Japan Inc.’s greatest threat? Typhoons.
FORTUNE — Northern revelers swimming the balmy seas off Okinawa just before typhoon Haiyun struck the Philippines must have noticed the waters were warmer this year. Around 28 degrees Celsius, compared to an air temperature of 26 degrees Celsius. Great for a last bit of summer sun before the long winter in Tokyo but deadly for some of the peoples of the Pacific and their economies.
Tropical cyclones like Haiyun typically form over large bodies of relatively warm water. With record high temperatures this year, the oceans around the East Asian seas have supplied such warmth in abundance, generating megastorms, which have hit nations like the Philippines hard, both physically and economically.
Further misery from natural disasters seems unavoidable. And the wealthier islands of Japan — the world’s third-biggest economy – will also share the financial burden. Japan also bares the brunt of vicious typhoons, which are forecast to grow even stronger in the near future, according to experts.
Japan is located in the middle of what is known as Typhoon Alley. Reinsurer Munich Re reckons that, between 1980 and 2008, eight of the 10 costliest natural disasters in Asia were typhoons that hit Japan. To be sure, such high costs may be due to an increase in insurance policies taken out in Japan, says climate scientist Miguel Esteban at the University of Tokyo. “Japan has experienced severe physical damage and other, indirect economic consequences of these weather systems. These include the loss in economic productivity due to downtime in the public transportation system or other important industries, such as ports,” he wrote in a recent paper.
Relying almost entirely on imports of food and energy, Japan Inc. is more vulnerable to the disruptive effects of natural disasters than other developed states. According to a report on climate change by the U.K. Embassy in Japan, the cost of direct damage from typhoons in Japan in the 1990s was 35 times greater than what it was in the 1970s, while the cost of damage related to flooding was eight times as much.
If that weren’t enough, the effects of climate change are expected to spawn “super-typhoons,” packing winds faster than a bullet train in the second half of this century, say Japanese researchers.
The economic repercussions of such storms will be severe, says the U.K.’s Stern Review on the Economics of Climate Change. “The overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of damage could rise to 20% of GDP or more.”
“Of course typhoons hurt the economy, and the damage they cause has generally been increasing,” says Esteban. “Although this increase is generally attributed to increased exposure. There are more people in coastal areas, and people own more things these days than they did 50 years ago, so when something happens, the economic damage is greater.”
2013 has certainly been a typhoon bumper year for the Japanese archipelago, which usually averages about 26.7 annually. The tally has been 28 typhoons so far, with that number likely to surpass 30. Japanese cyclones — typhoons in the Pacific, hurricanes in the Atlantic — are normally spawned in the south Pacific and often travel up the same jet stream — Typhoon Ally — that sent pioneering circumnavigators along the east coast of Japan toward San Francisco.
“With global warming on the rise, it is important to understand how the amount of time and money lost due to these phenomena could increase,” says Esteban. As nations attempt to grow into economies like Japan, losses will only increase.
But even a mighty economy like Japan’s will suffer. Between 30.6 to 127.9 billion additional Yen alone could be needed by 2085 to expand all ports in the country to cope with the increase in downtime due to typhoons, says Esteban.
“Essentially, as citizens are forced to take shelter, the economic productivity of the country dramatically decreases,” says Esteban who reckons Japan’s overall losses could amount to $7 billion annually thanks to Typhoons.
Japan’s problem, like the Philippines, isn’t, however, an increase in the frequency of devastating storms; it is their increasing ferocity.
“For the last two decades or so, typhoons in the western Pacific have actually been becoming less frequent,” says climatologist Kerry Emanuel of MIT. “But most model projections suggest that global warming will eventually increase the incidence of the highest categories of hurricanes and typhoons.” That’s bad news for northern Japanese cities like Tokyo, which often escape the full force of these southern storms.
So what is Tokyo doing about such problems? Apart from strengthening its infrastructure, the country’s leaders find their hands tied over helping contain CO2 levels. Japan’s numerous nuclear power stations have been more or less offline since the Fukushima disaster. And with no indication that they will fire up soon, the country is burning fossil fuels at an unprecedented rate to keep Japan Inc. in business. Japan, it seems, is powerless to stop the furies it has summoned.