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Katrina's Economic Bill Could Hit $100B

Hurricane Katrina and the resulting flooding in New Orleans will cause an economic loss expected to top $100 billion,risk modeler Risk Management Solutions (search)said on Friday.

Risk Management Solutions said at least half of the loss will result from the flooding, which has left New Orleans essentially uninhabitable. The remainder will come from wind and infrastructure damage, storm surges and indirect economic impacts, it said.

The cost of interrupted economic activity tops $100 million a day, the firm said. The most catastrophic damage from the storm occurred in Louisiana and Mississippi.

Katrina's ultimate economic and insurance consequences "will depend highly on how quickly authorities can respond," said Laurie Johnson, the firm's vice president of technical marketing.

RMS estimated that at least 150,000 properties have been flooded, surpassing the record 137,000 set in 1927 from flooding and levee failures on the lower Mississippi River.

The firm said property in the flooded areas is worth about $100 billion. Decontamination costs will be significant, and prolonged immersion of wooden residential buildings in polluted water may require a large proportion of buildings to be replaced, it said.

Not all analysts are as gloomy about Katrina's potential economic impact. Ethan Harris, chief U.S. economist at Lehman Brothers Inc. (LEH), in a report on Friday said: "Despite the immense destruction of property and lives, Hurricane Katrina will likely have a modest impact on the national economy."

RMS, which is based in Newark, Calif., had on Monday forecast that insured losses from Katrina would total $10 billion to $25 billion.

It made that forecast before levees protecting New Orleans, which lies mostly below sea level, failed.