by Kevin Caruso
September 11, 2005
The most recent estimate for Hurricane Katrina’s economic cost is $125 billion, representing a $25 billion increase from the previous estimate of $100 billion.
And because 60 percent of New Orleans is still underwater, a full assessment of the damages is not yet possible, thus the full economic cost can not yet be accurately determined.
"It could take months to drain the water and fully assess the level of structural damage, as well as the contamination in the soil and groundwater," said a spokesman for Risk Management Solutions (RMS), the company who gave the current estimate.
RMS also indicated that insurance firms will also likely increase their estimate of losses.
The current estimate of $20 billion to $60 billion, will likely be bumped to $40 billion to $60 billion, they said.
RMS believes that 50% of the total economic loss will be due to the flood. However, they indicated that in some areas it will be difficult to differ between flood and wind damage.
“Distinguishing the portion of damage attributable to wind or flood will be difficult in many areas that were impacted by winds in excess of 100 mph," RMS said.
RMS also indicated that because this disaster is unlike any other in our history, there is no data or experience to guide them with other important projections, such as the extent of contamination that might exist in the flooded areas, and when residents will be able to repopulate such areas.
“This is the first urban flood that has affected such a vast and industrialized region,” said Laurie Johnson of RMS.
“Without benchmarks, authorities have little experience to inform them of the levels of contamination to expect once the waters recede, or how long it will take before the region can be inhabited again. Ultimately, public-safety concerns will determine when businesses can reopen and residents are allowed to return, even in areas that appear to be undamaged.”