Blame it on the rain: Climate change has caused billions of dollars in flood damages

Blame it on the rain: Climate change has caused billions of dollars in flood damages

It’s not simply population growth, shortsighted construction decisions or insatiable demand for desirable waterfront lots that account for costly flood damage in the past few decades. It is actually raining more often and more heavily than before.

Over the past three decades, intensifying precipitation has accounted for roughly $75 billion of the estimated $199 billion in U.S. flood damages from 1988 to 2017, a group of Stanford University scientists argue in research posted Monday in the journal Proceedings of the National Academy of Sciences.

Read: 2020 brought 22 climate-change disasters costing $1 billion or more and capped the hottest decade on record

Noah Diffenbaugh, senior author of the report and the Kara J. Foundation Professor at Stanford Earth, and his team found that climate change has contributed substantially to the growing cost of flooding in the U.S., and that exceeding the levels of global warming agreed upon in the voluntary UN Paris Agreement is very likely to lead to greater intensification of the kinds of extreme precipitation events that have been most costly and devastating in recent decades. The Paris pact aims to hold the increase in average global temperatures “well below” 2 degrees Celsius (3.6 degrees Fahrenheit), and ideally no more than 1.5C (2.7 F), compared to pre-industrial levels.

Insurer Munich Re calls flooding “the No. 1 natural peril in the U.S.” But although flooding is one of the most common, widespread and costly natural hazards, determining whether climate change has contributed to the rising financial costs of flooding — and if so, by how much — has been a topic of debate. The Stanford Earth group looked to close that debate gap.

At the crux of the division is the question of whether or not the increasing trend in the cost of flooding in the U.S. has been driven primarily by socioeconomic factors like population growth, housing development and increasing property values or other factors. Most previous research has focused either on very detailed case studies (for example, of individual disasters or long-term changes in individual states) or on correlation between precipitation and flood damages for the U.S. overall.

Read: Banks increasingly unload flooded-out mortgages at taxpayer expense

“Previous studies have analyzed pieces of this puzzle, but this is the first study to combine rigorous economic analysis of the historical relationships between climate and flooding costs with really careful extreme event analyses in both historical observations and global climate models, across the whole United States,” said Diffenbaugh.

The research team started by developing an economic model based on observed precipitation and monthly reports of flood damage, controlling for other factors that might affect flooding costs like increases in home values. They then calculated the change in extreme precipitation in each state over the study period. Finally, they used the model to calculate what the economic damages would have been if those changes in extreme precipitation had not occurred.

“This counterfactual analysis is similar to computing how many games the Los Angeles Lakers would have won, with and without the addition of LeBron James, holding all other players constant,” said study co-author and economist Marshall Burke, an associate professor of Earth system science.

The report finds that changes in precipitation accounted for 36% of the actual flooding costs that occurred in the U.S. from 1988 to 2017. The effect of changing precipitation was primarily driven by increases in extreme precipitation, which have been responsible for the largest share of flooding costs historically.

“What we find is that, even in states where the long-term mean precipitation hasn’t changed, in most cases the wettest events have intensified, increasing the financial damages relative to what would have occurred without the changes in precipitation,” added Frances Davenport, a PhD student in Earth system science at Stanford’s School of Earth, Energy & Environmental Sciences, who co-wrote the report.

The researchers emphasize that, by providing a new quantification of the scale of the financial costs of climate change, their findings have implications beyond flooding in the U.S.

“Accurately and comprehensively tallying the past and future costs of climate change is key to making good policy decisions,” said Burke. “This work shows that past climate change has already cost the U.S. economy billions of dollars, just due to flood damages alone.”

Already, greater flooding is impacting real estate markets. A 2020 analysis from showed that home buyers are beginning to factor climate-change concerns into their decision-making.

The site examined flood risk data for the past five years from First Street Foundation, an organization that tracks flood damage. Researchers found that homes with a severe or extreme risk of flooding in coastal counties where a hurricane-related disaster declaration had been made in that time span only saw sales price growth of 25%. That was as much as 5% lower than homes will minimal or low risk of flooding.

Read more: Home buyers are starting to factor flood and wildfire risks into their real estate decisions — and it’s affecting price growth

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