The massive flooding in Colorado, which has claimed at least eight lives already, continues to pummel areas where residents are otherwise accustomed to dry conditions. Late last month, EQECAT released its first comprehensive loss analysis in which the catastrophe modeling firm projected $2 billion in economic losses.
Comprising nearly half of that total are property losses: At least 1,500 homes have been destroyed, while some 20,000 homes have been damaged in more than 17 counties. Of course, these loss figures are expected to rise in the coming months, due in large part to the fact that damages are still unfolding. Flood waters shut down hundreds of natural gas and oil wells in the state's main petroleum-producing region and triggered at least two spills, temporarily suspending a multibillion-dollar drilling project and raising pollution concerns.
Infrastructure and Environmental Concerns
Severe damage to roads, railroads and other infrastructure is also expected to hamper the region's energy production for months to come, while analysts caution that images of flooded wellheads from the booming Wattenberg Field will increase public pressure to restrict drilling techniques, such as fracking.
With oil being swept away by floodwaters, the environmental impact is still being assessed. Unfortunately oil is just one of many contaminants washing through communities along the Rocky Mountain foothills. Another major concern is raw sewage. On Sept. 19, Gov. John Hickenlooper said there is a lot of water to dilute pollutants, including oil.
A far greater concern right now is what cannot possibly be diluted—namely, the tremendous economic burden that will assuredly fall on many Coloradans.
Residents Largely Uninsured
Because of the collective lack of flood insurance, the government, as well as the insurance industry face not another “Sandy” but rather a different brand of disaster. A staggering portion of flood-related damages are uninsured and therefore not eligible for compensation. This may not only delay recovery efforts in Colorado but also spark some further debate about the already hotly contested National Flood Insurance Program (NFIP). Compounding the issue is that little private flood insurance is even offered in Colorado. Furthermore, flood insurance typically remains a tough sell to budget-conscious consumers, and NFIP is often not retained after it becomes no longer mandatory.
According to the Federal Emergency Management Agency (FEMA), only 22,000 homes and businesses in Colorado have flood insurance. Boulder County, one of the 17 counties hit hardest by the raging waters, has 4,779 flood insurance policies. This is a small fraction of the 77,000 detached single-family homes in the county, according to Census data.
“These are rare events so people think, 'It's not going to happen to me,'” says Robert Hunter, director of insurance for the Consumer Federation of America. Hunter estimates that only about 10 to 25 percent of Colorado homes in high-risk flood areas have coverage.
Despite the relative lack of flood insurance, the Rocky Mountains in Colorado are known for flash flood risk, EQECAT says. “The confluence of steep canyons concentrate rainwater run-off, while meteorological conditions conducive to heavy rainfall produce a measurable risk of flooding along the entire Rocky Mountain range,” the firm stated in the Sept. report.
Some experts also believe that the recent forest fires have reduced the ability of the terrain to retain water and urbanization has exacerbated conditions from the flooding.
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