Troubled Waters

The Impacts of Flooding

Massive flooding can often have a devastating impact on the economy of a region and the livelihood of its people. Loss of human life, property damage, destruction of crops, loss of livestock, non-functioning infrastructure facilities, and the possibility of waterborne diseases are just some of the ways a flood can impact upon a community.

The personal safety risks, reduction in purchasing power, mass migration, and loss of land value in a flood plain makes areas prone to flooding extremely vulnerable on several levels. The additional costs associated with rehabilitation, relocation of displaced people and removal of property from flood-damaged areas can also divert money that could be used in other sectors.

Recent floods in North America demonstrate how this act of nature can have short and long-term impacts on the economy.

In June 2013, the province of Alberta experienced heavy rainfall that resulted in some of the worst flooding in the history of the province. Areas along the Bow, Elbow, Highwood, Red Deer, Sheep, Little Bow, and South Saskatchewan rivers and their tributaries were affected the most by the flooding. Sadly, four people were killed and hundreds of thousands had to evacuate as the floodwaters rose. Calgary’s downtown area, home to some of Canada’s biggest oil and gas companies, was inaccessible for almost a week due to the floods.

Now, the disaster stands to make a significant impact on the Canadian economy; according to the Canadian Imperial Bank of Commerce, the toll from the floods could knock a full percentage point off Canada’s annualized growth and five per cent off provincial growth in the third quarter. Another estimate from BMO Capital Markets says Canada’s GDP will be reduced by $2 billion as a direct result of the floods. Cleanup and recovery could cost anywhere from $3 to 5 billion.

The massive flooding damaged pipelines and disrupted rail transport, which affected the oil and gas industry, a significant player in the province’s economy. Enbridge Inc. shut down its Athabasca pipeline as well as its 380-kilometre Waupisoo pipeline, which carry nearly 1 million barrels of Alberta crude south to export hubs at Hardisty and Edmonton – these were precautionary measures. Enbridge estimated that it lost $1 million per day when the pipelines were shut down.

Farmland in Southern Alberta suffered damage as a result of the floods as well. However, Katrina Bluetchen, a spokeswoman for the provincial agriculture ministry, says the damage wasn’t widespread. Alberta accounts for 40 percent of Canada’s cattle herds, and the country’s largest beef plant, Cargill Limited, was forced to stop slaughtering cattle when floodwaters damaged the water supply in the town of High River. The facility requires large volumes of clean water in order for the plant to operate.

Tourism was also impacted by the flooding. The Calgary Stampede, which attracts an estimated one million visitors to the city, had to scale back this year because of the massive flooding at the Stampede grounds and the Scotiabank Saddledome, but was still held two weeks after the floods damaged significant portions of the city. The Scotiabank Saddledome was filled with floodwater, damaging dressing rooms, control rooms, and the event level of the arena. Concerts and agricultural-related events for the Calgary Stampede were cancelled as a result.

In spite of the massive flooding, the setback is only temporary, according to experts. TD Bank says Alberta’s economy will likely be quick to rebound from the flooding. While the retail, wholesale, rail and utility services in the province have suffered the biggest economic fallout from the floods, rebuilding efforts and increased government spending could actually boost Alberta’s gross domestic product in the latter half of 2013. The provincial government has already approved $1 billion in spending for the first phase of emergency recovery from the floods.

Flooding has an understandable – if unpredictable – impact on the economies of towns, cities, states and provinces. In April 2013, torrential downpours brought relief to the American Midwest, which had been suffering through one of the worst droughts in 50 years. However, the flooding snarled transportation lines and delayed crop plantings. In downtown Chicago, expressways were closed due to standing water and commuter rail lines were closed due to the floods. The floodwaters hindered barge loading at grain terminals along rivers and swirling currents affected movement. At export terminals, prices for corn and soybeans jumped by 10 cents a bushel as shippers scrambled to fill ocean-going vessels before river traffic stopped altogether.

When it comes to floodwaters and their effects on the overall economy, the consumer will wind up paying for it one way or another – smaller harvests mean food costs increase. Damaged facilities mean it will cost more to process crops. Crippled transportation means it will cost even more for food to make its way into stores.

One city that has faced massive and possibly permanent effects from flooding is the city of New Orleans, which was severely damaged by flooding from levee breeches after Hurricane Katrina hit the city in 2005. Eight years after the storm hit the Gulf Coast of the United States, the region still has lingering effects from the storm.

Damage from the storm was estimated to cost $96-$125 billion, with $40-$66 billion in insured losses. Half of these losses were a result of flooding in New Orleans. An estimated 300,000 homes were destroyed or otherwise made uninhabitable, and over 100 million cubic metres of debris and devastation were left behind, making cleanup efforts a daunting task. Many people criticized the immediate flood response and relief operations from local, state and federal officials and social unrest and looting followed as a result of the lack of response. The mayor of New Orleans at the time was voted out in the next election and the Governor of Louisiana, Kathleen Blanco, did not seek re-election after facing criticism from people in the New Orleans area about her role in the state’s response to the storm.

Katrina caused $260 million in damage to the port of New Orleans, affecting transportation and shipping for weeks as the city recovered. The tourism industry was responsible for a $9.6 billion annual impact before Katrina, and has only recently returned to pre-storm numbers. The massive flooding caused the city’s population to decrease because many areas where homes were destroyed were not rebuilt, and many who evacuated the city either stayed where they were sent (particularly the Houston area), or moved to outlying areas of the New Orleans Metropolitan area. However, the city’s population eventually recovered to about 80 percent of pre-Katrina levels. Many parts of the city have rebuilt since 2005, but the national economic slowdown affected many of the projects that were proposed for the city.

The floods also had an impact on the demographics of New Orleans. A large influx of immigrants from Mexico moved in to rebuild the damaged parts of the city, and the overall demographic figures suggest an increase in the white population for the first time in decades. The city is about 60 percent African-American, according to the US Census.

Floods can have huge consequences for communities and for people. Immediate impacts can include loss of life, damaged infrastructure, and loss of livelihoods. The expenses of this natural disaster can cost billions of dollars and reduce productivity in areas affected by floods. However, floods can also rejuvenate areas that are affected by drought and restore soil fertility. When an area is devastated by a flood, people must be aware of the not only the short-term effects of it, but the long-term effects as well.