Economic Effects of Environmental Crises: Evidence from Flint, Michigan

In April 2014, Flint, Michigan switched its drinking water supply from the Detroit water system to the Flint River as a temporary means to save $5M. Over the course of eighteen months, it was revealed that the switch exposed residents to dangerous levels of lead, culminating in an emergency declaration in October 2015. In this paper, we examine economic impacts as this crisis unfolded. We estimate that averting expenditures since the switch have exceeded $20M and the value of the Flint housing stock has fallen by $345M to $500M. Over this same period, state and federal spending has exceeded $343M.