Potential Increases in Hurricane Damage in the United States: Implications for the Federal Budget (June 2016) CBO estimates that the combined forces of climate change and coastal development will cause average annual hurricane damage to increase from 0.16 percent of gross domestic product (GDP), or about $30 billion today, to 0.22 percent of GDP by 2075, or roughly $40 billion in today’s economy. The average number of people facing substantial damage will increase from 1.2 million today to roughly 10 million in 2075. Rising damage will increase pressure for federal spending on relief and recovery efforts. CBO examines three approaches that might decrease such pressure.

CBO’s Approach to Estimating Expected Hurricane Damage: Working Paper 2016-02 By Terry Dinan (CBO) This working paper describes how the Congressional Budget Office estimates the effects of climate change and coastal development on hurricane damage. The estimates themselves are presented in a separate report—Potential Increases in Hurricane Damage in the United States: Implications for the Federal Budget—for three selected future years: 2025, 2050, and 2075.

Climate change is projected to increase damage in two ways. First, climate change is projected to result in more frequent high-intensity hurricanes. Second, for any given storm, rising sea levels are projected to lead to increased damage from storm surges. CBO generates state-specific estimates of hurricane damage on the basis of existing property exposure (which corresponds to existing vulnerability-weighted populations and per capita income in each state) by using damage functions provided by Risk Management Solutions and estimates of the distributions of hurricane frequencies and state-specific sea levels in future years.

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