Flood damage in the United States runs into billions of dollars!

In the second week of June, the U.S. media reported a flash flood in south Florida – dozens of streets were under water in just three days. This is another hydrological disaster that has hit the United States in the past six months. Annual flood damage, according to analysis released by the Senate, will amount to hundreds of billions of dollars. How will the world’s strongest economy cope?

June flooding in Florida

On June 11, an unnamed storm system came over the Sunshine State from the Gulf of Mexico, officially kicking off the US hurricane season. Up to 50 cm of rain fell in two days. Flooded areas included. Miami and Fort Lauderdale, and desperate drivers left hundreds of cars on flooded streets. On Thursday, a state of alert covered 8 million Florida residents, and 1,200 flights were canceled or delayed.

Unfortunately, the flooding phenomena in Florida have most likely not yet reached their climax. Meteorologists predict that thunderstorms are also expected in the south after June 17, making it difficult for the state’s residents to return to normal. Water rushed into many homes, furniture and food supplies were destroyed.

U.S. Senate counts up flood damage

The flooding in Florida coincided with the release of the results of a report commissioned by the U.S. Congress Joint Economic Committee (JEC). It shows that in 2023. The floods cost the U.S. economy between $179.8 billion and $496 billion. For comparison, it is worth adding that this is the equivalent of 1-2 percent. GDP.

The Senate committee’s estimates are much higher than previous studies have indicated. The report’s authors explain the differences by taking into account a wide range of costs overlooked in other analyses. These include:

• Physical flood damage to commercial and educational infrastructure;
• losses related to lost revenues;
• infrastructure improvements to protect against future floods;
• damage to residential homes;
• losses from federally backed mortgages and lost income taxes;
• destruction of transportation infrastructure;
• costs associated with deaths;
• Flood damage to ecosystems;
• loss of insured agricultural crops.

The report’s authors caution that even such a broad approach to costs may give an underestimate of the real damage, some of which is very difficult to measure and price. This category points, for example, to the costs associated with injuries and the impact of evacuation on the mental health of those affected, erosion and avalanches, destruction of cultural heritage, or stunted tourism revenues.

Wet year 2023

Last year alone, the United States experienced the cumulative impact of different types of flooding. These include river flooding, rising coastal water levels, and flash floods resulting from several days of rainfall of exceptional intensity. Already in January, atmospheric rivers have flooded dozens of local communities in California, bringing with them mudslides and mass evacuations. Up to 19 people have been killed, and the Russian and Salina rivers have fallen from their banks. In late April, the Mississippi River caused trouble, flooding roads, parks, campgrounds and residential homes in three states.

In July, gigantic flood damage was reported in the states of Vermont, Kentucky, New York, Massachusetts and Connecticut. In the former, the equivalent of two months’ average rainfall fell in just a few days, and water levels exceeded those recorded during the infamous Hurricane Irene in 2011. Homes, roads, bridges and even critical infrastructure were destroyed . In Kentucky, agricultural damage alone was estimated at millions of dollars.

Giant flood damage motivates investment

The JEC report focuses not only on costs, but also on the need to adapt to climate change, which is increasing the frequency and severity of flooding. And forecasts for the United States are not optimistic – while the Southwest will experience drought, the rest of the country is expected to see a significant increase in rainfall.

In recent years, the U.S. has passed a series of pieces of legislation that have enabled massive investments to make American communities more resilient to natural disasters such as floods. The talk includes. on the Bipartisan Infrastructure Law and the Water Resources Development Act of 2022. The report’s authors suggest that funding for projects that will protect the power grid, health care, sewage treatment plants and the transportation sector from the effects of flooding should also be ensured in the coming years.

Meanwhile, the numbers are unequivocal: $1. earmarked for measures to increase the resilience of municipalities reduces flood damage by $318. Well-planned investments can also increase employment and prevent job losses. Activities related to the protection of coastal wetlands and mangroves, which provide additional natural protection from flooding, are particularly positive. It has been shown that in the area around the Gulf of Mexico, $1. spent on reef and wetland restoration saves $7. In connection with flood damage reduction.

Through special grant programs, states and local governments can fund projects within catchment areas that prevent flooding and erosion, and serve to improve and protect water quality, as well as protect wildlife habitat. Separate funds are provided for flood risk reduction in agricultural areas.

Flood insurance and the health of the US economy

Annual flood damage is such a heavy economic burden that a rethink of how insurance is managed and priced is also necessary, according to JEC representatives. Although a decision was made in March 2024 to extend the National Flood Insurance Program (NFIP), but only until September this year, resulting in understandable uncertainty in the real estate market.

Climate change is, of course, a serious threat to the insurance industry, and policymakers should work to reduce this risk. Otherwise, areas of the country where devastating floods will become more frequent could become uninsurable – a problem that has already occurred in California due to the high risk of climate-related disasters. Thousands of families and many local governments will then be faced with the specter of an unbearable financial burden. Innovative approaches to risk sharing and improved insurance decision-making based on new technologies, such as satellite monitoring, could help.

The operation of the Federal Emergency Management Agency (FEMA), which provides financial support to flood victims, also needs to be reviewed. Its assistance is crucial when there is a need to evacuate and insurance does not cover all flood damage. The Biden administration has succeeded in partially cutting FEMA’s bureaucracy, expanding aid eligibility and introducing new types of payments that are available upfront.

If the federal government learns to invest in flood protection, catchment management and measures that strengthen resilience in the face of climate change, it will save huge amounts of money in the long run while reducing flood damage to human health and well-being, JEC says.