Harvey’s uncertainty throws businesses into upheaval.
With a Category 4 hurricane bearing down on the Gulf Coast, it’s worth asking what kind of longrange impact the storm will have on the local economy.
Already, CoreLogic is predicting that property damage from Hurricane Harvey could total $40 billion statewide.
Estimates, however, are complicated.
On one hand, you can look at the relatively cut-and-dried property damage figures. The National Hurricane Center has done that for U.S. storms between 1900 and 2010. Katrina comes in on top by a lot, at $108 billion in damage, due in part to the high-value port and refineries that it ripped into.
Here’s that list (which isn’t adjusted for inflation):
(SE FL, LA, MS) 2005, $108 billion
2. IKE (TX, LA) 2008, $29.5 billion
3. ANDREW (SE FL/LA) 1992, $26.5 billion
4. WILMA (S FL) 2005, $21 billion
5. IVAN (AL/NW FL) 2004, $18.8 billion
6. CHARLEY (SW FL) 2004, $15.1 billion
7. RITA (LA, TX) 2005, $12 billion
8. FRANCES (FL) 2004, $9.5 billion
9. ALLISON (TX) 2001, $9 billion
10. JEANNE (FL) 2004 $7.7 billion
11. HUGO (SC) 1989, $7 billion
12. FLOYD (Mid-Atlantic & NE U.S.) 1999, $6.9
13. ISABEL (Mid-Atlantic) 2003, $5.4 billion
14. OPAL (NW FL/AL) 1995, $5.1 billion
15. GUSTAV (LA) 2008, $4.6 billion
16. FRAN (NC) 1996, $4.2 billion
17. GEORGES (FL Keys, MS, AL) 1998, $2.8 billion
18. DENNIS (NW FL) 2005, $2.5 billion
19. FREDERIC (AL/MS) 1979, $2.3
20. AGNES (FL/NE U.S.) 1972, $2.1 billion
Not all of those were “major” storms, meaning Category 3 or higher. Allison, for example, was only a tropical storm that caused major flooding across Houston. Relatively minor storms that hit highly populated or infrastructure-dense areas can have an outsize impact.
Calculating overall economic impact involves taking into account reconstruction efforts, which can create an economic shot in the arm through insurance settlements, government aid and remittances from overseas relatives.
According to a 2005 study, those revenues cover four-fifths of the damage caused by the average hurricane.
Recovery-related activity after Hurricane Andrew boosted spending in Miami by $3.8 billion in just 18 months, a 2007 paper found, and the area rebounded strongly in the following years. A federal government analysis of Hurricane Sandy found that the storm led to 270,000 net jobs being created in New Jersey over four years, mostly in construction.
Those replacement effects don’t always make up for the hit to local property in coastal counties, a 2008 study of U.S. hurricanes found, and that money could be more productively spent elsewhere if the weather hadn’t gotten ugly.
Still, that study found the disasters had negligible long-run effects on state and national growth rates. Even Katrina victims’ personal incomes recovered relatively quickly after the disruption to jobs and workplaces, researchers wrote in 2014.
Worldwide, the severity of the economic impact of devastating storms is still debated. One study from 2009 found that only a handful of countries showed negative impacts over the longer term. Another, from 2014, calculated that extreme storms depressed incomes by 7.4 percent even two decades later.
Overall, the damage that Harvey causes will depend on the quality of the preparations that residents have made and the generosity of the response that ensues.
Will state and federal governments send billions of dollars in aid to rebuild Houston, Corpus Christi and everything in between once the waters recede? If not, the hit could be hard and lasting.
lydia.depillis@chron.com twitter.com/lydiadepillis