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Lower-income households hurt most by hurricane flooding

As Houston begins to recover from Hurricane Harvey, the city's lower-income population faces a tougher road. Flooding was more likely to hit low-income neighborhoods, and households in poverty tend to have a harder time managing natural disasters.

Using a radial analysis of bank branches — which shows the demographics around a bank branch — households in Houston's floodplains tend to have lower average income and a greater portion of families live in poverty. Generally, low-income households tend to suffer more from natural disasters, researchers said.

"Not only do their neighborhoods flood more, but also their housing quality is not as good, so mitigation on-site isn't as strong. And then they don't have the resources to recover," said Bill Fulton, director of Rice University's Kinder Institute for Urban Research.

The typical household income in the floodplains was $71,713, which is 27% lower than the income for households outside the flood-prone areas. And households in the floodplains were much more likely to be in poverty. Roughly 25% of households in the floodplains have income of less than $25,000, compared to 17% in areas outside the flood-prone zones. The data matches a broad academic consensus among researchers who have studied the effects of natural disasters on the poor.

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"You look back historically at how these places developed and usually the higher lands were developed first, leaving more marginal lands to the people who could not afford to live in the more prized areas," said Eric Tate, an associate professor of geographical and sustainability sciences at the University of Iowa.

S&P Global Market Intelligence used radial analysis of both open and closed bank branches to examine the demographics of people who live in the floodplain and those who live outside it. Radial analysis shows the demographics of individuals who live within one mile of a branch. The analysis used mapping data from the Federal Emergency Management Agency to identify Houston's 100-year floodplains — areas typically underwater and heavily damaged by so-called 100-year floods. To increase the coverage density, the analysis focused on Harris County, by far Houston's most populous county with roughly two-thirds of the population.

While the demographic analysis used closed branches to increase the number of observations, S&P Global Market Intelligence also looked at the number of operating branches in floodplains. Bank branch exposure to floodplains largely matched the lenders with the most exposure to the Houston metro area. JPMorgan Chase & Co. had the most with 17 branches in Harris County floodplains, followed by Wells Fargo & Co. and Bank of America Corp. with 13 and eight branches, respectively.

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Not all the branches in floodplains service lower-income areas. Rice University's Fulton said the Meyerland neighborhood in Houston tends to be more affluent and consistently floods. Located in the floodplains just southwest of West University Place, banks have several branches in the area.

At the same time, there is a chance that Hurricane Harvey's devastation was so expansive that branches outside the floodplain also sustained damage. "In previous disasters, Houston has had a lot of flood insurance claims that are outside the 100-year floodplain, and I think that will be the case here as well," said Jeffrey Czajkowski, managing director for the University of Pennsylvania's Wharton Risk Management and Decision Processes Center.

Fulton said Houston has a chronic problem with managing floods due to an incomplete infrastructure exacerbated by overdevelopment in areas exposed by the metro's bayous and reservoirs. Officials face tough decisions during floods: Release water from a reservoir, flooding one neighborhood, or allow the water to rise, flooding a different neighborhood.

"I think Hurricane Harvey is going to force a whole new discussion about how Houston prepares for floods," Fulton said. "This is the third 100-year flood in three years, so I think everyone will have to rethink about how we plan for this and what we should do differently."

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For additional coverage of Hurricane Harvey and Hurricane Irma, click here to access the "Storm surge" collection of articles.

To read an article on bank branches exposed to areas affected by Hurricane Harvey, click here. And for a podcast on how Hurricane Harvey has affected various industries, click here.

To conduct radial analysis for branches using the branches dataset on the screener tool, please view the various fields available under the Geographic Data: Radial Ring section in the field selector.