Assessing Property Level Economic Impacts of Climate in the US, New Insights and Evidence from a Comprehensive Flood Risk Assessment Tool

Abstract

Hurricanes and flood-related events cause more direct economic damage than any other type of natural disaster. In the United States, that damage totals more than USD 1 trillion in damages since 1980. On average, direct flood losses have risen from USD 4 billion annually in the 1980s to roughly USD 17 billion annually from 2010 to 2018. Despite flooding’s tremendous economic impact on US properties and communities, current estimates of expected damages are lacking due to the fact that flood risk in many parts of the US is unidentified, underestimated, or available models associated with high quality assessment tools are proprietary. This study introduces an economic-focused Environmental Impact Assessment (EIA) approach that builds upon an our existing understanding of prior assessment methods by taking advantage of a newly available, climate adjusted, parcel-level flood risk assessment model (First Street Foundation, 2020a and 2020b) in order to quantify property level economic impacts today, and into the climate adjusted future, using the Intergovernmental Panel on Climate Change’s (IPCC) Representative Concentration Pathways (RCPs) and NASA’s Global Climate Model ensemble (CMIP5). This approach represents a first of its kind—a publicly available high precision flood risk assessment tool at the property level developed completely with open data sources and open methods. The economic impact assessment presented here has been carried out using residential buildings in New Jersey as a testbed; however, the environmental assessment tool on which it is based is a national scale property level flood assessment model at a 3 m resolution. As evidence of the reliability of the EIA tool, the 2020 estimated economic impact (USD 5481 annual expectation) was compared to actual average per claim-year NFIP payouts from flooding and found an average of USD 5540 over the life of the program (difference of less than USD 100). Additionally, the tool finds a 41.4% increase in average economic flood damage through the year 2050 when environmental change is included in the model.