[Viewpoint] Storm clouds ahead

The new year ushered in extreme weather around the world, with heavy snow and freezing temperatures belting the Northern Hemisphere and torrential rain engulfing the Southern Hemisphere.

Beijing received 33 centimeters (13 inches) of snow on Jan. 3, the capital’s heaviest daily snowfall in 59 years. A week later, a 40-year low of 1.7 degrees Celsius was set in Miami, Florida, far below its average January low of 15.6 degrees Celsius. Nine parts of New South Wales in Australia were declared natural disaster areas due to heavy rain that began on Christmas Day and continued to Jan. 7. Similarly, monthlong flood conditions that began in late December killed 40 people in Kenya.

Extreme snow and cold did not spare Korea, either. On Jan. 4, 25.8 centimeters of snow fell in Seoul, breaking the previous one-day high of 25.6 centimeters in 1969. It ranked as the most snow on record since the nation’s weather data was first collected in 1937. January also saw 10 days of negative 10 degrees Celsius temperatures, the most since January 1985.

The severity of the weather can be traced directly to a change in climate stemming from an increasing amount of greenhouse gases in earth’s atmosphere. Climate is a distribution of weather events and entails the average, range and variability of weather elements. Climate change involves distribution of weather over a long period of time, and extreme weather events are extraordinary incidents linked to climate change.

The recent severe weather events are typical examples of what happens with climate change. Arctic temperatures since mid-December have hovered around negative 20 degrees Celsius - 10 degrees warmer than the normal - causing the Arctic jet stream to weaken. That has allowed Arctic air normally blocked by the jet stream to move south. Meanwhile, El Nino Modoki, which scientific studies link to climate change, has occurred in the central Pacific Ocean. El Nino Modoki differs from El Nino, which periodically occurs in the eastern Pacific near Peru and Ecuador and is unrelated to climate change. El Nino Modoki is being blamed for the heavy snow as the warm, moist air it generates collides with Arctic air.

As extraordinary weather events are the result of climate change and the direct cause of climate change is greenhouse emissions by humans, we can deduce that the shifting weather patterns are the result of human actions rather than natural forces. The Intergovernmental Panel on Climate Change, IPCC, estimates an over-90 percent possibility that climate change comes from human activities.

Thus, to leave this matter unsettled will make extraordinary weather events daily events. The IPCC warns that if greenhouse gas emissions are not restrained, the world’s average temperature may rise as much as 6.4 degrees Celsius this century. That is a tremendous increase considering it has risen only 0.8 degrees in the 250 years since the industrial revolution. Unless this issue is resolved, economic damage from extreme weather events could amount to as much as 20 percent of world GDP by 2100, which would generate a shock equal to that of the Great Depression in the 1930s.

Long-term climate change would affect economic activity in different ways. Agricultural business, which is typically the most weather sensitive, would suffer from falling output. The heavy snowfall in early January in Seoul is a case in point. It affected the supply of red lettuce, which is grown in suburban Seoul, resulting in a 64.5 percent surge in auction prices at the Gangseo Agricultural Wholesale Market. The construction industry would suffer delays and accidents, causing an increase in labor costs and other expenses.

The transportation sector would experience flight and shipping cancellations as well as traffic jams. In 2009, problems on the country’s 27 express highways caused by severe weather cost an estimated 398.15 billion won. Like agriculture, the manufacturing sector would suffer disruptions in production planning, inventory management and sales. An inaccurate weather forecast not only results in excess inventory but also the loss of opportunities to rivals. As for the retail sector, weather changes would dent sales in offline stores like large retailers, but a rise in traffic at Internet shopping malls and home shopping television channels. The record heavy snow in Seoul on Jan. 4 boosted sales at Hyundai H Mall and GS Home Shopping by 54 percent and 30 percent, respectively, from the same day in 2009.

The weather industry - which involves weather-related manufactured goods and weather-related services such as forecasting, consulting and financial services - is growing rapidly. The market for the Korean weather industry began in 1997 with the introduction of weather businesses, which reached 44.33 billion won in 2009, rising 94-fold in 12 years. Compared with the U.S. and Japanese markets, Korea’s market has sufficient growth potential. In 2006, the U.S. weather industry’s market was 2.2 trillion won, 114.2 times Korea’s. But we must take into account that the GDP of the U.S. was 14.1 times larger than Korea’s that year. In 2007, in Japan, whose economic size was 4.2 times bigger than Korea’s at the time, the market size was 380 billion won, 13.1 times Korea’s 29.08 billion.

To prepare for extreme weather events becoming regular occurrences, the government should integrate extreme weather-related laws that are enforced on an individual basis and devise a crisis management system that can immediately cope with extreme situations.

It is also imperative to encourage the weather industry to prepare for extreme conditions as it secures new growth engines. Companies should consider extreme weather events in management, considering weather as a risk factor as they do with oil prices, foreign exchange rates and interest rates.

*The writer is research fellow at Samsung Economic Research Institute. For more SERI reports, please visit its English Web site www.seriworld.org. Translation by the JoongAng Daily staff.

by Lee Jee-hoon