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Questions and Answers
Alejandra Palma believes the frequency of storms is decreasing in her area.
False
Each day that Root Hill Cafe is closed due to flooding costs Alejandra Palma approximately $3,500.
True
The US Chamber of Commerce reports that 27% of small businesses are at risk of shutting down due to disaster-related damages.
True
Last September, New York experienced average rainfall that did not impact small businesses significantly.
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Retail and restaurant establishments are often located in elevated spaces, making them less vulnerable to flooding.
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The vast majority of small businesses in NYC have established comprehensive plans to manage the impacts of unexpected events, such as floods.
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Small businesses in a low-income, formerly redlined section of San Diego were particularly impacted by the heavy rains in southern California, as they often lack access to sufficient financial resources and credit.
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While some businesses in Vermont are still recovering from last summer’s floods, others have chosen to permanently shut down due to the severity of the damage and the challenges of rebuilding.
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The US commercial sector is projected to experience a total of $16.9 billion in flood damage over the next 30 years, with small businesses bearing a disproportionate share of the losses.
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Due to the increasing cost of insurance and the withdrawal of insurers from certain areas, small businesses are finding it increasingly difficult to obtain adequate flood insurance coverage.
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Study Notes
Impact of Climate Change on Small Businesses
- Alejandra Palma, co-owner of Root Hill Cafe in Brooklyn, experiences ongoing anxiety about severe weather events, particularly hurricanes.
- Record rainfall in New York last September caused significant flooding, damaging Palma's business and leading to costly clean-up efforts that took nearly two days.
- Annually, flooding costs Palma approximately $17,500 in lost sales and employee pay due to about five business closure days.
Challenges for Small Businesses
- Rising flood risks linked to climate change are straining small businesses financially, compounding existing challenges such as COVID-19-related debt.
- The US Chamber of Commerce reports that 27% of small businesses feel they are at imminent risk of closure due to disasters.
- Natural disasters have increasingly affected states outside traditional high-risk regions, including Vermont, Iowa, and Colorado.
Vulnerability of Retail and Restaurant Businesses
- Many small businesses occupy ground-floor and basement spaces, making them especially vulnerable to flooding and sewer backups.
- A significant number of NYC small businesses lack adequate disaster response and recovery plans.
Financial Strain on Affected Regions
- Severe flooding in Southern California in January impacted over 100 businesses in low-income areas, aggravating economic instability.
- In Vermont, severe floods resulted in an estimated $300 million in economic damage, with affected businesses losing nearly $200,000 on average in equipment and inventory.
- Continued flooding in July 2024, due to remnants of Hurricane Beryl, further compounded difficulties for already struggling businesses.
Insurance Barriers and Economic Projections
- First Street, a climate risk data non-profit, projects $16.9 billion in commercial sector losses from flooding over the next 30 years.
- Rising insurance costs and insurers exiting markets due to climate risk leave many small businesses unable to afford adequate coverage.
- The Federal Emergency Management Agency (FEMA) reports that as of April, only about 120,000 small businesses nationwide are enrolled in the National Flood Insurance Program (NFIP).
Recommendations for Government Action
- Experts suggest local governments should invest in infrastructure improvements, particularly in sewage and drainage systems, to support small businesses and mitigate flooding risks.
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Description
Alejandra Palma, co-owner of Root Hill Cafe, shares her struggles with severe weather events, such as hurricanes and flooding, and the costly impact on her business. Learn about the challenges small business owners face due to climate change.
