How Can We Curb the Accelerating Costs of America’s Natural Disasters?

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Revised: 3/1/19

On November 19, 2016, my hometown newspaper in Western North Carolina reported that wildfires were ripping through 46,000 acres of the Nantahala National Forest. Natural disasters leave wounds—physical and mental—death and financial loss. Many neighbors in Western North Carolina and Tennessee lost homes, businesses, and the lives of relatives in the fires of 2016. Some victims take years to recover, some never do.

We all hope for safe communities, but graphic images of wildfires, hurricanes, floods, and other natural disasters have become familiar in recent years. The National Oceanic and Atmospheric Administration is the scorekeeper for our nation’s natural disasters and they do it in billions of dollars. In 2018, we suffered 14 natural disasters in which physical damage and the interruption of businesses totaled $91 billion. Surprisingly, 2018 was only the fourth most expensive year for natural disasters.  The cost of natural disasters in 2017 was over $300 billion. That’s twice the $149 billion direct costs of the September 11, 2001 attacks.

Year by year, the cost and frequency of natural disasters vary a lot, but the five year averages have shown crazy growth. Back in the 1990s, the five year average yearly cost of disasters was pretty stable at around $20 billion in the U.S. After 2001, the five year average cost more than doubled, fluctuating between $50 billion and $60 billion. Then around 2015, the five year average started climbing again to $100 billion. All of these figures are adjusted for inflation, so something real is going on here.

What will the annual figures, the suffering, and the loss of life be when the kids born this year become adults? We have already doubled the long-term average. Will it double again to $200 billion with spikes of $400 billion? What will it be like to live in a country that has the equivalent loss of a 9/11 attack–or two–every year?

As with most long-term issues, we can reverse this trend with innovation and political will if we act now. We do not have to continue rebuilding in floodplains, we can restore wetlands that protect us from flooding, we can enact building codes that require elevating homes in flood prone areas, harden them against hurricane force winds and earthquakes, make them more fire resistant in fire prone areas, and manage the brush that spreads wildfires. We can do better.

A recent study by the National Institute of Building Sciences concluded that $1 spent on these types of mitigation efforts, when targeted to the right areas, typically results in $4 to $6 of savings. Pretty good odds. Congress made a small down payment on prevention by passing the Disaster Recovery Reform Act of 2018, which allows diversion of some funds from disaster recovery to disaster prevention, but the amounts spent so far are too small to get the job done.

The federal government has allocated a little less than $1 billion per year to minimizing losses from disasters betwee­­­n 2007 and 2016, or about 1% of their annual cost. My analysis of what it would take in federal funding to seriously turn around the costs of natural disasters through mitigation efforts is an additional $2.5 to $5 billion per year. The low figure is based on the annual costs of natural disasters increasing by the same absolute amount as it has in the last 17 years–$4.7 billion per year–and the higher figure is based on the average cost of disasters growing by the same annual rate of 10%. The right figure is probably somewhere in between, but could be higher if global warming is truly driving the increasing costs of natural disasters.

In just a few years of consistent investment in mitigation, savings on disaster relief would more than pay the annual cost of mitigation. The future is always hidden in a cloud of “what ifs?” and nothing is more unpredictable than the annual costs of natural disasters–but the trend line is unmistakable. The federal government ends up paying out many billions of dollars each year responding to disasters. Would the initial expenditures for an effective mitigation program be too much of a burden to the current generation of taxpayers? The high estimate of what we need to spend is about the same as we spend on two days of Social Security payments or three days of what we spend on the Department of Defense Budget. Investing more in mitigation efforts rather than letting the costs of natural disasters run out of control is smart for the current generation of taxpayers and the responsible thing to do on behalf of the next generation.

Details of my analysis are available on request by emailing me at tfehsen1@jhu.edu.

Sources

Carter, Shan, and Amanda Cox. “One 9/11 Tally: $ 3.3 Trillion.” The New York Times, September 8 2011.

“Disaster Recovery Reform Act of 2018.” FEMA, https://www.fema.gov/disaster-recovery-reform-act-2018.

National Institute of Building Sciences Multihazard Mitigation Council. “Natural Hazard Mitigation Saves: 2017 Interim Report.” Washington, DC: National Institute of Building Sciences, 2017.

Sack, Kevin, and John Schwartz. “As Storms Keep Coming, Fema Spends Billions in ‘Cycle’ of Damage and Repair.” The New York Times, October 8, 2018 2018.

Stauffer, Anne, Justin Theal, and Colin Foard. “Natural Disaster Mitigation Spending Not Comprehensively Tracked.” Pew, https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2018/09/natural-disaster-mitigation-spending–not-comprehensively-tracked.

“U.S. Billion-Dollar Weather and Climate Disasters.” NOAA National Centers for Environmental Information (NCEI) https://www.ncdc.noaa.gov/billions/.