads.

Caribbean Agriculture: Farmers fight the risk of crop disease and bad weather

The impacts of climate are critical at a time when the Caribbean agricultural sector is already contending with issues such as disease. The banana sector has suffered losses at the impact of black sigatoka. Coffee plantations are being impacted by leaf rust (la roya). Meanwhile, citrus greening is weighing on yields for orange crops. A mixture of heavy rains and high winds would certainly pose a further challenge.

Hurricane Sandy’s impact on Jamaica’s agricultural sector amounted to J $1.43B, affecting 3,600 farms, including damage to livestock in the amount of J $95MM. Jamaica’s 2012/13 cacao crop suffered at the effect of Hurricane Sandy, dropping (19)% YoY for the harvest. The nation’s coffee industry lost J $101MM of un-reaped Blue Mountain coffee berries and J $9MM of high mountain coffee. Irrigation infrastructure was impacted at a cost of J $62MM.

Lower exports and higher inflation

The reduction of Agricultural production puts at risk the export of crops, and also can create price pressures on the local markets. The impacts of Hurricane Isaac and Sandy for Jamaica reduced local food supplies, exposing the country to higher international food prices, as well as higher imports.

Tourism: Exposure is not limited to the islands

The region’s tourism sector is highly vulnerable to weather events occurring locally, as cruise ships may be forced to skip calls, and storms may close airports and cause destruction to facilities. However, the hurricane doesn’t have to strike in the Caribbean to have an impact. In fact, Hurricane Sandy, which wreaked havoc on the US East Coast caused substantial damage to Caribbean tourism as flights and travel plans from the US were cancelled. For Jamaica, the US East Coast represents around 20% of tourist arrivals.

Following the late-season Hurricane Sandy, The Bahamas promoted an instant rebate program allowing travelers to claim $250 per booking for a visit of 4 nights or more to combat the drastic drop in air arrivals. The program lasted a year and resulted in $10MM of shared expense between the Ministry of Tourism and the private sector, resulting too costly to continue.

Bahama’s prize resort Atlantis has reported “seven digit” losses due to Hurricane Sandy. The storm cost the resort 2,000 room nights and a weekend casino tournament before impacting major source markets as it shut down travel across the eastern United States. The Lynden Pindling International Airport (LPIA) suffered a (4.8)% decline in arrivals in 2013, which was mainly attributed to Hurricane Sandy cutting into a key market in the US East Coast.

Financial Services: Is the Insurance sector prepared?

The insurance and reinsurance sector in Bermuda, The Bahamas, and Cayman Islands is only as strong as its risk modeling capacity. Hurricane Sandy, which was upgraded to a “Superstorm” resulted in high losses for insurers. Regional insurers announced Q4’2012 losses from Hurricane Sandy well into the billions of dollars. Risk modelers called the 2012 hurricane season one of the most active in 150 years, and that was even before Hurricane Sandy hit.

GLOBAL NEWS MATTERS

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For more on this story go to: https://globalnewsmatters.com/caribbean-risk-outlook-hurricanes/

Related story:

Projected-path-300x239Tropical Depression Two-E upgraded to Tropical Storm “Boris”

As at Tuesday, 3 June 2014 1:18 pm

NHC has upgraded Tropical Depression Two-E to Tropical Storm “Boris”. This storm poses no threat to the Cayman Islands.

It’s centered about 125 miles southeast of Salina Cruz, Mexico. Maximum sustained winds are 40 mph with higher gusts. No significant strengthening is expected before landfall.

This tropical storm is expected to produce 5 to 10 inches rain over Guatemala and as much as 10 to 20 inches of rain over a large part of southern Mexico through Saturday. Isolated amounts of more than 30 inches are likely in areas of mountainous terrain in the Mexican states of Oaxaca and Chiapas.

This is a life-threatening flash flood and mud slide situation.

 

 

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