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News
ReCAP
Economists Prepare Report on Impact of 2008 Floods in Iowa
Posted 24 June 2008
AMES, Iowa -- We know the 2008 floods devastated Iowa, with 83 of the
state's 99 counties being declared disaster areas by Gov. Chet Culver.
But what we won't know for some time is the actual economic impact of
those flood-damage losses, according to a new report by economists from
Iowa State University's Regional Capacity Analysis Program (ReCAP).
The report, "Economic
Impacts of the 2008 Floods in Iowa," details how the economic
impact of this year's flooding will be calculated. Once all of the
official losses are reported, ISU economists say the total may approach
or exceed the $1.45 billion in losses to crops, livestock, and personal
property/income reported in the 1993 floods. (ISU Professor of
Economics Dan Otto was lead author of that October 1993 report.)
But until the current numbers are in, any early projections putting
losses in the billions of dollars are premature, the ISU economists say.
"We can measure lots of things. What we can't measure is the thing that
people really, really want to know -- and that's the cost to the state
in terms of losses from the flooding," said Liesl Eathington, director
of ReCAP and lead author on the report. "We won't know that until
everyone reports the damage. We also won't know that until some of the
(state, federal and private) aid starts to flow in, which could take
months -- or in some cases, even years."
Expect 1-3 years until the numbers are in
Eathington says economists will rely on government accounts of the
economy, which come out quarterly, but only at the state level and
usually with a one-year lag.
"And so it may be a year, two years, or three before we can actually
look at the overall performance of the economy and figure out what the
net effect was," she said.
Otto's 1993 report also figured in the net effect. Taking into
consideration offsets such as insurance, federal disaster payments
and/or grants, and additional contributions, the report put total net
ag losses at $676 million, net wealth losses at $113.1 million and lost
personal income at $112 million from the '93 floods.
For now, economists can only estimate losses. As an example, the ReCAP
report estimates the loss to farmers from this year's flooding. The
USDA reported that nine percent of corn acres and eight percent of
soybeans have been flooded. Assuming that half of that land is still
able to be planted or replanted into soybeans, then ISU economist Dave
Swenson calculated that the change in anticipated gross sales for
Iowa's crop farmers might be as much as $1.2 to $1.5 billion less than
it otherwise might have been in a normal growing year.
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