New report demonstrates regional economic value of businesses within county floodplains

Severe flooding could cost regional economy more than $46 million a day

Expert economists are predicting that a shutdown of economic activity in King County’s floodplains would cost the region $46 million or more every day, and could curtail everything from aircraft manufacturing to bustling warehouse distribution centers.

King County Executive Ron Sims said the findings, included in a new economic analysis released this week titled “Economic Connections Between the King County Floodplains and the Greater King County Economy,” underscore the need to repair King County’s aging flood-protection infrastructure as soon as possible.

According to the independent analysis, prepared by ECONorthwest, Inc., the Pacific Northwest’s largest economics consulting firm, one third of the county’s aerospace employment is located in the floodplains. Overall, one fifth of King County’s total manufacturing employment lies within floodplains, primarily in and around the cities of Auburn, Kent and Renton.

“Heavy flooding has the potential of crippling some of King County’s most important economic sectors, including the aerospace industry,” said Sims. “The findings in this report are further proof of the importance of investing in our flood-prevention infrastructure.”

Earlier this year, the King County Council unanimously approved a 10-year plan to strengthen the county’s flood-protection program and formed a countywide flood control zone district. In July a countywide advisory committee comprised of elected officials recommended a property tax levy of 10 cents per $1,000 of assessed valuation to repair the County’s aging levee system. Before recommending the 10-cent funding level, the Advisory Committee reviewed proposed work programs that could be funded at the 5-, 8-, 10-, 12-, 14-, and 16-cent levels.

Sims noted that $46 million in lost economic output for every day of flooding is a conservative estimate.

"This number does not include the loss from people who live within the floodplains and would be unable to commute to their jobs outside floodplain areas,” he said.

“Nor does the $46 million figure include the loss of economic output from businesses that are located outside the floodplains that rely on goods and services produced by businesses inside floodplain areas, or the value of damaged or destroyed property or equipment.”

The economic study determined that significant income generated in the county’s floodplains is spent outside the floodplains, because although average wages are higher than average in the County’s floodplains, there are relatively few consumer-oriented businesses in the floodplains.In addition, the study found that floodplain businesses rely on business service firms in other areas of the County such as Seattle and Bellevue.

Because of the high proportion of manufacturing—especially aerospace manufacturing located in the floodplains—the average annual wage of workers in the floodplain is 13 percent higher than the countywide average.

The study also noted that while only 2 percent of King County’s population lives in the floodplain, roughly 6 percent of the county’s jobs are located within floodplains, or 65,000 jobs with wage and salary income of $3.7 billion. Property in King County’s floodplains is valued at more than $7 billion.

And because businesses within the floodplain region employ many people who live elsewhere in King County, the benefits of flood hazard management accrue well beyond the floodplain areas to the entire county economy. Regional employers such as Boeing have major facilities in floodplains, and thousands of residents commute into or out of the floodplains for their jobs each day.

Major flood disasters can also destroy critical communications and public safety infrastructure and strain police, fire, and medical services throughout the entire region.

Sims noted that flooding in King County has resulted in eight federal disaster declarations since 1990, the most recent coming in November 2006. Last year’s flooding alone resulted in an additional $33 million in damage to the County’s flood protection infrastructure, which consists of more than 500 aging flood protection facilities along 119 linear miles of rivers, many of which need major rehabilitation to keep them from failing.

Many of the County’s levees were constructed by farmers more than 40 years ago to protect their fields. Now these facilities protect homes, businesses, and critical public infrastructure such as utilities and transportation corridors that support the region’s economic prosperity.

The ECONorthwest Report focused on the economic importance of flood protection, but we cannot forget the human toll that flooding exacts on our communities, Sims said.

“Protecting our citizens and their property from the ravages of natural disasters such as flooding is one of the most fundamental roles of government,” he added.

The report was commissioned by the King County Department of Natural Resources and Parks’ Water and Land Resources Division and can be found online at http://www.kingcounty.gov/environment/waterandland/flooding/flood-control-zone-district/floodplains-economy-report.aspx.

Founded in 1974, ECONorthwest has completed more than 1,500 projects in economics, finance, planning, and policy evaluation. TEXT