Economy Watch: Economic Damage of Irma Could Hit $40B

AIR Worldwide estimates the damage caused by Hurricane Irma could be between $15 billion and $50 billion, but a great deal of uncertainty remains.

Image via NASA Worldview
Image via NASA Worldview

How much will the damage wrought by Hurricane Irma cost the U.S. economy? It’s still an open question. Catastrophe modeling firm AIR Worldwide estimates combined insured losses due to Hurricane Irma for the United States will be $20 billion to $40 billion, a range that suggests a great deal of uncertainty is still involved in making such an estimate.

One factor in the uncertainty is building construction. According to AIR, residential construction in Florida is dominated by wood-frame and masonry construction. For the same building code, wood-frame is typically more resistant to high winds than masonry. One reason is that modern timber construction can be less vulnerable than masonry construction from older codes.

As in the case of the 2004 hurricane season, significant damage may be expected to roof covers. Manufactured homes are vulnerable to significant damage during hurricanes and their performance tends to be a function of age and of the regulations under which the home was constructed and installed, AIR pointed out.

The South Florida Water Management District lowered water levels in canals as they plan for flooding and storm surge dangers. It’s worth noting that relative sea level on the Miami coast has risen 3.3 inches since Hurricane Andrew struck the area 25 years ago, and Miami-Dade County’s population has grown 35 percent, both of which are factors in estimating damage.