Economic Losses from Hurricane Isaac Could Reach $21 Billion

Author: Dr. Lloyd Blanchard, Director of Public Performance Management, IEM

Hurricane Isaac is currently predicted to make landfall near New Orleans on or just before the 7-year anniversary of Hurricane Katrina. However, global security consulting firm IEM estimates the results will be far different.

Katrina was a Category 3 storm that caused $108 billion in damages (the costliest ever in terms of dollars) and about 1,200 deaths (the most from a hurricane in 84 years). A day before projected landfall, Isaac has just reached hurricane strength with winds at 75 miles per hour, and is expected to make landfall as a Category 1 or 2 storm. According to IEM economist Dr. Lloyd Blanchard, “Based on this current information about the storm, IEM estimates that Isaac will cause less than 30 deaths and result in damage costs ranging from $18 to 21 billion.”

While the most obvious difference between these two storms lies in their severity (as measured by the Saffir-Simpson scale), the difference in wind speeds does not explain the difference in likely outcomes. Hurricanes are complex systems with many dimensions—wind speed and gusts, geographic breadth, associated rainfall, and storm surge. The destruction caused by Katrina can be attributed primarily to the condition of the protective levee systems and the record level storm surge—over 27 feet just east of New Orleans. Isaac is projected to produce storm surges of 6 to 12 feet, and will approach a city and coastal communities that have learned the hard lessons of Katrina. The protective systems in Louisiana have been strengthened with over $15 billion in improvements, and citizens are much more likely to heed official warnings and evacuation orders. The biggest threat from Isaac will be the amount of rain that drops on a city that lies below sea level, combined with storm surge.

Below is a scatterplot of the 30 most costly hurricanes in US history. It plots normalized damage costs against the Saffir-Simpson scale. Normalization means that the damage costs, populations, and wealth of affected areas have been updated or “equalized” to facilitate a valid comparison of damages across the broadly disparate time frames in history. This procedure makes an unnamed 1926 hurricane that struck southeast Florida and Alabama more destructive relative to Katrina in 2005, and unnamed 1900 and 1915 hurricanes that struck Galveston, TX more destructive than Andrew in 1992. These are the five most destructive storms in US history. The costs of Hurricane Isaac will fall closer to the trendline between Category 1 and 2 below.

Normalized Damages from 30 most Costly Hurricanes in US History

More Resources:

A Comparison of Hurricane Isaac’s Track and Historical Hurricane Katrina Track
Rescue and Storm Surge Video from Hurricane Isaac – Social Media Resources, Part 5
Personal Accounts of Hurricane Isaac as He Lashes the Louisiana & Mississippi Coast – Social Media Resources, Part 4

Hurricane Isaac to Make Gulf Coast Landfall Tonight – Social Media Resources, Part 3

Isaac Reaches Hurricane Status – Social Media Resources Part 2

Tropical Storm Isaac Social Media Resources – Disaster Social Network
- Part 1

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