Weather-related catastrophes are increasing in frequency and intensity, with multi-billion dollar disasters becoming the norm. On average, the United States experiences around 10 such disasters each year, causing more than $1 billion in damages. Investing in resilience and preparedness cannot prevent these losses, but it can significantly reduce them.
A new economic study by Allstate, the U.S. Chamber of Commerce and the U.S. Chamber of Commerce Foundation finds that for every dollar spent on climate resilience and preparation, communities can save $13 in damages, cleanup costs and economic impacts.
The study modeled 25 disaster scenarios that could result in damage and recovery costs ranging from $1 billion to $130 billion for communities across the country and found that investing in resilience and preparedness could significantly reduce the economic costs of disasters, preserve millions of jobs, reduce the number of people displaced, and help local economies recover faster.
“Each scenario we modeled shows that investing in resilience can provide remarkable benefits to communities,” said Marty Durbin, senior vice president for policy at the U.S. Chamber of Commerce. “This important study will help identify opportunities to reduce the economic costs of natural disasters, including job losses, reduced incomes, reduced economic activity and workforce losses.”
For example, the study found that investing $10.8 billion in resilience and preparedness for a Category 4 hurricane hitting Miami could prevent the loss of approximately 184,000 jobs, save approximately $26 billion in GDP, and save $17 billion in earned income for residents. Without these investments, the city would lose 361,000 jobs, $46 billion in GDP, and $29 billion in income.
Other examples include investing $833 million to prepare for a major earthquake in San Diego, which would save about 38,000 jobs, $5.8 billion in GDP, and $3.3 billion in income, while investing $83 million to prepare for a severe tornado in Nashville would save more than 5,300 jobs, $683 million in GDP, and $464 million in income.
The study found that communities that invest in preparedness benefit even when disasters don’t occur: In the Category 4 hurricane scenario above, investments would help Miami create more than 126,000 jobs, increase production by nearly $13 billion, and boost revenues by more than $8.5 billion.
The report also provides examples of resilience investments that communities, businesses and families can make.
- green infrastructure to manage stormwater runoff and protect floodplains;
- Restore wetlands and allow natural areas to store excess water.
- Barriers, floodgates, and embankments to prevent damage to structures from floodwaters.
- Strengthening evacuation routes in case of floods or hurricanes.
- Install electrical systems and equipment above flood danger levels.
- Fire-resistant roofing or landscaping.
“It’s important that decision-makers at all levels of government and business understand that these investments can make communities safer and more resilient,” said Mark DeCourcy, senior vice president of the U.S. Chamber of Commerce Foundation.
methodology
To determine the economic impact of resilience and preparedness measures, seven types of natural disasters were analyzed: hurricanes, severe storms, earthquakes, tornadoes, floods, wildfires, droughts, and heat waves. Different methodologies were used to calculate the damage caused by these disasters and their economic impact.
This article was produced by Insurance Journal’s sister publication, Carrier Management.
Photo: Example of flood protection. (Adobe Stock image)
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