How We Recover From The Recent Hurricanes Could Impact The National Economy For Decades

Amir Jina | Forbes

Posted: 1/15/18

How We Recover From The Recent Hurricanes Could Impact The National Economy For Decades

As the last TV news trucks pull out from Houston, Miami, and all the places devastated by Hurricanes Harvey, Irma, Jose and Maria, the city planners and construction crews will pull in. And eventually, these cities will largely spring back to life — perhaps even looking better than before.

The apparent rebuild supports economists’ long belief that disasters boost economies because of the influx in infrastructure investments. This, however, is all an illusion that misses the hidden costs that ripple throughout our national economy. In fact, my colleague Solomon Hsiang and I have found that storms like Harvey and Irma can lower the long-run growth of the United States, effectively rewinding our economy and leaving its imprints for up to two decades. That’s because if these hurricanes had not made landfall, the billions of local, state and federal taxpayer dollars that will now rightly go towards the recovery efforts in the form of federal emergency aid and other public services would have gone elsewhere to grow our economy.

So, the people of Houston and Miami may not be the only ones affected by the storms – we all could be affected. But, it doesn’t have to be this way. There is time to prevent these storms from having a bigger and broader economic toll on our national landscape. To do so, we need rebuilding and recovery plans to focus on generating incomes, not just erecting more hardened infrastructure; plans focused on increasing preparedness and fixing how we insure against these risks, not just relying on aid to fill the many gaps that more efficient policies could correct.

In the aftermath of a storm, people are focused on the physical re-build — restoring the flooded home or local diner to look as it did before the storm. That’s where much of the federal disaster aid comes in. However, we lose sight of people like the small business worker who can’t return to work because there’s simply not enough business to keep everyone employed.

Take New Orleans’ recovery from Hurricane Katrina as an example. In the months and years after the 2005 storm, the city rebuilt with cutting-edge new developments and skyscrapers. But what people didn’t see was the many small businesses that never bounced back. Ten years after the storm, the unemployment rate was still higher than pre-Katrina levels. And, this isn’t just the case with Katrina. Research shows that for all hurricanes, people rely on unemployment insurance and Medicaid, increasing the strain on those publicly funded programs.

Generating incomes and job opportunities to keep people off of unemployment and public assistance should be an important part of recovery plans. This relies first on changing how we think about damages. We must pay attention to the people for whom a small change in circumstances might mean having to make extremely difficult economic decisions – to stay in school, to keep paying for health insurance, or countless other necessary expenditures. It also means providing small businesses with help to weather the transition back to normalcy, and realizing that this transition could take years. If our policies don’t ensure that the recovery works for everyone, not just the people who most noticeably lost out, then we’ll perpetuate the increase in inequality that too often results from environmental impacts. We need to think of people, and not just properties.

While broadening our focus of what recovery means after a storm, we also need to make sure we’re better prepared for the next one. In the United States, we are falling short in this regard, but research shows that it pays: pre-emptive risk-reduction measures make up a small portion of the federal disaster budget, and yet such measures appear to be almost twice as effective at reducing damages as post-disaster recovery measures. Both forms of funding matter, but an evaluation of their effectiveness should show us how to better balance them.

Our damages from storms are 14 times greater than in any other wealthy country for similarly intense storms, and have stayed high for decades while other countries adapt. There could be a couple of reasons why we’re lagging so far behind. One major culprit is that we don’t pay for the risks we face. The National Flood Insurance Program doesn’t accurately quantify the risks of flooding in many areas of the country. Instead, it provides a federal subsidy for risky (and expensive) behavior – people build expensive properties in areas with high risks of flooding, fully expecting the federal government to rebuild when the inevitable occurs. So, we keep building in these areas—and, rebuilding.

Finally, there’s evidence that many vulnerable locations have a generally poor understanding of the risks they face, and how to deal with them. So, we need to better assess and communicate the specific risks to communities. My colleagues and I recently published a paper in Science that showed that coastal areas of the southern states are some of the most vulnerable to climate change impacts. Not only do areas like Houston and Miami face storm surges and the threat of stronger hurricanes once they occur, but they also stand to see higher energy costs and worse health impacts as they grapple with increased heat. This type of risk assessment can help communities understand the different priorities as they form local adaptation policies.

Once the winds die down, the waters recede and the world’s attention has moved on, the ghosts of disasters like Harvey and Irma linger in the places they struck and throughout the country. Disasters will continue to strike. But the economic aftershocks on our country don’t have to. By better adapting through policy and individual actions, by sensibly planning for the risks we know we face, and by realizing and confronting the hidden costs, it is possible to calm the storm after the storm.

 

 

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