The Joint Economic Committee’s Democratic staff estimates that flooding in the U.S. costs between $180 bn and $500 bn annually, according to JECD report.
These estimates stem from studies on the financial impact of flooding, including damage to infrastructure, homes, and economic output. The staff adjusted these figures to reflect a single year and inflation.
The JEC Democratic staff’s analysis suggests this range equals 1-2% of U.S. GDP in 2023. This estimate surpasses earlier figures, which calculated flood damage between $4.4 bn and $83 bn, covering only partial damages or specific floods.
The graph illustrates the lower-bound estimate of this impact. While climate change contributes to rising flood costs, the true cost remains uncertain. Regardless of the exact figure, flooding imposes a significant economic burden on the U.S.
Annual flood damage in the U.S.
The breakdown of economic costs includes:
- Infrastructure upgrades: $68.9 bn to $344.5 bn
- Direct commercial impact: $31.6 bn to $40 bn
- Indirect commercial impact: $27.1 bn to $34.3 bn
- Structural damage to commercial assets: $15.9 bn to $19.9 bn
- Damage to homes with federally-backed mortgages: $11.1 bn to $15.1 bn
- Value of homes lost to sea-level rise: $5.4 bn to $10.8 bn
- Annual tax revenue loss: $10.3 bn
- Damage to transit infrastructure: $59 mn to $9.7 bn
- Damage to homes with non-federally-backed mortgages: $4.5 bn to $6.1 bn
- Insurance claims for mortgage-free homes: $2.3 bn
- Costs from flood-related deaths: $1.2 bn to $1.5 bn
- Damage to ecosystems: $760 mn
- Insurance premium increases: $460 mn
- School infrastructure damage: $170 mn
- Insured crop loss: $80 mn
These figures likely underestimate the full economic impact, as many costs remain difficult to measure. Factors like injuries, mental health effects, erosion, landslides, water contamination, damage to cultural heritage, slower economic growth, and social displacement add to the burden.
Climate change may further amplify these costs due to rising sea levels and more intense storms, potentially pushing the total economic toll to 0.5 to 2 times the current estimates.
Recent legislation like the Inflation Reduction Act, Bipartisan Infrastructure Law, and Water Resources Development Act of 2022 have made substantial investments to combat climate change and make communities more resilient to its impacts like more devastating flooding.
Policymakers should continue to invest in cost-effective investments that safeguard key public assets and infrastructure like the energy grid, healthcare facilities, wastewater treatment plants, postal services, and transportation (including airports) from the effects of flooding.
On average every dollar invested in flood protection can save $5-8 in damages with some estimates showing that projects protecting water and waste treatment plants can produce $31 in returns per $1 invested.
A recent report also found thatadaptation measures can prevent job losses and increase employment growth. In January 2024, the Government Accountability Office recommended that the U.S. Army Corps of Engineers include climate resilience in its day-to-day operations to better manage flood risk.
Watershed management and investments in natural protection like coastal wetlands and mangroves provide additional protection against flooding. Nature-based solutions are cost-effective ways to protect against coastal flooding, with every $1 spent to restore wetlands and reefs saving $7 in direct flood reduction benefits.
by Yana Keller
