Monday, June 16, 2008

Economics of Disaster Relief: How to Recover from the Floods and Lessons from Katrina

I have been trying to follow the flooding stories in Iowa. I went to undergraduate in Iowa (Grinnell College), which has managed to avoid the floods, but I have fond memories of visiting Des Moines, Cedar Rapids and Iowa City during my time in Iowa. Those three cities have been hit hard. To get an idea of the damage see the Gazette, Cedar Rapids local newspaper.

Over the weekend I began to think about how best to help people recover from a flood. Should government assistance be offered and if so what kind? I’m not experienced enough to give a good answer to that question, but I do have some thoughts.

First, I think most people's inclination would be to provide government help. But from a federal level that would mean FEMA would probably be leading it and after the New Orleans recovery (or lack thereof), I’m guessing people are a little more wary of having the government try to help.

So why has FEMA failed in New Orleans, and what might be learned for Cedar Rapids? A policy brief, which is a short and good read, by Emily Chamlee-Wright and Dan Rothschild* from George Mason’s Mercatus Center suggests five things.

• Make only commitments that can be kept, and do them so as soon as possible.
• Minimize revisions to land use plans, and make these plans both simple and transparent.
• Encourage flexible commercial solutions to housing problems by suspending onerous regulations in the aftermath of disaster. Such regulations are appropriate for everyday conditions, but they often hamper redevelopment after a major disaster.
• Allow for the suspension of some employment regulations to make it easier for jobs to return to disaster stricken locales.
• Unless absolutely necessary, avoid providing goods and services that the private sector can supply.

The fifth one is interesting and not something I had thought about. As the paper says, FEMA came in after Katrina and hired a lot of the local worker and provided substantial unemployment benefits undercutting the ability of local businesses to recover by raising wages.

It is worth noting these lessons as Iowa goes forward with its recovery.
* disclosure I taught at Beloit with Emily and I'm friends with Dan

Bookmark and Share

No comments: