New Report Quantifies Flood Risk for American Homeowners

Flooding is the most expensive natural disaster in the United States, costing over $1 trillion in inflation adjusted dollars since 1980. While institutional real estate investors and insurers have been able to privately purchase flood risk information from for-profit companies, the majority of Americans have relied on Federal Emergency Management Agency (FEMA) maps to understand their risk. However, FEMA maps were not created to define risk for individual properties. This leaves millions of households and property owners unaware of their true risk. There has long been an urgent need for accurate, property-level, publicly available flood risk information in the United States. In a mission to fill that need, First Street Foundation has built a team of leading modelers, researchers, and data scientists to develop the first comprehensive, publicly available flood risk model in the United States. By democratizing this peer-reviewed flood risk data, First Street Foundation is correcting an asymmetry of information in the United States, empowering Americans to protect their most valuable assets – their homes – from flooding.

New research from First Street Foundation quantifies the financial impact of flood risk carried by American homeowners and how those dangers are growing as flood risks worsen due to a rapidly changing climate. First Street Foundation found that there are nearly 4.3 million residential homes (1–4 units) across the country with substantial flood risk (1% annual) that would result in economic damage. The research allows for the calculation of an average annual loss (AAL) statistic for each residential property in the contiguous United States, a key metric used to estimate the dollar value of damage associated with flood risk on an annualized basis. The Foundation found that while total expected annual loss for these properties across the U.S. is $20.0 billion this year, it grows to nearly $32.2 billion a year in 30 years — an increase

of 61% — due to the impact of a changing climate. Furthermore, the analysis demonstrates that if all of these homes were to insure against flood risk through the National Flood Insurance Program (NFIP) current pricing structure, those rates would need to increase 4.5 times to cover the risk. These patterns vary across the country, but consistently show an underestimation of economic flood risk in both coastal and inland regions.

The full report, titled “The Cost of Climate: America’s Growing Flood Risk” is available here.