Flooding set to cost U.S. hundreds of billions as risks mount
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Flooding — which has gotten increasingly severe in an era of extreme weather — costs the U.S. economy an estimated $179.8 to $496 billion per year in 2023 dollars, according to new data from Democrats on the Senate Joint Economic Committee.
Why it matters: The estimates are the equivalent of over 1% of 2023's gross domestic product, the report notes. It sheds light on a worsening problem for the insurance industry, as well as businesses and homeowners across the country.
The big picture: The report focuses on an issue that lawmakers in both parties are confronting, as a warming climate increases flood risks and severity.
- Governors in states such as Florida and Louisiana are grappling with insurers fleeing their states amid rising hurricane-related hazards like inland, coastal and storm surge flooding.
- The report finds that human-caused climate change is boosting flood risks, given that heavy precipitation is becoming more frequent and intense, and coastal sea levels are rising.
- The committee's majority staffers undertook their own research and consulted outside experts to come up with the new estimates, a committee spokesperson told Axios.
By the numbers: Between about $70 billion and $345 billion in infrastructure upgrades are needed for flood protection.
- Up to $40 billion a year is needed for direct commercial impacts from flooding.
- Up to $15.1 billion is seen for expected annual damage to homes with federally-backed mortgages.
- Up to $10.8 billion a year is estimated to represent the total value of owned homes lost to sea level rise.
Between the lines: Flood experts who were not involved in compiling the new data said the conclusions largely match other estimates.
- "We find around $100 billion in annualized damages to properties due to flood risk," Jeremy Porter, head of climate implications for the research group First Street Foundation, told Axios via email.
- "Then when you add on infrastructure damage, costs of repair, lost wages/etc., the total damages to the economy from flooding easily move into the hundreds of billions of dollars."
- Porter said the report may provide figures that are below what actual flood costs are.
The fine print: The report acknowledges its estimates are likely too low, stating: "Expert opinion suggests that the 'true total cost' of flooding lies somewhere between 0.5 to 2x the range estimated by the JEC Democratic
staff."
The intrigue: Porter said the insurance industry is hurting in part because of inflation's impacts to construction costs. With climate change altering the frequency and severity of extreme precipitation that leads to flooding, inflation can make repairs more costly.
- "Insurance companies are paying more not only because the events are happening more frequently, but because they cost more to repair," Porter said.
- Porter described a "climate economy" that is getting more expensive, in which public costs for infrastructure maintenance and repair are showing an uptick.
- At the same time, he said, homeowners are being squeezed by increasing insurance prices and lost wages from extreme weather and climate events.
The bottom line: The effects of a warming climate are making a growing proportion of the economy more vulnerable — and costly— than in the past, which will only continue.
- That's a sobering thought headed into what could be a hyperactive Atlantic hurricane season.
