MoneyGeek Analysis:

States With the Most Climate Risk Today

ByLucia Caldera

Updated: September 4, 2023

ByLucia Caldera

Updated: September 4, 2023

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When it comes to climate change, one significant issue homeowners face is the increased risk of damage from inclement weather and natural disasters like earthquakes, hurricanes, tornados and floods. While these hazards vary based on location, some states have more climate risk than others.

MoneyGeek analyzed the Federal Emergency Management Agency’s (FEMA) National Risk Index dataset to assess the climate risks homeowners could face in every state. Our analysis breaks down climate risk for each state by expected per capita loss, expected total loss and greatest potential climate hazard. MoneyGeek also calculated the percentage of each state’s total expected climate losses due to building losses, injury and loss of life and agricultural losses. Here’s what we found.

Key Findings:
  • Louisiana has the highest expected natural disaster losses per capita of any state, with damages estimated to cost each resident $246; property damage constitutes 67% of all estimated climate-related losses in the state.

  • Texas has the highest expected losses due to injury or death caused by natural disasters at $1.1 billion annually.

  • California has the highest expected losses to property damage at $4.6 billion annually, with earthquakes expected to be the most costly natural disaster in the state.

  • Earthquakes pose the most annualized natural disaster risk in the United States overall. Despite occurring less frequently than tornadoes and hurricanes, their potential for damage is significantly higher.

The States With the Highest Climate Risk for Residents

It’s crucial that homeowners understand the climate risks that pose a threat to their area. These risks can impact personal finances, home insurance coverage and emergency preparedness plans.

To find the states with the most climate risk per capita, MoneyGeek analyzed natural disaster data gathered by FEMA and estimated the cost of climate-change-related damage for each resident. We ranked the 15 states with the most climate risk per resident below.

15 States With the Highest Climate Risk for Residents
State
Expected Loss per Capita

1.

Louisiana

$246

2.

South Dakota

$243

3.

Nebraska

$225

4.

Mississippi

$203

5.

Kansas

$195

6.

Iowa

$195

7.

Alaska

$183

8.

North Dakota

$181

States With the Highest Climate Risk by Type of Natural Disaster

MoneyGeek found that earthquakes, tornadoes and riverine flooding are the top three most expensive climate risks in the United States. However, some states bear more of the cost of damages from these natural disasters than others.

The following definitions are key to understanding the risks that each type of weather emergency represents:

  • State With Greatest Risk Overall: These are the states with the largest total expected losses due to each type of hazard.
  • State Loss as % of National Loss: Cost of damage the state is expected to incur due to that natural disaster as a percentage of the total national cost of the natural disaster type.
  • State Expected Annual Loss: Cost of damage that the natural disaster is expected to cause in the state.
  • National Expected Annual Loss: Cost of damage that the natural disaster is expected to cause nationally.
The States Most Impacted by Different Climate Hazards
Hazard
State With Greatest Risk Overall
State Loss as % of National Loss
State Expected Annual Loss
National Expected Annual Loss

Earthquake

California

64%

$4,570,000,000

$7,195,451,659

Tornado

Texas

17%

$845,000,000

$5,060,337,787

Riverine Flooding

Texas

28%

$1,330,000,000

$4,725,570,182

Hurricane

Texas

40%

$1,470,000,000

$3,659,671,779

Drought

California

39%

$1,290,000,000

$3,296,011,675

Wildfire

California

44%

$699,000,000

$1,571,712,057

Strong Wind

Minnesota

7%

$93,896,674

$1,276,808,741

Hail

Texas

28%

$353,000,000

$1,260,927,544

It’s More Important Now Than Ever for Homeowners to Financially Protect Themselves from Climate Risk

After gaining a better understanding of the climate risk in their area, it’s crucial that homeowners take steps to prepare for natural disasters before they happen.

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PREPARING FOR CLIMATE RISK

The Federal Trade Commission recommends that residents take the following steps to prepare for climate risk:

  • Become familiar with your homeowner’s insurance coverage.
  • Get coverage in case of hazards, floods or earthquakes.
  • Take inventory of your assets and, when possible, store extra copies of important documents online.
  • Weatherproof your property.
  • Sign up for local alerts and weather warnings.
  • Work on your financial preparedness by establishing an emergency fund.
  • Keep an electronic and hard copy of FEMA’s Emergency Financial First Aid Kit.
  • Create a family safety plan.

Homes considered high-risk can be more difficult to insure in the voluntary insurance market. With the Fair Access to Insurance Requirements (FAIR) Plan, people who live in the worst states for climate change can get affordable homeowners insurance coverage through their state administrators. While these plans may be more expensive than private insurance, they limit homeowners' liability and offer coverage that wouldn’t otherwise be available.

Homeowners who aren’t sure if they have adequate homeowners insurance coverage can also use Ready.gov’s Insurance Coverage Discussion Form to work with their agents to protect their homes from climate risk.

Renters who want to protect their personal belongings can also benefit from a high-quality renters insurance policy. Purchasing this coverage can mitigate possible losses in the states with the worst climate change risk.

Expert Insights

Lack of information and extreme weather can harm homeowners who live in the worst states for natural disasters. MoneyGeek interviewed a panel of climate risk experts to help homeowners prepare.

  1. What do you think are some of the biggest natural hazards that affect our country today?
  2. Based on your studies, how do you expect climate risks to change in the future? What could the population expect, and how could they prepare for such changes?
  3. What steps can readers take to mitigate climate risk in their area?
  4. What resources would you recommend for individuals who live in states with high climate risk?
  5. If someone were considering a move, what type of data should they look for to choose an area with the lowest climate risk?
  6. How does climate risk affect homeownership?
Robert K. Kaufmann
Robert K. KaufmannProfessor at Department of Earth & Environment at Boston University
Jase E. Bernhardt
Jase E. BernhardtAssistant Professor of Geology, Environment & Sustainability at Hofstra University
Aaron McCright
Aaron McCrightProfessor and Chairperson of Michigan State University's Department of Sociology
Ryan Sriver
Ryan SriverAssociate Professor of Atmospheric Sciences at the University of Illinois at Urbana-Champaign
Jason West
Jason WestProfessor and Director of Graduate Studies for UNC's Department of Environmental Sciences and Engineering

Methodology

MoneyGeek analyzed data from FEMA’s National Risk Index datasets to calculate and compare annual expected losses from climate-related disasters for each state. To calculate per capita risk, MoneyGeek utilized 2022 population estimates for each state using data from the United States Census Bureau.

Full Data Set

MoneyGeek’s full data set provides a high-level understanding of the study results. Our state-by-state analysis paints a picture of the country’s overall climate risk and offers perspective on the states with the highest risk of natural disasters.

The table below uses the following terminology to evaluate climate risk across the country:

  • Expected Loss per Capita: Total expected losses per person based on population size and greatest potential hazards.
  • Annual Expected Loss (Millions): A forecast of how much natural disasters will cost each state in one year.
  • Greatest Potential Hazard: The hazard that represents the largest expected loss for each state.
  • % Building Loss: The percentage of the state’s Annual Expected Loss associated with building damage and destruction.
  • % Life Loss: The percentage of the state’s Annual Expected Loss associated with injury and loss of life, using a FEMA-determined value of statistical life of $7.4 million.
  • % Agricultural Loss: The percentage of the state’s Annual Expected Loss associated with loss of agricultural production.
State
Expected Loss per Capita
Annual Expected Loss (Millions)
Greatest Potential Hazard
% Building Loss
% Life Loss
% Agricultural Loss

Alabama

$108

$547,000,000

Tornado

52%

39%

10%

Alaska

$183

$134,000,000

Earthquake

75%

25%

0%

Arizona

$41

$302,000,000

Wildfire

49%

18%

33%

Arkansas

$172

$523,000,000

Tornado

36%

46%

18%

California

$175

$6,820,000,000

Earthquake

67%

13%

19%

Colorado

$83

$485,000,000

Tornado

71%

25%

5%

Connecticut

$16

$58,810,567

Tornado

47%

34%

19%

Delaware

$33

$33,506,285

Coastal Flooding

56%

36%

8%

District of Columbia

$25

$16,993,808

Strong Wind

49%

51%

0%

Florida

$76

$1,690,000,000

Hurricane

65%

27%

8%

Georgia

$57

$625,000,000

Tornado

47%

40%

12%

Hawaii

$110

$159,000,000

Earthquake

77%

24%

0%

Idaho

$76

$148,000,000

Drought

34%

23%

43%

Illinois

$68

$850,000,000

Tornado

42%

48%

10%

Indiana

$67

$460,000,000

Tornado

42%

44%

13%

About Lucia Caldera


Lucia Caldera headshot

Lucia Caldera has 10 years of experience in financial planning, managing and advising. As the Founder of Corporate Media Lab, she uses her background in personal finance to create approachable content that sparks financial wellness and unlocks growth for her audience.

Lucia holds a master’s in International Political Economy and Development from Fordham University and a bachelor’s in Economics from Clark University. Her work reflects her passion for financial education as the key to reducing the wealth gap for women and minorities.


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