UPDATE: Economic Impact of the South Carolina Flood
It will be weeks or months before the final word on economic losses are tallied from the devastating floods in South Carolina.
That said, early estimates are now coming in, including exclusive information we’ve put together from internal polling and initial estimates from economists from Moody’s Analytics.
There are three phases to major weather events: here’s how it played out for the combined Joaquin / South Carolina flood event.
Phase 1: The Forecast Factor
The forecast factor is what drives the rush into grocery stores and home centers during the days leading up to the actual storm event. This phase of the storm threat is driven exclusively by the prediction of the storm (what I call the “cone of certainty”) and almost always results in long lines and stock outs.
As I noted in a previous post, the pre-storm forecast factor impact is much larger now than it’s been in the past. This is a direct result of social media and what our colleague Dr Marshall Shepherd calls “social media-rologists.”
— Paul Walsh (@PaulEWalsh) October 1, 2015
Based on polling we did on weather.com just prior to and during the storm, the effect of the forecast factor was clearly visible, with huge lifts (compared to non-threatened areas) in purchase intent and sales of emergency supplies and food staples.
Phase 2: Economic Shutdown
The second phase of the impact occurs during the heart of the storm. It’s represents that period when the area hit by the storm is shut-down and, for all practical purposes, is out of business.
“Our preliminary estimate is that the net lost economic output is $390 million.
The rebuilding and cleanup efforts aside, much of the output lost during and in the immediate aftermath of the storm will be made up.
For example, though stores may have been closed, a lot of purchases took place leading up to the storm that otherwise would not have occurred such as food, water, batteries and flashlights and most planned purchases delayed by the storm would be made up once stores reopen.
In other businesses, lost output will be more difficult to make up. For instance, restaurants that were shut down during the week of the storm are unlikely to get that business back. Therefore, tourism will be the hardest hit by the flooding.
Assuming leisure/hospitality, professional/business services in the affected areas are shut down for five days, the net lost output will be $390 million.”
Phase 3: Recovery
— Duracell (@Duracell) October 5, 2015
This phase of the economics of a storm takes place over many months and, possibly, years.
As the dollars begin to flow in from insurance companies and, where applicable, government sources, the economic activity generated by the storm recovery nearly always results in an economic stimulus for the regions affected.
In the long term (again, months to years) this impact is beneficial to the regional economy.
In the near term, however, the recovery can be devastating for property owners and small businesses. This is particularly true in flood disasters as the vast majority of people impacted don’t have flood insurance.
Sadly, this is the case for people in South Carolina. Very few of the people most severely impacted have flood insurance.
— Bryan Wood (@bryanwx) October 6, 2015
The cost of the physical losses from the storm are already being estimated to be well over a billion dollars and the recovery can be expected to last for months and possibly years.
Too early to know #scflood economic cost, but here's perspective: The 2013 Colorado floods from 1-in-1,000 year rainfall cost $3.96 billion.
— Steve Bowen (@SteveBowenWx) October 5, 2015
I discussed this topic on The Weather Channel morning show, AMHQ earlier this morning.
You can watch it below:
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