Uncovering Secondary Damage

When Hurricane Florence made landfall on North Carolina’s coast in 2018, it brought record rainfall causing catastrophic flooding and damages to communities across the eastern portion of the state.

Estimating the financial impacts of household flooding is complex because direct damages often snowball into other financial risks, like a decrease in property value or loss of equity. Generally, post-disaster damage assessments focus on insured and uninsured losses, but these numbers do not account for the secondary impacts to households, lenders, local governments and other stakeholders who may also share in the financial consequences if a property owner defaults on their loan or abandons their property.

A new study published in Earth’s Future by researchers at UNC-Chapel Hill estimates $562 million in previously unquantified financial risks arising from property value changes and uninsured flood damages in eastern North Carolina as a result of Hurricane Florence

“The financial risks imposed in eastern North Carolina by this single hurricane exceed $500 million, compared to roughly $300 million in insured losses, and have not been estimated nor previously considered in flood-related recovery efforts,” said Greg Characklis, PhD, W.R. Kenan Jr. Distinguished Professor, co-author of the study and director of the Center on Financial Risk in Environmental Systems.

“This work evaluates flood-related financial risk in a new way that extends the analysis beyond just an assessment of the insured and uninsured losses that property owners experience as a result of a flood.”

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