Extent of damage from Colorado flooding in September 2013. Green areas represent counties where flood disaster has been declared, and red represents the most heavily populated areas. Photo: Colorado State Government

19 September 2013 (EQECAT) – Colorado floods in September 2013 are expected to cause economic damages greater than $2 billion. Heavy rains, flash floods, and mudslides impacted some of the most populous counties. Flooding has resulted in multiple fatalities with an estimated 1,500 homes destroyed, and thousands more damaged in over 17 counties. Most of the financial losses will be borne by residents, since very little flood risk is insured. The Rocky Mountains in Colorado are known for flash flood risk. The confluence of steep canyons, which concentrate rainwater run-off, and meteorological conditions conducive to heavy rainfall, produce a measurable risk of flooding along the entire Rocky Mountain range. Recent forest fires (reducing the ability of the terrain to retain water) and urbanization exacerbated conditions from the Colorado flooding. The recent catastrophic events produced by a series of heavy storms traversing the Rockies are a poignant reminder of this persistent risk. The Colorado Office of Emergency Management (OEM) has identified the following 17 impacted counties in Colorado: Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, El Paso, Fremont, Jefferson, Larimer, Logan, Morgan, Otero, Pueblo, Sedgewick, Washington, Weld. Figure 1 above depicts the extent of damage from Colorado flooding. Green areas represent counties where flood disaster has been declared, and red represents the most heavily populated areas. Summary reports to date note the following:

  • Approximately 1,500 homes have been destroyed;
  • An additional 17,500 homes have been damaged by rising waters;
  • More than 10,000 people have been displaced from their homes.

Rains continue, and ensuing flood waters are still susceptible to over-flowing banks – increasing damages and economic losses. To date, hundreds of miles of roads have been flooded. Many bridges and at least 4 dams have been damaged or destroyed. Restoring the destruction from this series of events will take time, further affecting businesses and residents.

Overall Economic Damages

Economic damages from natural catastrophes, such as flooding, include known costs, such as those related to restoration of services and costs of lodging for displaced persons. Intangible costs, such as lost revenues and wages, business interruption and demand surge, also contribute to economic damage.  The recent Colorado floods have caused significant damage to residential and commercial properties as well as roads and bridges. Closed roads and necessary detours will add additional business and employment costs. Preliminary economic cost estimates of the Colorado floods do not necessarily correspond to the final restoration costs, because not all damaged assets are repaired, especially at the consumer level.

For example, a damaged garage foundation may translate to limited usage and a shorter life from unrepaired damages.

The scale of this event can be compared to the damages from Superstorm Sandy in 2012. Widespread flooding and wind damages caused a recognized $50 billion in economic damages. Comparing the affected areas using the regional Gross Domestic Product (GDP) as a proxy for regional wealth, the area affected by Sandy encompassed approximately $4 trillion of the US GDP. The 17 counties identified by the Colorado OEM (home to approximately 80% of the Colorado population), represents about 80% of Colorado’s GDP of $240 billion (2012) or $190 billion.

The GDP affected by the recent Colorado flooding is approximately 5% ($190 billion divided by $4 trillion) of the GDP affected by Superstorm Sandy.  A reasonable estimate of economic damages from these floods is 5% of that from Sandy or $2.5 billion.

Costs of Housing and Living Expenses

Estimated economic damages from the 2013 Colorado flooding can also be evaluated from the enumerations of damage available currently. 

  • In the areas affected, an estimated replacement cost of $200,000 per household can develop an average of $300 million in total costs to repair the destroyed homes.
  • Reviews of the impacts and expensive repair of flooded houses can produce an estimate of $20,000 to restore each of the 17,500 flooded (but not destroyed) homes or an additional $350 million in economic damages (some of which won’t be repaired). 
  • Residents of the destroyed houses will incur extraordinary living expenses while their homes are being repaired, as will many of the residents of the damaged homes. Experience leads to an expectation of an additional $150 million in costs.

EQECAT estimates the total direct costs for residential property and living expense to be around $900 million or more than $200 per person living in the 17 affected counties (4 million people, 2012 census data [Link updated 23 June 2018. Also, cf. How to get the most out of census.gov. –Des]).

Infrastructure and Commerce Costs

Additional costs will be incurred from damages to infrastructure (roads, bridges, dams) and commerce (physical damage from the floods, lost production due to absent or distracted employees, detour costs). These costs are difficult to estimate and are usually on a scale with the damage to housing and living expenses. Some key unknowns in the estimation of these costs, are the potential for additional regulatory burdens incurred in the reconstruction. EQECAT expects the losses to commercial and government properties and related expenses to total around $1 billion.

Comparable Catastrophic Events

Unlike many recent hurricane and tropical storm catastrophes along the US East Coast, the losses from the Colorado floods are expected to be largely uninsured due to exclusions in the basic homeowners insurance policy. The US National Flood Insurance Program (NFIP) was established to provide flood insurance and is used by homeowners to establish flood insurance for properties that are within defined flood zones (usually denoted as 100-year flood zones) as a part of their mortgage. Most of the areas impacted by the recent Colorado floods are not within defined flood zones. The portion of homeowners who purchase flood insurance under such circumstances has historically been quite small. EQECAT will continue to monitor this event and provide updates as more information becomes available. [more]

Colorado Floods Likely to Incur Economic Cost Greater than $2 Billion