Climate Change

Here’s what flood damage is predicted to cost America by 2051

A flood caused by Tropical Storm Eta is seen in Davie, Florida, U.S., November 9, 2020.

Surprisingly, a lot of the at risk homes aren't required to have flood insurance. Image: REUTERS/Marco Bello REFILE

Kate Duguid
Writer, Reuters
Share:
Our Impact
What's the World Economic Forum doing to accelerate action on Climate Change?
The Big Picture
Explore and monitor how Climate Change is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:

Climate Change

  • Climate change is increasing the risk and severity of floods across America.
  • The cost of extreme weather and rising sea levels is predicted to rise to $32 billion by 2051.
  • Alarmingly, many of the at-risk homes in the Florida, California, South Carolina and Texas area are not required to have flood insurance.

Rising sea levels and extreme weather could cause $20 billion of flood damage to at-risk U.S. homes this year, rising to $32 billion by 2051, according to research from New York-based flood research non-profit First Street Foundation published on Monday.

"Increased awareness of flood risk and rising future insurance costs impact perceptions of value, which will impact real estate markets," said Matthew Eby, founder and executive director of First Street Foundation.

The cost of flood damage was approximately $17 billion annually between 2010 and 2018, according to testimony https://science.house.gov/imo/media/doc/Grimm%20Testimony.pdf from Federal Emergency Management Agency representative Michael Grimm. First Street does not have comparable estimates for 2020 or 2019.

Have you read?

Roughly 4.3 million homes - concentrated in Florida, California, South Carolina and Texas - have a substantial risk of sustaining economic damage from flooding this year, the report shows. The majority are not required by the U.S. government to have flood insurance. Were all of them to buy federal insurance, National Flood Insurance Program (NFIP) rates would need to increase 4.5 times to cover the risk, according to the report. The current average NFIP premium for these 4.3 million homes is $981.

Using Miami-Dade county in Florida as a case study, earlier First Street research https://firststreet.org/flood-lab/published-research/mckinsey-report-will-mortgages-and-markets-stay-afloat-in-florida showed that homes that had been flooded had a 3% price discount. Homes that were nearby other flooded properties and roads had an 11% discount.

This flood risk has been underpriced in mortgage- and real-estate-backed markets due to outdated federal government flood maps.

United States Climate Change Global Risks
The cost of extreme weather is predicted to rise to $32 billion by 2051. Image: McKinsey & Company

The number of properties with a substantial risk of flooding this year is approximately 70% higher than what is estimated by FEMA's maps, according to First Street https://www.reuters.com/article/us-usa-floods-real-estate/from-new-york-to-houston-flood-risk-for-real-estate-hubs-ramps-up-idUSKBN2400YV. FEMA maps are used to determine rates on government flood insurance and to underpin risk assessments done by mortgage lenders, big real estate firms and investors.

"By and large, we find that most commercial real estate firms don't presently have a good grasp of what this change could mean to the repricing of assets," said Eby.

Loading...
Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Share:
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

Two years to save the planet, says UN climate chief, and other nature and climate stories you need to read this week

Johnny Wood

April 15, 2024

About Us

Events

Media

Partners & Members

  • Join Us

Language Editions

Privacy Policy & Terms of Service

© 2024 World Economic Forum