Dam­age es­ti­mated at $42 bil., among most costly US storms

The Korea Times - - WORLD -

WASH­ING­TON (AFP) — Dam­age from Hur­ri­cane Har­vey could put it among the top five most costly U.S. storms ever, with fail­ing dams and lev­ees driv­ing up loss fore­casts, data mod­el­ing showed Tues­day.

Es­ti­mates for to­tal eco­nomic costs and dam­age shot up overnight to $42 bil­lion from $30 bil­lion, as flood­ing be­gan to spread to Louisiana and flood con­trol mea­sures be­came over­whelmed, ac­cord­ing to Chuck Wat­son, founder of the dis­as­ter mod­el­ing firm Enki Re­search.

While au­thor­i­ties still fo­cused on res­cu­ing sur­vivors on Tues­day, the ques­tion of the storm’s af­ter­math — and its ex­pected long-last­ing hit to the Texas and U.S. economies — was only be­gin­ning to come into view.

Re­cent re­search also shows nat­u­ral dis­as­ters can re­sult in more con­cen­trated poverty in for­mer dis­as­ter ar­eas.

“If Har­vey were your nor­mal hur­ri­cane it would be prob­a­bly a $4 bil­lion event,” Wat­son told AFP. “That would be tragic for the peo­ple af­fected, but for the ef­fect on the macroe­con­omy, we wouldn’t be talk­ing about it at all.”

As yet, the storm is nowhere near as costly as 2005’s Hur­ri­cane Ka­t­rina, which took a $118 bil­lion bite out of the re­gional econ­omy.

But at $42 bil­lion in un­re­cov­er­able eco­nomic losses, Har­vey would be about as dam­ag­ing as Hur­ri­cane Ike, which struck Texas and parts of the Caribbean at a cost of $43 bil­lion in 2008, and Hur­ri­cane Wilma, which tore through North Amer­ica in 2005, with a cost of nearly $38 bil­lion, ac­cord­ing to Wat­son’s es­ti­mates.

And the Har­vey es­ti­mate could still go up.

A U.S. en­ergy hub with $1.6 tril­lion in an­nual eco­nomic out­put, Texas ac­counts for nearly nine per­cent of Amer­ica’s GDP, the sec­ond largest state econ­omy af­ter Cal­i­for­nia — and larger than Canada or South Korea.

Gold­man Sachs es­ti­mated Mon­day that Har­vey’s dis­rup­tions to the en­ergy sec­tor alone could shave as much as 0.2 per­cent­age points off of U.S. GDP growth in the third quar­ter of this year.

Leah Bous­tan, pro­fes­sor of eco­nom­ics at Prince­ton Univer­sity, said that over time nat­u­ral dis­as­ters tend to cause wealth­ier res­i­dents to flee the dev­as­ta­tion, leav­ing poorer in­hab­i­tants to face the eco­nomic fall­out.

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