Detroit City Wire

Weather-related catastrophes are increasing in frequency and severity, with billion-dollar disasters becoming commonplace. In 2022 alone, the cost of natural disasters exceeded $360 billion globally, including more than 40 weather events each causing over $1 billion in damage. With these escalating costs, it is essential for governments, businesses, and households to invest in resilience to ensure community prosperity.

A new economic study by Allstate, the U.S. Chamber of Commerce, and the U.S. Chamber of Commerce Foundation reveals that every $1 spent on climate resilience and preparedness saves communities $13 in damages, cleanup costs, and economic impact. The U.S. averages ten natural disasters annually that result in $1 billion or more in damages. The study found that investment in disaster preparedness can significantly reduce a community’s overall economic costs.

The study modeled 25 disaster scenarios varying in severity and location. On average, each dollar invested reduced economic costs by $7 after an event. It is generally accepted that $1 of upfront investment reduces damage and cleanup costs by $6. Thus, combining these figures shows that every $1 invested yields $13 in long-term savings.

Each model revealed substantial economic savings from upfront investments in disaster resiliency programs and resources—preserving millions of jobs and household incomes, reducing displacement from homes, and maintaining production to help local economies rebound faster.

The research underscores that dollars spent on disaster preparedness are far more effective at reducing the cost of natural disasters than those spent on recovery efforts.

Investing in disaster preparedness is critical for both large metropolitan areas and small rural towns. These investments make a significant difference for both large-scale and relatively minor disasters.

For instance:

- Investments totaling $10.8 billion for a Category 4 hurricane striking Miami would prevent the loss of 184,000 jobs while saving $26 billion in production and $17 billion in income.

- An investment of $83 million for wildfire resilience in Santa Fe would save 388 jobs, retain almost $45 million of output, and preserve over $20 million of income.

Even if a disaster does not occur, communities benefit economically from preparedness investments through job creation and increased workforce attraction or retention. This leads to higher production levels and incomes.

When disasters do strike, areas with prior investments in resilience can preserve jobs and income that might otherwise be lost—the larger the upfront investment, the greater the potential benefits.