Ida Hits Home

By Shelburne, Vermont Financial Advisor Josh Kruk
September 9, 2021

When I was growing up, my father owned a business in Paterson, New Jersey. We’d visit relatives in Little Falls, go to the mall in Paramus, and see movies in Ridgewood. It was surreal to see what happened in those places last week when the tail end of Hurricane Ida came through.

Positioned next to the Atlantic Ocean and home to a healthy number of rivers and lakes, New Jersey has never been immune to serious flooding. However, in the 20 years I spent there (early 70s to early 90s), nothing even approached what just happened. A video of what I first thought was a rapidly flowing river turned out to be water raging down a street. Hundreds of abandoned cars, some of which belonged to people who had been swept away, lent a post-apocalyptic feel to the nightly news.

Last month, we wrote about tail risk and the need to redefine what an extreme event looks like. This was a timely, if unwelcome, example. The mayor of Fort Lee called it a “100-year storm”, meaning something that has a 1% chance of happening in any given year. But was it really that? While the impacts of each storm were unique, you could argue this is the third instance in a decade. Irene, seared in our minds here in Vermont, killed nine people in New Jersey in 2011. A year later, Sandy redefined what a mid-Atlantic landfall could mean.

Climate solutions are generally grouped into two categories, mitigation and adaptation. The former centers on reducing or removing greenhouse gas emissions to stall temperature increases. The latter is about taking steps to decrease the impact of the climate change we have already locked in. People often associate adaptation with infrastructure, which can be an easier sell politically than mitigation (as evidenced by the number of times “our crumbling roads and bridges” appear in public speeches).

But based on recent experience, it’s realistic to wonder if physical adaptation can occur quickly enough to outpace the change itself, or whether we’ll constantly find ourselves a step behind. Arguably, the most important adaptation may be behavioral as people adjust to the new normal and take whatever actions they can to avoid situational risk. In the meantime, I would invest as much as possible in mitigation. As the old saying goes, “If you want to get out of a hole, the first step is to stop digging.”