Tag Archives: hurricane katrina

Disaster Response and Foreclosure

According to the AP, FEMA is exploring how to use foreclosed homes to house people displaced by future natural disasters:

The federal government is exploring how to put Florida hurricane evacuees in foreclosed homes if a Katrina-like storm devastates the region and shelters, hotels and other housing options are full, The Associated Press has learned.

Officials told AP on Tuesday that it is an effort to find some benefit in the foreclosure crisis and keep people close to their homes and communities instead of scattering them around the country, which happened when Hurricane Katrina devastated New Orleans and other parts of coastal Louisiana and Mississippi almost four years ago. Thousands of victims who lost their homes in the storm moved to Houston, Atlanta and other cities, and many never returned.

The Super Bowl as Economic Remedy

It seems obvious that when a city is chosen to host a major event — political convention, Super Bowl, Olympics — this provides a natural economic boost to the city’s economy. If any city is deserving of such a boost it is New Orleans, which will be hosting the 2013 Super Bowl for the first time since Hurricane Katrina. (It will be the 10th time the city has been the site of the championship.)

And like many governments that find themselves chosen for a major sporting event, the Louisiana legislature is deciding if it should spend $85 million in Superdome upgrades. However, the boost is largely symbolic: while New Orleanians may feel a sense of pride over the selection, and the stadium will get another make over, economic gains are very likely to be fleeting and possibly negative.

Much academic work has been done assessing the impact of sporting events on regional economies. The findings generally show little lasting impact on host cities. Robert Baade finds the primary beneficiaries of taxpayer subsidies for stadiums are team owners, and players, not local residents.

That has not stopped cities from competing for the honor. 

University of Maryland economist Dennis Coates, writing in The American, finds since 1990 Major League Baseball has opened 19 new stadiums, the NFL opened 17, and the NBA over 20. These projects are highly subsidized on the federal, state and local levels, with the public bearing as much as 63 percent of the cost.  Coates and fellow economist Brad Humphreys find in an analysis of  of wages between 1969 and the 1990s in metro areas where these stadiums reside is that incomes actually decreased.

Why? Consumer spending on sports replaces consumption of other kinds of entertainment, and the spending patrons undertake has a relatively small multiplier effect in real the local economy. Athletes get the income boost. And to top it off, increased local subsidies to the franchise redirect tax revenues from other use, making the local economy less efficient.

While local and state governments might like to think otherwise, being chosen as a host city may be as much an economic drain as a publicity boon.

Slow Motion Stimulus

The stimulus is premised on fast action. Hurricane Katrina relief was also premised on fast action. But, three and a half years later, FEMA records show two-thirds of $5.8 billion meant to repair flooded schools, libraries, sewers and roads is unspent.

Roadblocks and bottlenecks will likely be a feature of the stimulus. With so many different programs targeted to similar sounding goals, you can be certain that regulatory communication breakdowns between agencies and state and local governments will be frequent. Localities and states will have to become experts on regulatory details that govern the use of funds — and be careful not to assume they can combine funding streams for an identified project.

If Hurricane Katrina aid is a guide, the stimulus spending will be anything but immediate.

New Paper on Infrastructure and Flood Protection

Today the Mercatus Center released a new paper by Peter Gordon and Richard Little, both of the University of Southern California. The paper, “Building Walls Against Bad Infrastructure
Policy in New Orleans,” is the latest policy primer in the Mercatus Policy Series.

Written as part of the Mercatus Center’s Gulf Coast Recovery Project, Gordon and Little focus on how Louisiana can think more holistically about risk management and disaster mitigation. But the research is germane far beyond the Pelican State and should be a useful tool for any state or local government that relies on levees, floodworks, and other protections against natural disasters. Structural controls are never foolproof, they argue, and along with insurance, risk transfer mechanisms, and redundant defenses, are only part of a larger system to mitigate against natural disasters.

In the paper, Gordon and Little suggest how the private sector can be better involved in mitigation against disaster and how this should inform state and local governments:

As New Orleans rebuilds from the damage of Hurricane Katrina, local and national policy makers are attempting to ensure the levees are rebuilt better and stronger. While such efforts to ensure more reliable flood protection are certainly understandable given the region’s history, they should not preclude serious consideration of the implications of excessive reliance on structural controls. More comprehensive approaches will provide decision makers at all levels—from elected officials to individual homeowners—with incentives to manage flood risk effectively.

Read the whole thing here.