Businesses face mounting flood risks
A groundbreaking report finds that businesses in the U.S. could lose more than 3.1 million days of operation next year due to increasing flood risks from human-caused global warming. This total may grow to 4 million days by 2051, the report predicts, warning of ripple effects throughout local economies.
The big picture: Previous reports had looked at residential and critical infrastructure exposure. This is the first detailed report examining commercial real estate's increasing vulnerability.
Why it matters: The report, from the nonprofit First Street Foundation and commercial engineering firm Arup, examines the damage, downtime and economic toll from growing flood risks to over 3.6 million commercial retail, office and multi-unit residential properties in the Lower 48 states.
Details: Some of the findings are surprising, showing high vulnerability in cities not normally associated with floods, such as Pittsburgh.
- The report also drives home the increased costs, both in time and money, of flooding during the next few decades as sea levels rise and heavy precipitation events aggravate inland flooding.
- According to the report, today there are 729,999 retail, office and multi-unit residential properties that face at least a 1% chance of flood damage in the Lower 48. The structural damage tied to these risks is expected to be about $13.5 billion next year, growing by 25% by 2052, to more than $16.9 billion, the report found.
- When buildings incur severe structural damage, businesses are forced to close and residents to relocate while repairs are made.
- The economic impact of operational time loss is projected to increase from about $27 billion in lost output and $23 billion in indirect impacts to metropolitan areas and states to $34 billion in operational time losses by 2052. The indirect losses by 2052 could total $29.1 billion, the report found.
Between the lines: The report comes as large banks and businesses are under increasing pressure to quantify their climate risk exposure, including what may be embedded within their real estate holdings.
What they're saying: "American businesses and local economies face much more uncertainty and unpredictability when it comes to the potential impact of flooding on their bottom line than they may realize," said First Street Foundation founder and executive director Matthew Eby in a statement.
- This map, from the report by the First Street Foundation and Arup, shows the increasing concentration of flood risk along the Gulf Coast during the next few decades.