SLIDE 1 THE ECONOMIC IMPACT OF HURRICANES: THE FOUR MAJOR IMPACT PHASES
Peter Evangelakis, Ph.D.
SLIDE 2 Hurricane Impact Stages
4 main stages
1) Baseline (GDP level before the hurricane) 2) Loss (sustained major loss of GDP) 3) Recovery (rebuilding efforts take effect) 4) New Equilibrium (may be several years later)
SLIDE 3 Top 5 Costliest Hurricanes
Hurricane Sandy: $70.2 Billion Hurricane Ike: $34.8 Billion Hurricane Katrina: $160 Billion Hurricane Ivan: $27.1 Billion Hurricane Andrew: 47.8 Billion
Source: NY Times: The Cost of Hurricane Harvey: Only One Recent Storm Comes Close
SLIDE 4 Top 5 Costliest Hurricanes
Early unofficial estimates of Hurricane Harvey range from a low of $70 billion in damages to a high of $108 billion. At Harvey’s low, it would fall short of Hurricane Sandy. At Harvey’s high, it would exceed Sandy but fall short of Katrina. Variables included when assessing damages are Disruption to business Unemployment periods lasting up to months Transportation and infrastructure damages Crop loss, including 25 percent of orange crop Increased fuel prices Property damages
SLIDE 5
Hurricane Impact Stages
SLIDE 6
REMI Hurricane Studies
Tampa Bay Disaster Resiliency Study Hurricane Sandy Impact on Connecticut’s Economy Sandia National Laboratories Impact of Hurricane Katrina Florida’s Hurricane Impact System
SLIDE 7
Model Structure
SLIDE 8
New Economic Geography
SLIDE 9 Static vs. Dynamic Analysis
- Construction spending
- Direct and Indirect Employment
(Supply Chain)
- Construction spending
- Direct and Indirect Employment
(Supply Chain)
Production Cost
- Population
- House Expense
- Employment
- Labor productivity
- Output over time
- Competitiveness
Static Analysis Dynamic Analysis
SLIDE 10
Florida Population Forecast
SLIDE 11
Florida Employment Forecast
SLIDE 12
Florida Baseline Economic Forecast
SLIDE 13
Florida Sector level Output Forecast
SLIDE 14
Hillsborough Sector level Output Forecast
SLIDE 15
Hillsborough’s Economy 2016 ($117 Billion)
SLIDE 16 Hurricane Simulation Impact in Hillsborough
2 Week Economic Shut Down 10 Billion Loss and Rebuild in Capital Stock Long term Increase in Insurance cost for Businesses Long term Increase in Insurance cost for Households Long term Business and/or Population Loss
SLIDE 17
Loss of sales for a 2-week period in Hillsborough County
SLIDE 18
Industry Sales loss for all industries in Hillsborough County
SLIDE 19
Economic Output Loss
SLIDE 20
Economic Output Loss by Sector
SLIDE 21
Employment Loss
SLIDE 22
Capital Stock Lose Due to Decrease in Economic Activity
SLIDE 23
Decrease in additional capital stock to match $10 billion reduction
SLIDE 24
$10 billion of capital stock loss and its recovery over time
SLIDE 25
Output impact from capital stock decrease
SLIDE 26
Positive Employment over time due to Rebuilding of Capital Stock
SLIDE 27
Insurance Input for each Industry (Averaging 1.4%)
SLIDE 28
Increased Insurance Cost by 50% (ie production cost by .7%)
SLIDE 29
Long term Economic Loss due to Insurance Premium Increase (Industry)
SLIDE 30
Long term Employment Loss due to Insurance Premium Increase (Industry)
SLIDE 31
Select Household Insurance Price
SLIDE 32
Increase Household Insurance by 50%
SLIDE 33
Price of Household Insurance Rising
SLIDE 34
Total Consumption Decrease
SLIDE 35
Loss in Business
SLIDE 36
Output Loss due to Business Closing
SLIDE 37
Employment Loss due to Business Closing
SLIDE 38
Business Closing by Sector
SLIDE 39
Complete Simulation (Output, Hillsborough County)
SLIDE 40
Complete Simulation (Employment, Hillsborough County)
SLIDE 41
Complete Simulation (Population, Hillsborough County)
SLIDE 42
Complete Simulation (Employment in all of FL)
SLIDE 43 what does REMI say? sm
Conclusion
1)
Take into consideration of your existing economic base to understand the impact
2)
Take into consideration of your existing economic base to plan for recovery
3)
Duration of recovery is important (economic and population loss, completeness impact)
4)
Long-term cost and resilience planning
