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A Hard Rain’s a-Gonna Fall

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The torrential rain buffeting northern California and the Pacific Northwest is the result of two converging phenomena: an atmospheric river and a bomb cyclone. While the exceptionally heavy downpours may extinguish wildfires in the region, the violent rainfall is a reminder that a more extreme occurrence of such phenomena has the capacity to destroy a good swath of the Golden State’s economy. Indeed, weather did so 160 years ago in California’s Great Flood, and it can do it again.

The Great Flood of 1861-1862 is perhaps largely forgotten, but it should not be. In meteorological circles, the event is known as an ARkStorm, with AR standing for atmospheric river, and k designating one thousand—meaning that the storm is a once-in-a-millennium occurrence.

Remarkable for the extent of its destruction, the Great Flood claimed 4,000 lives and a quarter of California’s towns. The combination of rain and snow melt from the Sierra Nevada range produced the equivalent of 10 feet of rain, while the Central Valley turned into a lake roughly 300 miles long and 20 to 60 miles wide. Governor-Elect Leland Stanford used a rowboat to reach his inauguration ceremony on January 10, 1862. California, which attained statehood only in 1850, temporarily relocated the capital from Sacramento to San Francisco. The state’s economic foundation permanently transformed from ranching to farming following the destruction of the great herds.

A repeat of the ARkStorm in California would result in an estimated $725 billion in economic losses, according to the U.S. Geological Survey (USGS). The report is gripping and should be required reading for insurers because it highlights the potential fallout of another massive storm. Importantly, the report suggests that the “k” in ARkStorm is misleading—it is not a once-in-a-millennium event. Scientific studies of offshore sediment in the San Francisco Bay and Santa Barbara areas show that such storms also occurred in 212, 440, 603, 1029, 1418 and 1605. This suggests that ARkStorms may occur roughly every 200 years. Indeed, the report declares that “there is no scientific evidence to suggest that such extreme storms could not happen again.”

In insurance circles the phrase “the big one” refers to the inevitable reoccurrence of the 1906 San Francisco earthquake. But it’s been 160 years since California’s great flood—another “big one”—and the next could be just a generation away. Insurers and communities should, at a minimum, learn about the 1861-1862 California ARkStorm. There may be no way to completely ARkStorm-proof the counties of Northern California, but familiarity with what has happened before will stimulate public policy discussions regarding mitigation measures that may be taken to reduce the inevitable damage.

About Jerry Theodorou

Jerry Theodorou is the director of the Finance, Insurance and Trade Policy Program. He develops and advances effective free market public policy solutions to complex issues where federal and state governments have intervened. Prior to R Street, Theodorou was the director of insurance research at Conning in Hartford, Conn. In his 12 years at Conning, a leading insurance asset management and research firm, he was highly sought after for his insights and publications on a broad range of matters impacting property and casualty insurers, and was in strong demand as keynote speaker at conferences. Prior to Conning, Theodorou worked for the global insurance giant American International Group (AIG) in a variety of global underwriting, operations and strategy roles, including close to a decade of expatriate managerial assignments in Europe and the Middle East.

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