Costing Floods and Other Extreme Events

Lead Organization 

Commission for Environmental Cooperation (CEC) - An intergovernmental organization that supports cooperation among the NAFTA partners (United States, Mexico and Canada) to address environmental issues of continental concern.

Problem Areas

The methods by which costs of flood damages were estimated varied significantly among federal and state/provincial jurisdictions and across the three CEC countries. There were significant data gaps in assessing uninsured losses and much of the available data was not adequately georeferenced. Moreover, much of the data itself was not available in real-time. Furthermore, the economic impacts of cascading multi-hazards (for example, dry season > forest fires > floods > landslides) were not well documented. As a consequence of these limitations, governmental agencies and private entities were not able to easily assess “trade-offs” for infrastructure and institutional investments for enhancing disaster resilience. The information gaps also limited joint responses between US, Canada and Mexico, particularly when encountering extreme events that impacted multiple jurisdictions.

Why Address the Problem

The economic costs of floods and other extreme events are a central element of policy formulation to address future impacts (e.g., cost/benefit analyses), allocate adequate resources for monitoring and preparedness, and provide support for building resilient communities. The costing of these extreme events, when available in a timely manner, could be utilized by various levels of government from national to sub-national to municipal, as well as various sectors of the economy such as agriculture, natural resources extraction industries, the media, and the insurance industry.

Project Objectives

The overall objective of this project was to formulate a standardized methodology for assessing the cost of extreme floods in the US, Mexico, and Canada. The methodology was developed in close cooperation between interested government agencies, Indigenous community representatives, private sector partners, and domain experts. The composition of this group included the end-users of this methodology and data generated from it, particularly those designing infrastructure investments, enhancements to community resilience, and long-term planning. This group would further extend this methodology through case studies in each of the three countries, to a multi-hazard assessment that incorporated other extreme events (such as hurricanes, tornadoes, forest fires, landslides, etc.). Such integrated and standardized methodologies did not exist at that time.

The costing methodologies developed under this project, when applied across the three countries, will enable systematic investments by the governmental agencies partnering in this initiative to enhance resilience to extreme floods, reduce the economic impact of future events, and support real-time monitoring and disaster response. A common cost assessment methodology would also enable regional collaboration in applied and targeted research on future impacts of extreme events, operations for mitigating impacts of extreme events, and coordinated policymaking among the three countries.

Project Outputs

This project formulated a common methodology for measuring the economic impacts of extreme floods, tabulating the economic costs of floods and related extreme events in the US, Mexico, and Canada for a 5-year period (2013-2017), analyzing emerging patterns, and identifying the design elements for a common platform through which this information could be shared. Completed successfully in July 2021, it is anticipated that this project will guide the future development of a centralized portal for researchers, insurance industry, communities, and businesses to access information relevant to preparing for weather-related hazards. Data could potentially include economic impacts (e.g., damages in personal property, business expenditures or losses), including agricultural impacts (e.g., crop loss), transportation impacts (e.g., road closures, air flight cancellations), and impacts from other sectors.

The project will also inform future methodologies for determining the economic impacts of other types of extreme events. Such an approach would enable a more realistic analysis of the costs associated with a broader range of extreme events, including hurricanes, tornadoes, forest fires, landslides, etc. Proof-of-concept application of this methodology will be developed through three case studies, one in each country. Findings have been summarized in a policy brief that targets project beneficiaries as well as policymakers and planners within the three governments.


Project Beneficiaries and Partners

The project beneficiaries – primarily end-users of extreme events data such as federal, state/provincial, and municipal level government agencies, Indigenous community organizations, and key sectors of economy such as insurance, agriculture and transportation – were incorporated directly in the project as partners. These end users provided inputs into the methodological development and design of case studies in Mexico, US and Canada, essentially serving as project partners. Additionally, domain experts and institutions from the three countries also comprised the project team.