Iowa State University
INDEX A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

News Service

News Service:

Annette Hacker, director,
(515) 294-3720

Office: (515) 294-4777

07-03-08

Contacts:

Contact: Terry Besser, Sociology, (515) 294-6508, tbesser@iastate.edu

Dan Otto, Economics, (515) 294-6147, (515) 231-7239 (c), dmotto@iastate.edu

Mike Ferlazzo, News Service, (515) 294-8986, ferlazzo@iastate.edu

Previous floods can provide economic lessons for 2008 recovery, ISU researchers say

AMES, Iowa -- Before last month, the floods of 1993 were the standard by which all floods in the state of Iowa were measured. And previous Iowa State University research on the 1993 floods may provide lessons on what recently flooded communities can expect as they try to recover.

Professor of Sociology Terry Besser has studied economic shocks in 99 small towns (populations between 500 and 10,000) in Iowa between 1994 and 2004 -- 12 of which had been significantly impacted by weather phenomena. Leaders in seven of those communities cited the 1993 flood as a shock to their local economy. Seven of the 12 natural disaster towns (58 percent) were small towns with populations of fewer than 750 people.

Through her research, Besser has found the general rule in recovery to be the bigger the town, the greater its chances of bouncing back from natural disaster-related shocks.

"It is not that larger towns did not experience natural disasters during this period, it is that a natural disaster of the same magnitude -- in terms of dollars of damage or people and businesses displaced -- will have a larger impact on a small town than one with more resources to cope with the shock," she said. "Thus the 1993 flood was felt in larger towns as well as smaller ones, but was less likely to rise to the level of a 'shock' in the larger towns."

ISU Professor of Economics Dan Otto was lead author of a report that calculated $1.45 billion in losses to crops, livestock, and personal property/income reported across the state during the 1993 flood. He's now assisting the Iowa Department of Revenue on a similar report this year.

While some of the official damage estimates are just beginning to trickle in, Otto projects the 2008 flood damage price tag will be higher than it was in '93.

"What happened in Cedar Rapids alone (this year) was far worse than anything that hit Des Moines in '93, or the four or five urban counties that sustained most of the damage," he said. "The fact is that more densely populated areas of the state and more river towns were impacted this time around."

Size matters in recovery

Besser says the magnitude of the impact on the community depends on the population size of the town. Her research further indicates that a community needs to have a certain population threshold in order to provide basic services, especially in the wake of a natural disaster like this year's floods.

"When I previously looked at this sort of thing, it seemed like the threshold level was about 3,500 people, but I think you can go a little lower to maybe 2,500," she said. "But once you get below that, it's very hard to sustain local services like medical care, schools, shopping, entertainment and jobs.

"So the size of the town really makes a difference (in ability to recover), and for some of these little towns -- and this is pure speculation -- it could be a shock that they can't overcome," Besser said.

In the three communities where the natural disaster shocks were perceived to be the most severe, Besser reports mixed views about whether the ultimate impact of the shock was positive or negative. Larger towns were more likely to report both positive and negative outcomes of their shock.

"This again probably reflects different levels of resources available to cope with the aftermath of the shock and the possibility more likely present in large towns of utilizing the 'opportunity' of the shock to improve facilities and the physical environment of the community," Besser said.

Otto says that some recently damaged communities may have a better idea of how best to go about rebuilding by following the blueprints made 15 years ago. And the Federal Emergency Management Agency (FEMA) may also be better prepared to provide more rapid financial relief.

"It's helpful that we're not inventing on the fly," he said. "We kind of know the categories that will be effective (in securing federal disaster finding). The feds are also coming off of the (Hurricane) Katrina disaster and trying to be more responsive."

While local governments are eager to begin the relief process, Otto advises them to spend wisely. "Communities will want to make sure they maximize the benefit from spending their own resources in terms of leveraging any matching funds," he said.

Some good news for flooded communities

But regardless of federal funding, the good news for flooded communities is that recovery tends to stimulate spending and economic growth. In the 1993 floods, real nonfarm gross domestic product posted a 2.7 percent gain.

"We saw that from a gross state product standpoint, it's a stimulus event," Otto said. "It leads to more government and personal spending."

And there's more good news. Besser analyzed data from the 1990 and 2000 U.S. Census and another source to compare the natural disaster-shocked towns to other sampled towns and found no significant difference regarding changes in employment levels, median household income, poverty rate and percent of businesses that are local.

-30-

Besser

Terry Besser

Otto

Dan Otto

Quick look

Previous research on the 1993 floods by Professor of Sociology Terry Besser and Professor of Economics Dan Otto may provide lessons on what recently flooded communities can expect as they try to recover.

Quote

"So the size of the town really makes a difference (in ability to recover), and for some of these little towns -- and this is pure speculation -- it could be a shock that they can't overcome."

Terry Besser