Nearing the 20th anniversary of America's costliest natural disaster, Moody's Analytics warns that the Miami area has the potential to have a costlier one.
Hurricane Katrina made landfall on Aug. 29, 2005, flooding much of New Orleans as well as other parts of Louisiana, Mississippi and other states in the Southeast, causing an estimated 1,833 deaths and $161 billion in property damage.
This week's Moody's Analytics report, "The Macroeconomic Consequences of a Category 5 Miami Hurricane," says such a storm would lead to about $212 billion in property damage (excluding damage to infrastructure). The report says there is a one in four chance of this hurricane occurring in the next 10 years in the City of Miami and/or the neighboring counties of Miami-Dade, Broward, or Palm Springs.
Category 5 hurricanes are the most intense hurricanes.
Miami's geography makes it "particularly susceptible to flooding from major rain events and storm surge," Miami-Dade County notes on its
The National Oceanic and Atmospheric Administration has projected sea level will rise about 10 to 12 inches by 2050. There are 6.46 million people living in the Miami metropolitan area.
Scientists say intense hurricanes will become more frequent over time due to increasing sea and atmosphere temperatures.
The Moody's Analytics report applies natural catastrophe models and economic forecasting.
The authors
In the severe scenario the City of Miami's economy would be 13% or more smaller after 10 years than it otherwise would have been and the City of Miami's home prices would decline 16% over the course of 10 years.
The report notes that its authors use Hurricane Katrina as a "tangible point of reference" because it is the costliest storm in U.S. history.
"It was not selected because it shared the same physical characteristics as the scenario we ultimately considered. Katrina had a much bigger surge and flooding component, whereas the event we selected is highly wind-dominated."
If the model assumed greater storm surge in Miami, damage to the area would be greater.
"This analysis is a stark reminder of the
"While Miami and other parts of the state have made great strides in preparedness, the financial and economic fallout of a Category 5 hurricane would be severe, straining local budgets, destabilizing insurance markets and reshaping regional economies for years," Zemaitis said. "The findings remind us that such an event is not so extraordinary — a one in four chance in the next decade — and why it's so urgent to invest in resilience and risk reduction before the next storm hits."
David Victor, distinguished professor of innovation and public policy at University of California at San Diego, hadn't seen the Moody's study and it was hard to evaluate without having done so but "the findings are plausible," he said.
"The critical question underlying the consideration of this topic is what will the role of the federal government be going forward as to whether or not assistance will be provided," said John Hallacy, president of John Hallacy Consulting, LLC.
In the last several months President Donald Trump has talked about eliminating or at least reducing spending on the Federal Emergency Management Agency.
"As for the ultimate impact on government finances, it becomes an issue of what federal resources will be available," Muni Credit News Publisher Joseph Krist said.
"In a world where the Federal Emergency Management Agency might not exist, is it reasonable to expect the state of Florida to pick up the whole tab for recovery? Is it reasonable to expect many states to recover on their own from a disaster of that scale?" he said.
"As for preparedness, I'm not sure that events of this scale are something that can be totally prepared for," Krist said. "You can try to regulate development, encourage some relocations but in Florida that seems to be a non-starter. The insurance angle may be what drives many decisions. If the state becomes the sole insurer, they better have significant reserves."
FEMA workers are saying the country's ability
On Monday a letter was delivered to Congress
Our shared commitment to our country, our oaths of office, and our mission of helping people before, during and after disasters compel us to warn Congress and the American people of the cascading effects of decisions made by the current administration," the employees wrote.
About one-third of the agency's employees have left FEMA since Trump entered office, according to The New York Times. The newspaper
The employees said they hoped their opposition to the cuts "come in time to prevent not only another national catastrophe like Hurricane Katrina, but the effective dissolution of FEMA itself and the abandonment of the American people such an event would represent."
Zemaitis said, "In Florida, the Southeast Florida Regional Climate Change Compact brings together four counties (Broward, Miami-Dade, Monroe and Palm Beach) to forge a unified, collaborative strategy for cutting greenhouse gas emissions, adapting to rising seas, and building resilience – demonstrating a leading regional model for holistic climate action."
However, "Building codes probably fall short of providing some modicum of protection for a Category 5 event. Building should be halted on parcels that are particularly prone to future events," Hallacy said.
"Florida and her counties are among the most prepared in the nation when it comes to hurricane response and recovery," said Cragin Mosteller, director of external affairs at the Florida Association of Counties. "Yet, the path to full recovery from a major storm often takes years – sometimes even decades – and depends on the combined efforts of federal, state and local partners, along with the dedication of businesses and residents."
Over time Florida will be hit with additional Category 4 and 5 hurricanes, said Dominic Calabro, president and chief executive officer at Florida TaxWatch.
The state's government should encourage more competition among insurers to lower property insurance rates, institute holidays on sales taxes on items to prepare for hurricanes and improve the routes in and out of areas exposed to hurricanes, Calabro said.
The government is doing some of these things but it can do more to prepare for hurricanes, Calabro said.
The impact of major storms on Florida can affect the
Calabro said getting rid of FEMA's bureaucracy and Congress forwarding the money that would have been spent on FEMA to Florida would be a good thing. As things stand, some of FEMA's money is to be used to address minor natural disasters that FEMA clearly shouldn't be involved in. Getting rid of FEMA would be removing the "middlemen" of emergency services, he said.
The City of Miami is rated Aa2 by Moody's Ratings and AA by S&P Global Ratings. Miami-Dade County is rated Aa2 by Moody's, AA by S&P and AA-plus by Fitch Ratings. Broward County is rated Aaa by Moody's for the general obligation bonds and AAA by S&P for the sales tax bonds. Palm Beach County is rated triple-A by Moody's, S&P and Fitch.
In the ratings reports the ratings agencies generally note the municipalities' exposure to major hurricanes as a credit negative. They also say the state and local governments have taken steps to mitigate the problems.
Government officials from the City of Miami, the counties of Miami-Dade, Broward, and Palm Beach, and the State of Florida didn't respond to inquiries for this story.
