The Coastal Impact of Tropical Cyclones

From flooding insurance to economic loss

Flood Insurance

Photo by Jos Zwaan on Unsplash

NFIP History

Massive flooding in and around the Mississippi Delta from 1927 to 1928 triggered a collapse of available private-market flood insurance. After these events underwriters exited the private market, leaving those living in floodplain zones along rivers and coasts at risk for property loss during hurricanes and major storms. It was not until 1956 under President Eisenhower that Congress passed the Federal Flood Insurance Act, attempting to address flooding damage in the U.S. northeast caused by Hurricanes Connie and Dianne. However, lack of funding and further changes caused the law to lapse in 1957. After Hurricane Betsy in 1965, the U.S. Government decided to study how aid was funded and distributed to victims of storm disasters and resulted in the creation of the National Flood Insurance Program (NFIP).

NFIP: Major Issues

The core concern with NFIP is its financial solvency as it runs enormous deficits, especially after significant storms strike densely populated areas. However, for many decades NFIP took on modest debt and paid manageable claims. Not until the 2000s — with hurricanes Katrina and Rita — did flood damage rack up significant losses. NFIP’s cumulative debt in 2005 was in the tens of millions, by the end of the decade in 2010 the figure remained at a steady $17 billion. Subsidized flood insurance for high-risk homes shows NFIP’s actuarial method to be fundamentally broken, serving more as a nationalized bailout for risky assets.

NFIP: Possible Solutions

Without reform, NFIP will remain accumulating large deficits during catastrophic hurricanes. However, there are ways to improve the program and reduce federal expenses along with floodplain development.

Economic Loss

Growth Rates

The influence of storms on local and national economies is a much-discussed topic in the academic literature. With a century of data going back to the early 1900s, researchers have access to a tremendous amount of resources that help identify, locate, and analyze storm results on trade. From historical tables to satellite data and predictive modeling, understanding how tropical cyclones affect economic activity in the near and long-term is a vast topic of study.

Light Imagery

One way measuring economic impact from cyclones has improved is with nightlight satellite imagery. Often national, regional, and even insurance loss data cannot fully capture the total economic effects of storm damage. Satellite imagery specifically looks at electrified human settlements and gas flares, which are correlated to GDP per square kilometer. Aggregate numbers necessarily offer a low resolution, compared with light information showing immense detail.

Writer, focusing on politics and tech.

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