EPI Study Finds Coastal Population Drain Following Hurricanes

August 18, 2006

A study conducted by the Earth Policy Institute (http://www.earth-policy.org) concludes that a number of people who evacuated their homes in the wake of Hurricanes Katrina, Rita and Wilma may have left permanently.

The EPI report, authored by the organization’s President Lester R. Brown, notes that Katrina “forced a million people from New Orleans and the small towns on the Mississippi and Louisiana coasts to move inland either within state or to neighboring states, such as Texas and Arkansas. Although nearly all planned to return, many have not.”

The study indicates that a major factor in their decision appears to be the significantly higher costs of insuring coastal property.

“Unlike in previous cases, when residents typically left areas threatened by hurricanes and returned when authorities declared it was safe to do so, many of these evacuees are finding new homes,” said the report. “In this respect, the U.S. hurricane season of 2005 was different. Record-high temperatures in the Gulf of Mexico surface waters helped make Hurricane Katrina the most financially destructive hurricane ever to make landfall anywhere.”

Brown expressed some surprise at these findings, as he and others “who track the effects of global warming” had been assuming that the “first large flow of climate refugees would likely be in the South Pacific with the abandonment of Tuvalu or other low-lying islands.” However, as Brown wrote, “we were wrong. The first massive movement of climate refugees has been that of people away from the Gulf Coast of the United States.”

The report discusses the huge losses and massive destruction caused by Katrina, and then indicates that “as of July 2006, New Orleans, the three parishes, and the three counties in Mississippi had lost a total of 375,000 residents because of destruction from Katrina. Some evacuees are still returning, but the flow has slowed to a near trickle. We estimate that at least 250,000 of them have established homes elsewhere and will not return.” Brown classes them as “climate refugees.”

The study also takes into account the effect the 2004-05 hurricanes have had on property insurance rates. The difficulty of obtaining adequate, if any insurance cover is “hanging over the future of the hurricane-prone coastal regions of the U.S.” It confirms, as most of the industry knows, that “insurance costs are climbing, and private insurance companies are withdrawing from high-risk coastal areas.”

The report notes that the trend goes back to Hurricane Andrew, which hit Florida in 1992, “destroying 60,000 homes and bankrupting some 11 local insurance companies.” To meet the shortfall, the report states: “Governments in hurricane-prone states, including Florida, Mississippi, and Louisiana, each created a state-supported insurance company for homeowners unable to get private insurance. Florida’s state insurer, Citizens Property Insurance Corporation, ran a deficit of $516 million in 2004. An analysis of risks and costs in late 2005 showed that premiums charged to property owners must be raised 80 percent to ensure Citizens’ future viability.

“These deficits were repeated in Louisiana and at the national level with the National Flood Insurance Program, which ran a $23 billion deficit in 2005. The bottom line is that rates must rise as the risk rises. This applies not only to property insurance, but also for firms seeking to insure against business interruption losses.”

According to the EPI there are “35 million people living along the hurricane-prone coast that stretches from North Carolina to Texas. Half of these live in Florida: 10 million on the Atlantic coast and 7 million on the Gulf coast. As rising seas and more powerful hurricanes translate into higher insurance costs in these coastal communities, people are retreating inland. And just as companies migrate to regions with lower wages, they also migrate to regions with lower insurance costs.”

The report concludes that the “more destructive storms in recent years are only the beginning. Since 1970, the Earth’s average temperature has risen by one degree Fahrenheit, but by 2100 it could rise by up to 10 degrees Fahrenheit (6 degrees Celsius). More destructive storms are an early manifestation of global warming. The longer-term risk is that rising temperatures will melt glaciers and polar ice caps, raising sea level and displacing coastal residents worldwide. The flow of climate refugees to date numbers in the thousands, but if we do not quickly reduce CO2 emissions, it could one day number in the millions.”

The full text of the report and additional information can be obtained on the EPI’s Website, as noted above.

Topics Catastrophe Natural Disasters Florida Louisiana Hurricane Property Mississippi

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