Over the weekend, the lab announced it was back to 100 percent operations. On Monday morning, before I had settled in, an email arrived: a tropical storm would pass through the next day. By early morning the lab director had sent another note—if you can avoid coming in, don't.
Strictly speaking, a tropical storm and a typhoon are not the same thing. The thresholds differ by region, but both belong to the tropical cyclone family. There are also extratropical and polar cyclones. A cyclone starts with uneven heating, which sets air moving; the deeper driver is Earth's rotation and gravity. In its early stage it can feed itself through a positive feedback loop, but once it moves from ocean to land it weakens quickly.
New York sits by the sea but at a high latitude, so tropical storms generally do not reach it. Hurricane Sandy did in 2012. The city lost power, the subway flooded, and an emergency was declared. That was the biggest disaster New York suffered after 9/11, at least until people started calling 2020 itself a disaster. I am not counting this year. An email has already said some subway stations are closed; I do not know whether water has got in again.
I first saw a typhoon in high school. Shandong sits at a latitude where typhoons are not common, which is probably why it stayed with me. Typhoon Lekima crossed Shandong last year, but I was not home. I also remember a storm in primary school that turned the afternoon almost as dark as night. The one I actually watched was Typhoon Fengshen. I was going to a health station for a hepatitis B shot, wearing a raincoat and riding a bicycle. I looked up and saw most of the sky's dark clouds rotating in one direction. It was overwhelming, because you could feel that the sky above you was only one part of the storm; the main body was much larger. On a weather map it looks like a fried egg on a map. Seeing one edge of that fried egg cover the sky is something else.
A typhoon is a natural phenomenon and often a disaster. Once it has formed, its path is not that hard to forecast, but we still cannot say where one will be born. Its most important contribution to humans is rain. Typhoon rainfall is a major source of freshwater. Freshwater makes up only 2.5 percent of the world's water; about 70 percent of it is locked in glaciers and snow, about 30 percent is groundwater, and surface water accounts for just 0.3 percent. Groundwater comes in shallow and deep layers. The shallow layer can be replenished by surface water and rain. The deep layer can technically circulate too, but its cycle takes more than a thousand years. Many agricultural wells are in fact mining deep groundwater, which on a human timescale is nonrenewable. Many cities have overpumped good groundwater, caused the ground to sink, and then had to switch to surface water. In my hometown, Zibo, the groundwater was already used up when I was in primary school. After that we drank reservoir water and Yellow River water.
Even total water resources are not that large. The water humans can use amounts to about 200,000 cubic kilometers, or 200 trillion tonnes. We currently use something like 100 billion tonnes of freshwater a day, though water can be recycled. In Chinese cities, daily domestic water use is about 100 liters per person. If the whole world lived at that level, we would need to supply 700 million tonnes a day. That sounds like plenty, but the big users are industry and agriculture, not households. A single typhoon can drop nearly 10 billion tonnes of freshwater rain. In many coastal regions, 20 to 30 percent of the freshwater needed for development is replenished by typhoon rainfall. So although typhoons have no positive image in daily life, an industrial society needs them as a supplementary source.
China's climate used to be described as dry north, flooded south. That is why projects like the South-North Water Diversion exist, even though they work against natural elevation. Climate change is now shifting the pattern. In the last decade, climate data has been pointing to the opposite: wet north, dry south. In 2012 Beijing was hit by a sudden downpour. I was living in the Zhongguancun youth apartments then. When I stepped outside I was stunned. The rain came down as if it were free; you could see wave after wave of rain curtains washing through. Looking back at reports from 2012, experts were predicting that 2020 would be a peak year for northern rainfall—a small cycle.
Climate change hits cities, especially cities planned on a whim. I have been to most of Shandong's seventeen cities, mainly because I did not have the money to travel the whole country. The building styles are very similar, especially around government seats. When a climate or geological disaster arrives, it does area-of-effect damage. The sponge city idea has become popular in recent years. In plain terms, it means replanning at the urban scale so water is used efficiently, especially by softening the impact of rainfall on drainage systems and turning that water into a resource. You build a buffer for urban freshwater—wetlands, storage ponds, green belts. The concept is easy to state and hard to build. Who pays? Probably the government, but the government has no money. Who benefits? Future people. So the likely route is PPP, bringing in social and private capital, like the wastewater plants and waste-to-energy incinerators built in recent years. But the benefits are hard to measure. We still do not know when a storm will appear, and you cannot easily levy a sponge city tax. City governments could issue local bonds or use catastrophe insurance. Financial products can attract some gamblers. But local debt has already been abused by many local governments, so whether the public will buy in is another question.
Back to the tropical storm crossing New York, Isaias. Damage is unavoidable. But since 2012, New York's MTA has sold catastrophe bonds, or CAT bonds, with annual yields of 3 to 4 percent. It is a financial way of resisting natural risk. That yield is much higher than a bank deposit. When there is no disaster, the issuer only has to pay interest, because the principal is also invested, so it is a good cash flow. When a disaster does come, the issuer can use the principal—usually held in a special insurance company account—for relief. If the disaster is so large that the principal is wiped out, the later interest payments can go in two ways. One: they simply disappear, and investors lose. Two: the issuer has bought corresponding catastrophe insurance and transfers later interest payments to the insurer. The first path requires a very high interest rate for investors; the second means paying premiums to an insurer, and insurers are quite happy to receive cash flow. CAT bonds do not get high ratings. High yield means high risk, but this risk is natural disaster, not economic risk. The 2008 financial crisis barely touched these bonds, so CAT is also a diversification hedge.
Still, the business should be looked at quantitatively. In 2019, natural disasters caused 150 billion dollars in losses worldwide, and insurers paid 52 billion dollars, mostly for typhoons and floods. Thanks to preventive measures, the total number of natural disasters has risen over the past thirty years, but after adjusting for inflation, annual total losses have been basically stable. The payout ratio, however, has been rising. As an investment, catastrophe insurance is quite risky. The thing eyeing your principal is not a particular person; it is the Earth. CAT rates have been climbing in recent years, and annual yields are now above 5 percent. If you have the nerve, you can bet against geography. But I think big-city governments, out of responsibility to residents, should master these risk-transfer tools.
Cities are, in the end, humanity's last refuge. Steel and concrete create a constant-temperature environment that isolates us from nature's shifts between cold and heat. But biologically we are homeotherms, which means we have built an extra constant-temperature shell in order to survive. I have long suspected that COVID-19 has dragged on in the United States because, in terms of the living environment, the virus is always in a highly transmissible state around 20 degrees Celsius. Europe's reopening did not produce a big rebound, possibly because European housing is more conservative and air-conditioning penetration is lower, unlike the high residential energy use in the United States. COVID-19 transmission should not do well in high heat, but human habitats never get hot. This may be why the United States stands out. Since 2003, global energy use in human habitats has been rising. This relatively constant-temperature living environment may be acting as a safe zone for the spread of cyclical temperature-sensitive diseases—an urban disease in the literal sense.
The wind outside has passed. There are already reports of a fallen tree killing someone. A tropical storm releases, every day, energy on the scale of a huge nuclear arsenal. There have been historical experiments to weaken tropical storms by seeding them with silver iodide. For a while the results looked good, but later the weakened part was attributed to measurement uncertainty, and the experiments were not continued. In games, controlling the weather sits at the top of the technology tree. If a country could control weather, it would solve agricultural, resource, and military problems at once.
There is no need to put too much hope in tech companies. I have just received an email: Google plans to pay each Google+ user up to 12 dollars to give up the right to sue further. I was an early Google+ user—early enough to have the singer Xu Ruyun as a mutual contact—but the service was hopeless. Now it seems the information I leaked there was worth 12 dollars. Once a daily-use piece of software or service forms an ecosystem, user privacy is basically gone. WeChat is probably the biggest giant in China, while QQ was once breached. I once found my own QQ group relationships on the public internet, and it was real. Later I saw updated data being sold elsewhere. I feel that my data profile at many internet companies already understands me better than I do. That is also an inescapable mark of the era.
2020 is destined to be a year that keeps supplying material.