A recent report by Congressional Budget Office (CBO) in the USA estimates that damage from hurricane winds, storm surges and heavy rain will cause as much as $54 billion economic losses per year.
By CBO’s estimate, the expected economic losses (average losses over the long run) from most types of such damage total $54 billion per year: $34 billion to the residential sector, $9 billion to commercial businesses, and $12 billion to the public sector.
CBO estimates that under current conditions and policies, the expected cost to the federal government — and thus to taxpayers — because of damage from hurricane winds and storm-related flooding is $17 billion per year.
The report goes on to say that such costs will place further pressure on the country’s National Flood Insurance Program (NFIP).
“CBO estimates a subsidy cost for the National Flood Insurance Program (NFIP) because the program’s expected costs exceed its premiums, creating an expected annual shortfall of $1.4 billion under current conditions. Raising NFIP premiums by $1.4 billion would eliminate the expected shortfall.”
The CBO report recommended several steps to reduce the financial impact of future storms.
“Lawmakers could pursue various approaches to decrease expected losses from hurricane winds and storm-related flooding and to limit the effect of those losses on the federal budget.”
CBO examined five approaches, including limiting greenhouse emissions; increasing federal funding to assess flood risks; expanding purchase requirements for flood insurance; expanding the federal role in risk mitigation; and increasing the share of postdisaster assistance paid for by state and local governments.
The full report can be found here (pdf).
