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Catastrophic Floods More Frequent in 2019

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Last week, after already experiencing heavy rainfalls and flooding, New Orleans was preparing for tropical storm Barry, expecting the storm to overflow or even breach the city’s levees. Flights in and out of the city were cancelled, as were concerts and other public events, as the city braced for catastrophe. Barry ended up narrowly missing New Orleans, and instead moved inland, drenching other parts of Louisiana and Mississippi and causing floods and mass power outages in those areas. It was yet another example of how major flooding has become a normal occurrence for many regions of the country, and by all indications, it is becoming worse each year.

The National Oceanic and Atmospheric Administration (NOAA) stated in its report 2017 State of U.S. High Tide Flooding and 2018 Outlook that “The projected increase in high tide flooding in 2018 may be as much as 60 percent higher across U.S. coastlines as compared to typical flooding about 20 years ago and 100% higher than 30 years ago.” This prediction turned out to be accurate, as the United States saw massive flooding throughout 2018, including “sunny-day” or “high-tide” flooding that occurs during high tides outside of hurricane events.

In its recent report on 2018 high-tide flooding and 2019 outlook, the NOAA said that these floods’ median frequency in 2018 “reached 5 days, which tied the historical record of 2015.” Of the 98 observed locations along the U.S. coastline, 12 reportedly broke or tied their all-time records for high-tide flooding in 2018. And now, the NOAA is predicting that 2019 could be even worse.

The NOAA noted that high-tide flooding “is increasingly common due to years of relative sea level increases. It no longer takes a strong storm or a hurricane to cause flooding in many coastal areas.” The Union of Concerned Scientists has said that sea level rise is accelerating, that “sea levels in the U.S. are rising fastest along the East Coast and Gulf of Mexico,” and that the primary reason for this sea level rise is climate change melting land ice and heating oceans.

According to the NOAA’s 2019 projections, it expects high-tide flooding along the U.S. coastlines this year to reach double the numbers from 2000. Additionally, “the Northeast Atlantic could see a 140% increase, the Southeast could see a 190% increase, and the Western Gulf of Mexico could see a 130% increase.”

Almost 40% of the U.S. population lives in coastal areas, and could be at risk from flooding effects. With the start of hurricane season, these dangers will only increase as storms batter the coasts. Even before Barry threatened, New Orleans faced massive flooding last week, while Pittsburgh contended with flash floods. And the week before, heavy rains left Washington, D.C. and surrounding towns swimming in water that overwhelmed the city’s storm water pipes.

These increasing floods mean serious losses for people, municipalities and businesses. The recent DC-area floods reportedly caused $3.5 million in damage to Arlington, Virginia county infrastructure alone. In March, a “bomb cyclone” hit Nebraska, with heavy rainfall causing damages totaling more than $1.3 billion. This figure includes $449 million in road, levee and other infrastructure damage, as well as serious damage to more than 2,000 homes and 340 businesses. Iowa also experienced flooding that caused water treatment plants to shut down, depriving two cities’ residents of fresh water. And across the Midwest, agriculture was also hit hard by flooding, slowing corn and soybean planting. The delay may decrease harvests by at least 8% and increase prices worldwide.

As Risk Management Monitor has previously reported, Texas A&M University at Galveston and the Texas General Land Office examined the 50-year impact of a major storm hitting Galveston Bay on the Texas coast near Houston, finding that major storm events that caused flooding would have huge secondary effects on the economy, both locally and nationally.

Various states, including those along the Mississippi River, have already enacted flood control measures like levees, dams and flood walls, but have seen this year’s increased flooding defeat these measures. Others have encouraged residents to purchase flood insurance to offset losses. But the increasing scope of future floods may mean that these steps are not enough. Though tropical storm Barry missed New Orleans, experts have still expressed concern about coming storms possibly “topping” the city’s levees, which could cause even more damage to the already-flooded city.

Texas Study Shows Business Impact of Major Storms

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A new study conducted by Texas A&M University at Galveston and the Texas General Land Office examines the 50-year impact of a major storm hitting Galveston Bay on the Texas coast near Houston, including secondary effects to the economy. The study focused on catastrophic “500-year” flood events (with a one-in-500 chance of occurring in a year), which, while rare, have hit the state 3 times in recent years. This includes Hurricane Harvey, which struck Louisiana and Texas in August 2017, causing $125 billion in damage, according to the National Hurricane Center.

These larger storms have serious economic impacts locally, regionally and nationally. Over a 50-year time frame, the study notes, “the projected economic impact on Texas’ Gross State Product (GSP) of storm surge without coastal protection is substantial.” In the wake of a 500-year magnitude event, the regional petroleum and chemical manufacturing sectors would see their output decline by 19% (or $175.4 billion) in lost revenue, as well as a projected 17% loss of petroleum jobs (approximately 155,000 jobs) and a petroleum price increase of 13%. It would also impact the region’s housing, with the sector declining by 8%, or $39.5 billion lost in sales.

A 500-year surge event striking Galveston Bay would also have serious impacts for national economic activity, especially because the region processes 25% of the petroleum and more than half of the jet fuel used in the United States. According to the study, U.S. GDP could drop 1.1% (approximately $883 billion), U.S. exports would suffer a 4% drop (approximately $1.66 billion) and “30 states not including Texas will have lower GSP in response to a surge event in Texas.”

“The Galveston Bay region is one of the most flood- and surge-prone areas in the United States with vast amounts of vulnerable residential, commercial, industrial and petro-chemical areas at risk,” said Texas Land Commissioner George P. Bush. “This study clearly demonstrates that, without any new protections in place, future storm surges could have substantial and lingering impacts on Texas’ economy and send lasting ripples through other economic sectors nationwide.”

Turning to mitigation, the authors of the report assessed the potential measure of a 17-foot “coastal spine,” also called a “coastal storm suppression system,” made up of “connecting seawalls and fortified dunes/levees along the coastline to retractable gates.” In October, the Army Corps of Engineers released the study Coastal Texas Protection and Restoration Feasibility Study proposing a similar example of this sort of structure—74 miles of barrier, including “floodwalls (inverted T-walls), floodgates (both highway and railroad floodgates), seawall improvements, drainage structures, pump stations, and surge barrier gates.”

The researchers estimate that a coastal spine would reduce the region’s lost petroleum and chemical manufacturing sector losses to 3% and 5%, respectively, a 1% reduction in regional unemployment, and a 1% increase in petroleum product prices. The report also claims that a coastal spine mitigation plan would reduce Houston-Galveston regional insurance premiums by as much as 28%. This could provide significant relief for insurers as well. Even though insurance and reinsurance only covered about 30% of the total wind and flood damage from Hurricane Harvey, this amounted to tens of millions in losses.

In terms of construction cost, the Texas researchers polled residents of three local counties and found that 56% “believed that both government and port industries should be responsible for financing the coastal barrier system,” and a majority agreed that some form of taxation should support its construction.

Harvey Losses Could Reach $90 Billion

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With weeks to go before floodwaters recede in some parts of Texas, Hurricane Harvey—which delivered more than three feet of rain in areas of Houston—has so far caused at least 38 deaths and numerous injuries. Harvey was downgraded to a storm Wednesday night, but tens of thousands of people are still in shelters, some of which are also flooded, fearful of what they will find when they return to their homes.

“Hurricane Harvey has already broken all U.S. records for tropical cyclone-driven extreme rainfall, with observed cumulative amounts of 51 inches,” Michael Young, RMS head of Americas climate risk modeling said in a statement.

Joel N. Myers, founder, president and chairman of AccuWeather declared Hurricane Harvey to be, “The costliest and worst natural disaster in American history. AccuWeather has raised its estimate of the impact to the nation’s gross national product to $190 billion or a full one percent, which exceeds totals of economic impact of Katrina and Sandy combined.”

Damage assessments are climbing, with modeling and analytics firm RMS now estimating that losses incurred by wind, storm surge and inland flooding could be as high as $70 billion-$90 billion. The majority of losses are coming from inland flooding in the Houston metropolitan area, where more than seven million properties top $1.5 trillion in value. RMS said the estimate includes damage to all residential, commercial, industrial and automotive risks in the area, as well as possible inflation from an area-wide demand surge.

According to RMS:

Most losses will be uninsured, given that private flood insurance is limited. However, although the insured losses will remain uncertain for some time they will be significant, as private coverage is not consistent: there are significant variations in how coverage is provided by individual insurers.

Coverage for some of the residential losses has been provided by the National Flood Insurance Program (NFIP). There are approximately 500,000 NFIP policies that will be affected by Harvey, and the losses to the program will be very significant – potentially the largest event to date. However, NFIP penetration rates are as low as 20% in the Houston area, and thus most of the losses will be uninsured. This will rekindle the public policy debate around this issue.

Texas Gov. Greg Abbott estimated that more than $125 billion in federal funding will be required to help the state recover from Hurricane Harvey, the Wall Street Journal reported.

Adding to the area’s woes were two explosions at the Arkema Inc. chemical plant in Crosby, Texas, 20 miles northeast of Houston early on Thursday.

The plant, which produces organic peroxides used in products like kitchen counter tops, polystyrene cups and plates, industrial paints and PVC pipes., was without electric service since Sunday and lost refrigeration when backup generators were flooded. Because the products need to be kept cold to prevent a chemical reaction, workers had moved them from warehouses into diesel-powered refrigerated containers, but those were also flooded.

A sheriff’s deputy was taken to a hospital after inhaling fumes, according to Reuters.

Residents in a 1.5-mile radius of the Arkema plant were evacuated on Tuesday, and water levels there make it too dangerous for workers to assess the situation from the ground, officials added.

Arkema urged people to stay away as the fire burns out. Black smoke was billowing from the site, Harris County Sheriff Ed Gonzalez said at a televised news briefing.

The Federal Aviation Administration said Wednesday it had temporarily barred flights from the area because of the risk of fire or explosion.

Hurricane Harvey Hits Texas with Up to $30 Billion in Damages

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Hurricane Harvey, which made landfall in Texas on Friday night as a Category 4 hurricane, has so far caused at least five deaths and more than a dozen injuries. Now a tropical storm, Harvey has dumped more than 30 inches of rain on the Houston area, with another 15 to 20 inches anticipated by Friday.

According to the New York Times:

  • With record floodwaters devastating much of southeast Texas, more than 450,000 people are likely to seek federal aid in recovering from Harvey, the storm that has battered the Gulf Coast for days, Brock Long, the director of the Federal Emergency Management Agency, said on Monday. The agency has estimated that about 30,000 people will seek emergency shelter, and that federal aid will be needed for years.
  • The Houston region now looks like an inland sea dotted by islands, with floodwaters inundating roads, vehicles, and even bridges and buildings. Thousands of people have been rescued from flooded homes and cars and many more are stuck in homes that remained above water but are cut off.

Bloomberg reports that damage from Harvey is expected to reach as much as $30 billion when factoring in the impact of flooding on the region’s labor force, power grid, transportation and other aspects supporting the energy sector.

Catastrophe modeling firm AIR Worldwide estimates that industry insured losses resulting from Hurricane Harvey’s winds and storm surge in Texas will range from $1.2 billion to $2.3 billion. AIR noted that these estimates do not include the impact of the ongoing torrential rain and catastrophic flooding from the hurricane unprecedented precipitation.

Hurricane Katrina, which struck New Orleans in 2005, caused about $160 billion in total economic damages, with about 47% covered by the insurance industry.

The Wall Street Journal said that despite the high damage anticipated, the timing is good for insurers and their customers:

Personal and commercial insurers have record levels of capital, the money they have on hand that isn’t required to back obligations. With insurers’ overall strong capital position, Harvey is unlikely to cause extensive damage to the industry’s financial strength, although it could hurt quarterly earnings for those carriers with blocks of business in hard-hit areas.

According to the Wall Street Journal, analysts estimate it would take $100 billion or more of losses in a 12-month period to cause distress within the insurance industry. The Insurance Information Institute reported that insurers had $709 billion in surplus during the first quarter of this year, which translates to $1 in surplus for every 75 cents of net premiums.

Although 52% of residential and commercial properties in the Houston metro are at “High” or “Moderate” risk of flooding, they are not in Special Flood Hazard Areas (SFHA) identified by the Federal Emergency Management Agency (FEMA), according to CoreLogic. Properties within SFHA zones, categorized as Extreme or Very High Risk, require flood insurance if the property has a federally insured mortgage. Properties outside SFHA zones are not required to carry flood insurance.

Levels of flood risk for properties in seven metro areas likely to have severe rain and flooding as a result of Hurricane Harvey:

A factor in insurance costs, according to AIR Worldwide, is that more than half of the commercial buildings in both Texas and Louisiana are steel and concrete. Unlike residential structures, commercial buildings are often built to stricter standards, making them less vulnerable than single-family homes. More than 40% of buildings in the U.S. Gulf Coast region meet Flood Insurance Rate Map (FIRM) standards set in 1980, AIR said.