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