Proposed budget reductions for the National Oceanic and Atmospheric Administration (NOAA) for fiscal year 2026 are causing concern within the real estate and insurance industries. Experts warn that cuts to the agency, which provides foundational climate and weather data, could introduce significant uncertainty into investment decisions, infrastructure planning, and risk assessment for properties across the United States.
The proposal follows a period of reduced funding for the agency, a division of the U.S. Commerce Department. The potential impact extends to developers, investment managers, and insurers who rely on NOAA's data to evaluate long-term environmental hazards such as flooding, wildfires, and sea-level rise.
Key Takeaways
- The Trump Administration has proposed further budget cuts for NOAA for fiscal year 2026, which begins October 1.
- The real estate, insurance, and engineering sectors depend on NOAA data for risk assessment, investment decisions, and infrastructure design.
- Experts state that NOAA's data underpins more than $10 trillion in goods and services, including commercial real estate.
- Cuts could affect critical tools like elevation benchmarks and precipitation models, increasing uncertainty in property development and insurance underwriting.
Details of the Proposed Funding Reductions
The proposed cuts for fiscal year 2026 come after NOAA's funding was already reduced by approximately 30 percent in 2025. During that period, the agency's spending on climate research was 14 percent lower than the amount mandated by Congress.
Support for downsizing federal agencies, including NOAA, has been articulated by conservative policy groups. Diana Furchtgott-Roth, a director at The Heritage Foundation, pointed to the national debt as a reason for re-evaluating federal spending. "Given the annual deficit of more than $1.5 trillion and the national debt of $37 trillion, we need to figure out what the federal government has to do and what the private sector can do," she stated.
The Heritage Foundation's Project 2025 includes a blueprint for reducing the size of the federal government, which encompasses agencies like NOAA.
The Role of NOAA Data in Real Estate and Investment
Many professionals in the real estate industry may not interact with NOAA directly, but its data is deeply integrated into their decision-making processes. Alec Bogdanoff, a principal scientist at the engineering firm Brizaga, highlighted the agency's broad economic influence.
"NOAA is deeply embedded in the economy and development sector in ways that are not always visible to the public," Bogdanoff explained. "Whether they’re deciding to acquire property or make an investment, reviewing potential hazards, or [assessing] existing or future mitigation efforts, evidence-based decisions depend on data and research from NOAA."
According to Bogdanoff, NOAA's work in weather forecasting, ocean monitoring, and climate analysis supports an estimated $10 trillion in goods and services, including the commercial real estate market.
Third-Party Tools Rely on Government Data
Many large investment firms do not analyze raw government data themselves. Instead, they use specialized climate risk analytics software provided by third-party companies. These tools, which assess risks like flooding and wildfires for specific properties, are built upon the historical data and models originally produced and maintained by NOAA.
LaSalle Investment Management is one such firm that uses external tools to inform its portfolio decisions. Elena Alschuler, head of sustainability for the Americas at LaSalle, explained their process. "If a location is flagged as having an elevated physical climate risk, then we will dig in and review additional data sources... to make a final determination as to whether we’re comfortable with that level of risk," she said.
How Private Companies Use Public Data
The company First Street is a key provider of this type of risk analysis. Ed Kearns, the chief science officer at First Street and a former chief data officer at NOAA, detailed how they leverage the agency's information.
"We have downloaded NOAA’s historical air temperature, precipitation, hail, hurricane, coastal sea level, and other environmental data to create our high-resolution flood, wildfire, and wind risk insights for homeowners, businesses, and communities across the country," Kearns said. He noted that while innovators like First Street rely on this open data, they are not dependent on new data streams for property-specific analysis.
Impact on Infrastructure and Development
NOAA's influence extends beyond investment analysis to the physical construction of buildings and public works. The National Centers for Environmental Information (NCEI), an entity within NOAA, stated that its data is fundamental to American infrastructure.
"NOAA data is integral to American infrastructure and provides essential data to ensure that buildings, bridges, and other structures are designed to withstand current and future environmental conditions," NCEI said in a statement. The agency's data informs everything from site selection and engineering to insurance rates and property taxes.
The Official U.S. Elevation Standard
One of NOAA's most critical contributions is the National Spatial Reference System, maintained by the National Geodetic Survey. This system includes NAVD88, the official elevation baseline used across the United States. It is the foundation for surveying, floodplain mapping, zoning regulations, and engineering projects. This common elevation language ensures that infrastructure projects align correctly from one community to the next.
This data is especially vital for coastal development, where properties often sell at a significant premium. According to a study by American Home Shield, properties with a waterfront view sell for an average of 78 percent more. This premium can reach 119 percent in Florida and 101 percent in California.
Jean Francois Roy, CEO of the Florida-based development company OceanLand, stressed the responsibilities involved. "Coastal development requires a thoughtful understanding of environmental risks and a commitment to long-term resilience," he said.
Risks to Insurance and Future Planning
The insurance industry is another major consumer of NOAA's historical data. Alschuler of LaSalle pointed out that insurers use this information to understand past catastrophic events, which helps them in underwriting policies and setting rates.
"Insurance companies use this data for underwriting and rate setting, establishing guidelines for their claim aggregations, and reinsurance purchasers also use it to plan for the potential impact of disasters," Alschuler noted.
Bogdanoff agreed, stating that the data provides a stable foundation for the insurance market. "Without that foundation, insurance markets would face far greater uncertainty and costs," he said. This stability is crucial for developers who need reliable insurance costs to secure financing for long-term projects.
Experts also worry about the potential elimination of specific NOAA products. Kearns warned that losing the Atlas 15 precipitation estimate could have a significant impact. This tool provides rainfall frequency estimates used to design stormwater systems and mitigate flood risk. "We’ve already seen increased rainfall, and fluvial flooding is worse than it was in the past," Kearns said. "Everyone needs to be prepared and make investments in risk mitigation... based on accurate forecasts."
