FLOOD06680

• County: Statewide
• Basin: Statewide
• Title: Flood Damage in the United States, 1926-2000
• Date: 6/1/2000
• Prepared By: NOAA
• Floodplain - Doc Type: Flood Documentation Report

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7. USE AND INTERPRETATION OF NWS FLOOD DAMAGE DATA

"Estimate" is the key word for describing the NWS flood damage data. They do not
represent an accurate accounting of actual costs, nor do they include all of the losses that might
be attributable to flooding. Rather, they are rough estimates of direct physical damage to
property, crops, and public infrastructure. Damage estimates for individual flood events are
often quite inaccurate, but as estimates from many events are added together the errors become
proportionately smaller.

These findings suggest that, at the national level, annual damage totals are reasonably
accurate because they are sums of damage estimates from many flood events. Flood damage
occurs every year, and the frequency distribution of national damages during 1934-1999
approximates a log normal distribution. Therefore, the national data can be analyzed using
conventional parametric statistics.

State annual damage estimates are more problematic. Both frequency and magnitude of
damage must be considered, because damaging floods do not occur every year in most states.
Flood frequency cannot be determined simply by the presence or absence of a damage estimate
because reporting, particularly for small floods, is unreliable. (To estimate flood frequency, we
recommend establishing a threshold below which estimates are simply classified as "low" or
"minimal", as in Section 6.) Estimates of the magnitude of annual damage are often highly
unreliable. In many states, most of the annual damage estimates are below $500 million (in
inflation-adjusted 1995 dollars), therefore likely to contain proportionately large errors, as shown
in Section 5. Even when damage is greater than $500 million, estimates from different sources
have been found to disagree by as much as 40%.

Aggregation is one key to reducing estimation errors. To compare flood damages between
states or river basins, it is advisable to aggregate the damage estimates over many years and
compare the sums. To compare damage between years, it is advisable to aggregate yearly state
damage estimates over multi-state regions, or river basin damages over large river drainage
systems. Even when the estimates are highly aggregated, the user still needs to be aware that
some of the variability is caused by error, and interpret the results accordingly.

A. Analyzing Trends Over Time
There are several ways of looking at trends in flood damage. Economic damage results
from an interaction between flood waters and human activities in the flooded area, so one must
consider changes in population and development. Figure 7-1 shows (a) U.S. total flood damage,
(b) flood damage per capita, and (c) flood damage per million dollars of tangible wealth.' (All

'Flood damage per capita is computed by dividing the inflation-adjusted losses for each year by the estimated
population on July I of that year (www.census.gov). Flood damage per million dollars of tangible wealth uses the
net stock of fixed reproducible tangible wealth as estimated by the U.S. Dept. Of Commerce, Bureau of Economic
Analysis (www.bea.doc.gov)forDecember31 of each year (depreciating stock carried over from prior years).
Thus, the flood damage per million dollars of tangible wealth reflects the propcrtion of the nation's wealth in that
year lost due to floods. All three damage time series have log normal frequency distributions, therefore the
displayed trends are transformations of linear trends computed on the logarithm of the damage values.
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