ABSTRACT
Abstract Weather and climate disasters receive much public attention, as well as dominating the portfolios in catastrophe insurance. Public policy concerns include the questions of whether such disasters are becoming more frequent and/or more intense. Addressing such questions is complicated because not only is the climate possibly changing, but societal vulnerability as well. Extreme value theory provides a natural framework for addressing these questions, yet statistical methods based on this theory have been only rarely applied in this context. In the present chapter, first the extremal characteristics of extreme weather and climate events that may result in disasters are described, including possible trends and relationships to physically based covariates such as the El Nin˜o-Southern Oscillation phenomenon. Then the extremal characteristics of economic damage are described, including the random sum representation for annual total damage. Finally, damage functions converting the intensity of extreme events into the corresponding economic damage are considered. In an attempt to attribute the upper tail behavior of economic damage to that of the underlying weather or climate phenomenon, penultimate approximations in extreme value theory are invoked. Applications include the US billion-dollar weather and climate disasters, with the main focus being on the economic damage caused by hurricanes.
