Preliminary Estimates of Economic Costs of the February 2021 Texas Winter Storm
Published on February 25, 2021
The recent extreme winter weather is unprecedented in Texas. Records were shattered, and the demands on the power grid were exceptional. When brutal conditions took down about 40% of generation capacity (wind turbines and conventional plants alike), disaster struck. Most people had to deal with power outages (sometimes for days in freezing temperatures) and millions had no water (again for an extended period).
All industries were impacted, and supply chains have been disrupted. Much of the state business complex came to a standstill, affecting everything from consumer spending to manufacturing, oil production, agriculture, and beyond. It will take some time for a full understanding of the damages and economic cost of the storm, but preliminary estimates indicate that it will be massive. Unlike a hurricane or tornado, the damage and business interruption has touched every corner of the state.
The Perryman Group utilized its impact assessment model and current property damage estimates to measure the total economic cost of the storm when multiplier effects are considered based on the preliminary data currently available from the insurance industry and weather services and experiences from other weather events. Using the low and high estimates to date, projected long-term losses in gross product over time include between $85.8 and $128.7 billion, with lost income of $56.8 billion to $85.1 billion. These amounts are in the range of (and potentially above) the losses associated with the most expensive weather events in Texas to date, Hurricanes Harvey and Ike.
For more details please refer to the full brief.