Natural disasters are expensive, but sometimes improve economy - NBC12 - WWBT - Richmond, VA News On Your Side

Natural disasters expensive, sometimes improve economy of hit areas

Rebuilding after a natural disaster hits has been known to make economy better than before. (Source: KFOR/CNN) Rebuilding after a natural disaster hits has been known to make economy better than before. (Source: KFOR/CNN)

(RNN) - The massive tornado that ripped through Moore, OK, on May 20 took lives and caused misery. It also generated a debate about how much money Oklahoma would need from the federal government to recover.

If recent disasters are any indication, federal disaster relief can serve as a good, long-term investment.

The estimated financial cost of the Moore tornado will be about $2 billion, according to Oklahoma authorities. However, insurance companies reported the cost will be as high as $3.5 billion.

The federal government will likely have to help out for a full recovery, but exactly how much the taxpayers will kick in remains to be seen.

Oklahoma senators Tom Coburn and James Inhofe were called hypocrites for voting against a relief package that sent $50.7 billion to the Superstorm Sandy recovery but were willing to accept federal aid for their state's tornado recovery.

Inhofe slammed the Superstorm Sandy bill, even going as far as calling it a "slush fund" of which politicians from across the country were trying to get a piece. Both senators were part of a coalition of Republicans who wanted to cut the aid package down to around $24 billion.

Although Inhofe and Coburn exaggerated the extent of the bill's largesse, they were correct that not every dollar was going directly toward recovery. About $13 billion of the bill was earmarked for infrastructure improvements to prevent damage from future storms, including projects to keep New York City subways from flooding and to improve highways around the country.

The Sandy package also included money for an array of federal agencies, which caused some politicians to be suspicious of the bill.

New Orleans, Japan bounce back after destruction

Money for extra projects is a common element in federal relief packages. And while fiscal conservatives might attack these extras as pork, the money can help a ravaged economy recover.

When Hurricane Katrina hit New Orleans, the city's economy buckled. Ruined buildings and roads meant no jobs for residents and no way to get help to the stricken areas. However, billions of dollars in federal aid helped get the city quickly rebuilt.

This has helped not only the construction business but everything that comes along with it, including tourism. New Orleans now has a lower unemployment rate than the national average.

The city's unemployment rate is about the same as Houston, which has been praised for its booming economy.

Parts of the country hit by earthquakes also benefited economically, as well as areas prone to hurricanes and storms. According to the New York Times, "Studies have found that earthquakes in California and Alaska helped spur economic activity there, and that countries with more hurricanes and storms tend to see higher rates of growth. Some of the most recent studies have found a link between disasters and subsequent innovation."

The Times article explained that when infrastructure is destroyed and has to be rebuilt, a newer and better infrastructure can increase productivity in the future. In the meantime, it provides immediate jobs because of the rebuilding process.

After Japan's devastating earthquake and tsunami in 2011 that killed more than 27,000 people and caused as much as $309 billion in damage, many feared the Japanese economy would be depressed for years to come.

And although the region where the earthquake struck hardest was still in disarray, the country as a whole experienced 6-percent growth less than a year later. The speed at which factories and infrastructure were rebuilt was given much credit for the recovery.

Haiti was an exception

Not every area hit by natural disasters can bounce back. Haiti's 2010 earthquake obliterated the island nation and took 200,000 lives. Before the earthquake struck, its economy was already the worst in the Western Hemisphere and its infrastructure was far behind developed nations.

That lack of infrastructure already in place has made it difficult to rebuild.

It didn't help that the country experienced more tragedy in the years after the earthquake: A cholera outbreak months after the earthquake and heavy tropical storms in 2012 caused severe damage.

Problems involving disbursement of foreign aid, government corruption and other issues plagued the troubled nation's recovery and left its economy worse than it was before.

In the U.S., tornado damage can be costly, but they also tend to strike low-populated areas. Tornado Alley, which consists of Northern Texas, Oklahoma, South Dakota, Nebraska and Kansas, is one of the least-populated areas of the country.

This means that although the damage tornadoes cause can be debilitating on a personal level, the potential for infrastructure damage is low.

When tornadoes do cause heavy damage, the goal is usually to get the area affected back to where it was, which means rebuilding homes and local businesses. In recent years, aid distributed to places like Tuscaloosa, AL, and Joplin, MO – two small cities hit hard by tornadoes – helped the population recover but didn't improve the economies.

However, disaster relief has provided funds for ambitious projects that could potentially improve the economies down the road, albeit slightly. In Joplin, $800 million has been allocated for rebuilding efforts, and plans called for building more than what was lost, including a new library, movie theater and a revamped commercial district.

Copyright 2013 Raycom News Network. All rights reserved.

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    (Source: Doug Gunnare via AP)(Source: Doug Gunnare via AP)

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