The Congressional Budget Office (CBO) released a report this week saying models it ran on hurricane damage in the United States point to an ever-increasing drain on the U.S. economy as climate change and coastal development mix to increase losses.
The CBO report says that the expected annual impact of hurricane damage on current U.S. gross domestic product (GDP) amounts to $28 billion.
That figure is expected to $39 billion by 2075.
According to the CBO’s models, 45 percent of the increase in the impact of hurricane damage on the GDP is attributable to climate change and 55 percent to coastal development.
“CBO concludes that, over time, the costs associated with hurricane damage will increase more rapidly than the economy will grow,” the report states. “Consequently, hurricane damage will rise as a share of gross domestic product, which provides a measure of the nation’s ability to pay for that damage.”
In terms of specific regions, the CBO says the top three states ranked by expected damage are Florida, Texas, and Louisiana. The report adds those three states make up over three-quarters of the total expected annual hurricane damage, and that Florida alone accounts for more than half of the .damage.
In order to measure the damage, the congressional watchdog employed models from Risk Management Solutions (RMS). The CBO said that it generated state-specific estimates of hurricane damage on the basis of existing property exposure by using damage functions provided by RMS.
The RMS simulations served as the “basis for the Congressional Budget Office’s reference Case” tied to damage estimates, the report states.
“Those damage functions incorporate the probability of landfall at various locations for hurricanes of different categories and indicate expected damage,” according to the CBO.
Risk Market News Newsletter
Join the newsletter to receive the latest updates in your inbox.