--> Gill Blog: Economic Costs of Katrina

Gill Blog

Thursday, September 15, 2005

Economic Costs of Katrina

There is spreculation that the reconstruction of New Orleans will not just be a fix, but an entirely new rebuild consisting of massive relocation programs. This morning, I read about the possibility of building a Tennessee Valley Authority-like agency tentatively called the Gulf Coast Regional Redevelopment Authority that will start with an initial infusion of $150 Billion.

How does one begin to measure the economic costs of the storm? I came across these figures in this morning's Wall Street Journal (source material from: Risk Management Solutions, Environmental Protection Agency, Insurance Information Institute, Mortgage Bankers Association):
  • 90,000 square miles covered by federal disaster declaration (about the size of the United Kingdom)
  • 555 water systems in Mississippi, 469 in Louisiana and 73 in Alabama affected
  • $125 billion or more in economic losses
  • $25 billion or more in insured property losses (compared with $20.1 billion after Sept. 11 attacks)
  • $40-$60 billion in private insured losses
  • 160,000 or more homes ruined in Louisiana
  • 360,000 mortgages, valued at $48 billion, affected
This is just a start, and we expect these numbers to be revised to include unforeseen costs in the future.