Mon June 6, 2011
Finding A Disaster's Economic Silver Lining
Originally published on Mon June 6, 2011 4:38 am
From Montana to Missouri, thousands of people have had to evacuate their homes and businesses to escape the floodwaters of the Missouri River. Over the weekend, the Army Corps of Engineers closed nearly 200 miles of the river to boating traffic.
The flooded shops and idled vessels along the Missouri are just the latest businesses hurt by weather-related disasters across the country this spring. Violent tornadoes, widespread flooding and even droughts have taken their toll.
In the days after a powerful tornado leveled a quarter of the city of Joplin, Mo., it was difficult to tell what once was there.
"This was my dad's dental office here that we're looking at," says Matthew Shelby.
Sifting through the piles of rubble, he tries to explain what this dental office used to look like.
"There was a second floor here," Shelby continues. "We had three exam rooms."
There's little left now, except a foundation and debris, and Shelby says his father isn't sure yet whether he'll continue his practice.
"You can imagine, when you've been building something for 41 years and just have it gone in one afternoon, the kind of emotional toll that probably takes on you," Shelby adds. "But he's promised to get back working, either somewhere else renting something or rebuilding."
The tornado on May 22 wiped out more than 400 businesses in Joplin, and with them, 4,500 jobs. One insurance industry estimate puts insured losses in Joplin at up to $3 billion. Add to that the damage caused by earlier tornadoes in Alabama, Georgia and other states, and the costs could reach up to $10 billion.
In addition, widespread flooding along the Mississippi River and its tributaries idled barges, delaying shipments of grains, oil and other commodities. Riverboat casinos were shut down, laying off workers and biting into the tax revenue sent to local and state government.
And millions of acres of farmland were, or still are, under water.
"From about Missouri south, Missouri, Illinois south along the river, we had about 3.5, 3.6 million acres of cropland that were affected," says Bob Young, chief economist for the American Farm Bureau Federation.
"But probably a greater extent of crop loss would be the drought going on in Texas and Oklahoma, in terms of overall crop loss," Young adds.
He says crop insurance will cover most losses, and good weather this summer could still turn things around for many growers, so he says it's too early to tell if what he calls a weird year weatherwise will have a significant impact on the agricultural economy.
"For the overall scheme of things, we'll feel it, we'll know it happened, but I think we'll be able to go on from there," Young says.
And economists say that tends to be what happens after natural disasters. Economist David Mitchell of Missouri State University says even in a terrible weather year such as this, there may be little lasting negative effect.
"In the very, very short run it can have a very localized impact on the economy but it's not very likely to have a large impact on the national economy," Mitchell says.
While some sectors may suffer, like tourism, Mitchell says other sectors, such as construction, will begin to boom.
Back in Joplin, work is already under way to get people back to work.
Spokeswoman Kirstie Smith says the Joplin Chamber of Commerce is helping business owners find phones, computers or even office space for that dentist whose building was leveled.
Smith says the loss of life and property in Joplin is still overwhelming. But "at the risk of sounding insensitive," she says, "this tragedy is really is an opportunity for Joplin."
Smith says because such a large area is flattened, the catastrophe allows local leaders to rethink land use and development. Companies can redesign work space and upgrade equipment and technology. And out of a horrible tragedy, the city of Joplin may be able to revamp and improve its economy.