Calculating the Cost of Weather and Climate Disasters

Calculating the Cost of Weather and Climate Disasters:

Seven things to know about NCEI’s U.S. billion-dollar disasters data

Drought, floods, freezing temperatures, severe storms, tropical cyclones, wildfires, winter storms—every year since 1980, these weather and climate disasters have claimed countless lives and caused billions of dollars in damages in the United States.

The mission of the National Centers for Environmental Information (NCEI) is to chronicle these disasters and document their impacts to the Nation.

1. Why study the cost of weather and climate disasters?

NCEI is the Nation’s scorekeeper in terms of addressing severe weather and climate events in their historical perspective. As part of NCEI’s responsibilities of monitoring and assessing the climate, NCEI tracks and evaluate climate events in the United States that have great economic and societal impacts.

NCEI’s U.S. billion-dollar disaster analysis seeks to bring the best public and private disaster loss data together in a systematic approach. To that end, NCEI maintains a consistent record of weather and climate disasters with costs equaling or exceeding $1 billion in damages.

NCEI currently monitors and assesses the costs and impacts of:

  • Hurricanes
  • Drought and Heat Waves
  • Inland floods
  • Severe local storms
  • Wildfires
  • Crop freeze events
  • Winter storms and Cold Waves

2. What are the costliest weather and climate disasters?

In short, tropical cyclones are the costliest of the weather and climate disasters. Since 1980, the U.S. has sustained at least 323 weather and climate disasters where overall damages/costs reached or exceeded $1 billion (including CPI adjustment to 2021). The total cost of these 323 events exceeds $2.195 trillion.

During 2021, there were 20 separate billion-dollar weather and climate disaster events across the United States. The total cost from these events of 2021 was $145.0 billion and is the third most costly year on record, behind 2017 and 2005.

2021 also follows the year 2020 that set the new annual record of 22 events. 2021 is the seventh consecutive year (2015-2021) in which 10 or more billion-dollar weather and climate disaster events have impacted the United States.

The average cost per event by disaster types are the following:

  1. Tropical cyclones have the highest average cost per event of $20.3 billion.
  2. Drought/heat waves have an average cost of $10.0 billion per event.
  3. Wildfires have an average cost of $6.2 billion per event.
  4. Flooding events have an average cost of $4.7 billion per event.
  5. Winter storms have an average cost of $4.1 billion per event.
  6. Freezes have an average cost of $3.7 billion per event.
  7. Severe storms have an average cost of $2.3 billion per event, but are the most frequent disaster type.

3. Has every state experienced a billion-dollar disaster?

While each region of the United States faces a unique combination of weather and climate events, every state in the country has been impacted by at least one-billion-dollar disaster since 1980. Since 1980, there have been more than 100 of these events that have affected at least some part of Texas, while only one event has impacted Hawaii (Hurricane Iniki in 1992).

Wildfires are most common west of the Plains states and in several Southeastern states. However, the most intense and destructive wildfires occur in California–most notably after the year 2000. Inland flood events—not caused by tropical cyclones—often occur in states near large rivers or the Gulf of Mexico, which is a warm source of moisture to fuel rainstorms.

Drought impacts are mostly focused in the Southern and Plains states where crop and livestock assets are densely populated. Severe local storm events are common across the Plains, Southeast, and Ohio River Valley states. And, winter storm impacts are concentrated in the Northeastern states while tropical cyclone impacts range from Texas to New England but also impact many inland states.

4. How do you calculate a disaster’s price tag?

In calculating the cost assessments, NCEI receives input from a variety of public and private data sources, including Insurance Services Office, FEMA, U.S. Department of Agriculture, National Interagency Fire Center, Energy Information Administration, U.S. Army Corps, and State agencies.

Each of these data sources provides key pieces of information that capture the total, direct costs—both insured and uninsured—of weather and climate events. These costs include:

  • Physical damage to residential, commercial, and government or municipal buildings
  • Material assets within a building
  • Time element losses like business interruption
  • Vehicles and boats
  • Offshore energy platforms
  • Public infrastructure like roads, bridges, and buildings
  • Agricultural assets like crops, livestock, and timber
  • Disaster restoration and wildfire suppression costs

One of the key transformations is scaling up insured loss data to account for uninsured and underinsured losses, which differs by peril, geography, and asset class.

However, these loss assessments do not take into account losses to natural capital or assets, healthcare related losses, or values associated with loss of life. Therefore, NCEI’s estimates should be considered conservative with respect to what is truly lost, but cannot be completely measured.

5. How long does it take to calculate the price tag?

The scale and complexity of a disaster greatly influence the length of time to assess the losses. Hurricanes are particularly challenging because it takes time to better understand the wind versus water damage losses across a variety of assets (like homes, businesses, boats and vehicles, infrastructure, and agriculture) and how much of this damage is insured versus uninsured. In contrast, with more localized events—like a Colorado hail storm—where property is highly insured, NCEI can more quickly capture the losses.

6. Are billion-dollar disasters becoming more frequent?

The increases in population and material wealth over the last several decades are an important factor for higher damage potential. These trends are further complicated by the fact that many population centers and infrastructure exist in vulnerable areas like coasts, river floodplains and the wildland urban interface, while building codes are often insufficient in reducing damage from extreme events. Climate change is also playing a role in the increasing frequency of some types of extreme weather that lead to billion-dollar disasters.

7. Has the U.S. experienced more flooding events in recent years? 

Billion-dollar inland—non-tropical—flood events have increased in the United States. Most notably, four separate billion-dollar inland flood events occurred in 2016. This doubled the previous annual record, as no more than two of these events had occurred in a year since 1980. In 2017, two non-tropical inland flood events affected the country (in California and Missouri/Arkansas).

In 2019, the U.S. was impacted by several large-scale, inland flood events across many Midwestern and Southern Plains states. The damage costs were at least $20.0 billion, which makes it one of the costliest U.S. floods on record. In 2021, Louisiana and California also experienced flood events, in addition to many other non-billion-dollar floods like in Waverly, Tennessee that were locally catastrophic.

In 2017, Hurricane Harvey caused unprecedented amounts of rainfall (up to 60 inches) over Houston—one of America’s largest cities. More than 30 inches of rainfall fell on 6.9 million people, while 1.25 million experienced over 45 inches and 11,000 had over 50 inches, based on 7-day rainfall totals ending August 31. The year 2021 was the fifth consecutive year (2017-2021) that the U.S. was impacted by a slow-moving tropical cyclone that produced extreme rainfall and damaging floods—Harvey, Florence, Imelda, Sally and Ida.

For more information on how the different types of billion-dollar disaster events have changed over time, see NCEI’s time series. To visualize the frequency and cost of billion-dollar disasters, check out NCEI’s mapping tool. In addition, the following report offers the latest contextual summary on the U.S. Billion-dollar disasters: 2021 U.S. billion-dollar weather and climate disasters in historical context. 

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