The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.
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Lessons from past weather disasters
We've been thinking more about the impact of the April 27 tornado outbreak and how the recovery is taking shape.
We are drawn to comparisons to Hurricane Katrina—not the impact on New Orleans, because that event was singular as a result of the flooding, but the impact on the Mississippi Coast, where damage was catastrophic and, apart from the storm surge, the area experienced no flooding.
A report prepared in August 2008 by the Gulf Coast Business Council, titled Mississippi Gulf Coast 3.0 Three Years after Hurricane Katrina, reported that:
"Construction and rebuilding not only stabilized the economy on the Mississippi Coast in the months after the storm, but also propelled [sales tax] revenues to new highs; in fact, the entire State of Mississippi saw a boom."
Marianne Hill, senior economist with the Mississippi Institutions of Higher Learning (IHL), wrote in December 2005 issue of Mississippi Economic Review and Outlook:
"As 2005 draws to a close, recovery efforts are focused on debris removal and clean-up, provision of assistance and services to Coast residents, resolution of insurance claims, and reconstruction planning. Within a few months, reconstruction efforts will be able to move ahead at full steam. Already most homeowners and businesses are back in the area, settling insurance claims, repairing damage and restarting operations."
In the June 2006 report, she wrote:
"The destruction caused by Hurricane Katrina last summer set back economic activity in the state, but the tremendous inflows of assistance since the disaster have boosted sales, employment and tax revenues. Although the task of rebuilding after such devastation is frustratingly slow by its very nature, the recovery effort is moving forward. Economic indicators show clearly that progress is being made."
Like the Mississippi coast in 2005, assistance is arriving to hard-hit areas of Alabama. I was struck by weekend reports of the help that was flowing into Tuscaloosa. A story on Tuscaloosanews.com reported that up to 10,000 people had come to the city to help.
"LaDonnah Roberts, coordinator for Tuscaloosa Area Volunteer Resources, said that number doesn't take into account the hundreds more who are working with organizations like Samaritan's Purse and churches that were not required to register this weekend.
" ‘We estimate that since the storm, we've probably seen 10,000 total volunteers come into the city,' Roberts said."
Last week, we wrote about the small Alabama town of Hackleburg, which was devastated on April 27. Looking at how rural areas recover from natural disasters is an important part of the story. Bob Neal, emergency and fire safety coordinator from Mississippi IHL's finance and administration arm, recognized the difference in delivery of assistance between rural and non-rural areas. He wrote in the December 2005 issue of Mississippi Economic Review and Outlook (cited above) that:
"Rural places receive disaster aid more slowly than urban places because they are more thinly populated and, generally, more difficult to access after a disaster. There is little that can be done to alleviate or mitigate these two fundamental factors affecting disaster aid delivery. People who live in rural places must simply accept the fact that disaster aid will reach them more slowly than in urban places. Rural places also receive less disaster aid than their urban cousins. Providing disaster assistance in rural places is more expensive. Fixed costs of providing aid are spread over fewer people and transportation costs are greater."
We also wanted to share a paper I came across researching the topic. It's an (as far as we can tell) unpublished thesis written in 2009 by a doctoral candidate from Texas Tech University, Maribel Martinez. In her paper, titled "Economic analysis of the tornado impact upon two communities," she notes that:
"Research on the short-term and long-term economic effects after a tornadic event is sparse, especially for small to mid-size communities. These communities often lack the political and economic influence of larger cities when it comes to preparing and recovering from an event. Although large metropolitans may have more population at risk, large urban areas often have the resources, training, and funds to deal with hazards and disasters."
Martinez looks at the impact of tornados on two smaller communities—Clovis, N.M., and Tulia, Texas, that were hit on March 23, 2007, and April 21, 2007, respectively. Her conclusions are:
"The people in the community came together along with many others from surrounding communities to help in the cleanup process. Debris was cleared within the week....
Those businesses that sustained major damage not only to the structure but inventory as well, took longer to recover, between two to nine months....
"Research showed that when businesses are hit by a tornado, some experienced demand surge. This included auto repair shops and service firms such as insurance agents. Others continued to operate or recovered quickly by changing locations or operating out of their homes. However, establishments in sectors such as manufacturing/dairy/retail sustained longer lasting periods of business interruption."
We'll continue to monitor the recovery in both densely populated and rural parts of the Southeast in future posts.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
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