Whether from an overflowing river, rising coastal waters, or a flash flood, flooding causes extensive harm to American households, infrastructure, and businesses across the country. In the last year alone, devastating floods have hit Vermont, California, and Kentucky as climate change increases the threat of these disasters in both inland and coastal communities. This string of deadly flooding years—along with higher threats of future floods—underscores the massive costs of flooding and climate inaction.
The Joint Economic Committee’s Democratic staff estimates that the total cost of flooding in the United States is between $179.8 and $496.0 billion each year in 2023 dollars. The graph below shows the lower-bound estimate of what flooding costs the country in total each year. It is important to note that, while climate change is increasing the cost of flooding, there is significant uncertainty around what the true total cost of flooding is in any given year. Regardless of the exact number, it is clear that floods represent a massive cost to the U.S. economy.
This range was calculated based on existing research on the effects of flooding in the United States. Each underlying study focused on specific costs like damage to infrastructure, lost economic output, and damage to homes, just to name a few. Staff then adjusted these cost estimates to both isolate the cost in a single year and to adjust for inflation.
The total annual economic burden of flooding in the United States is between $179.8 and $496.0 billion.
The JEC Democratic staff’s analysis finds that flooding in the United States causes between $179.8 and $496.0 billion dollars in damages annually, which is equivalent to 1-2% of U.S. GDP in 2023. This range is notably higher than existing estimates in the literature, which put the cost of either a subset of the damages or a subset of floods at between $4.4 and $82.7 billion in 2023 dollars. The economic costs in this analysis in billions (B) include:
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Infrastructure upgrades needed to protect against flooding: $68.9 to $344.5B
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Direct commercial impact from flooding: $31.6 to $40B
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Indirect commercial impact from flooding: $27.1 to $34.3B
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Structural damage to commercial physical assets: $15.9 to $19.9B
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Expected annual damage to homes with federally-backed mortgages: $11.1 to $15.1B
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Total value of owned outright homes lost to sea level rise: $5.4 to $10.8B
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Annual loss in tax revenue due to flooding: $10.3B
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Damage to transit infrastructure from flooding: $0.059 to $9.7B
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Expected annual damage to homes with non-federally backed mortgages: $4.5 to $6.1B
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Insurance claims from flood damage to mortgage-free homes: $2.3B
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Costs associated with flooding deaths: $1.2 to $1.5B
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Damage to ecosystem services from flooding: $0.76B
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Increases in insurance premiums: $0.46B
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School infrastructure damage from flooding: $0.17B
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Insured crop loss from flooding: $0.08B
The total costs in this report should be viewed as a likely undercount of the true total cost, as there are several costs connected to flooding that are difficult to measure and have not been fully quantified by researchers.* Climate change may also increase many of the included and excluded costs going forward as heavier precipitation makes flash and river floods more damaging while rising sea levels put coastal areas at greater risk. Given these compounding factors and the inherent challenge in measuring the total economic cost of natural disasters, especially when compounded by climate change, expert opinion suggests that the “true total cost” of flooding lies somewhere between 0.5 to 2x the range estimated by the JEC Democratic staff.
* These additional costs include: injuries suffered from flooding; mental health effects from displacement or fleeing from floods; damage from erosion and landslides caused by flooding exacerbated by wildfires destabilizing land; water contamination; damage to cultural heritage; slower economic growth, including from tourism loss; prevention of access to essential public services, including healthcare and emergency services and grid power loss; and broader social impacts and displacement costs beyond moving costs, which are partially represented by reduction in value and damage estimates to real estate above.
These significant flooding costs motivate continued cost-effective investments in resilience.
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.
A recent report found that every dollar invested in flood protection saves up to $318 in damages, and adaptation 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.
The Natural Resources Conservation Service Watershed Protection and Flood Prevention Program provides technical and financial assistance to manage the effects of flooding. These grants to states, local governments, and tribes can fund watershed projects to address flooding, erosion, water quality protection and improvement, recreation, ground water recharge, municipal and rural water supplies, and wildlife habitat protection. This very popular program is always oversubscribed, so additional funding would enable more flooding resilience projects that would provide significant return on investment. The Emergency Watershed Protection-Floodplain Easement Program also helps landowners address flooding hazards on agricultural lands. Stakeholders of the program have generally described it as important and well managed with opportunities for improvement.
Improving flood insurance and disaster relief will support Americans and the economy.
Finally, improving both how flood insurance is managed and priced and how FEMA aid is disbursed would better support Americans before and after flooding hits their homes and assets. Extending the National Flood Insurance Program (NFIP)’s authorization on March 22, 2024 was an important first step. However, the program was only extended through the end of September 2024, and short term patches to NFIP reauthorization (which has been patched 29 times since 2017) create uncertainty for the real estate market. When flooding damages homes and displaces people and insurance is limited, FEMA disbursements help people get back on their feet. A recent change by the Biden Administration eliminates red tape, expands eligibility, and establishes new benefits, including up front funds for emergency housing.
The JEC Democratic staff have previously written about climate risks to the insurance sector and how policymakers could reduce these financial risks. Increasingly devastating flood risks are contributing to certain parts of the country becoming uninsurable, leaving families and local governments facing significant financial risks and economic burdens. Our previous report discussed the need for innovations in insurance and risk-sharing, including improved data that feeds into insurance decision-making using real-time, actionable earth monitoring from satellites and other technological advances. Accurate data is essential, as flood risk disclosure laws can have large economic impacts—a recent law in Texas, post-Hurricane Harvey, required this disclosure, and the most affected homes dropped approximately $15,000 in sales price.
Flooding imposes large costs on Americans and the economy, which are increasing with climate change. By investing in flood protection, watershed management, and climate resilience efforts, the federal government will save money long-term while minimizing the harmful effects of flooding on people’s health, well-being, and finances.
For more information about the methods used in this report, see the methodology and technical appendix.
