Cultivating Community Wealth: Wealth and Disaster

This post is part of an eight-week series on Cultivating Community Wealth.

As we wrap up this series on Cultivating Community Wealth, we take a look at what happens when communities face disaster. We often think of natural disasters, such as drought, floods, hurricanes, tornadoes, and wildfire. But disasters can also be purely economic—the loss of a major employer. Some economic losses may be due to a loss of competitive advantage in the region, but losses can also result from global economics and other situations outside the region’s control or even from political decisions (e.g., war or military base realignment and closure [BRAC]).

Regardless of their form, disasters decimate community wealth in many forms. In the case of a natural disaster, built (physical) and natural (environmental) capital may be destroyed, requiring financial capital to be diverted from intended uses. In an economic disaster, loss of an employer may result in deterioration of built capital, exodus of intellectual capital, loss of public tax revenue, and possible further job losses in other businesses due to local economic linkages. Disasters of any type can harm individual and social capital.

Some people suggest that disasters actually benefit local economies. I’ve posted my critique of that opinion under “Do disasters help the economy?”. It is true that physical structures and some industries can come back stronger than ever. But most of that economic benefit is replacing existing physical capital and economic activity, although the structures and activity may be rebuilt more efficiently, which can benefit the region in the long run.

Socially and psychologically, people are rarely better off as a result of a disaster. This is compounded by the fact that the poor and small businesses are less likely to have sufficient resources to rebuild and recover post-disaster. Hales, Walzer, and Calvin (2012) note that the effect of the disaster and the ability to recovery are affected by race, class, gender and age, and they state that disaster response efforts should make an effort to mitigate these disparities.

Fannin and Honadle (2014) note the challenges that local governments can face in maintaining liquidity and resources for disaster recovery. Liquidity and appropriate planning for lines of credit and vendors can help local governments provide timely debris clean-up and other disaster relief services.

Creating a disaster preparedness plan is one of the most important steps local governments, businesses, and even households can take to maintain and rebuild wealth. Preparedness at multiple levels (i.e., public, business, and family) can protects a wide range of community assets. In Texas, Councils of Government prepare Threat and Hazard Identification and Risk Assessments (THIRA) for a variety of potential conditions and disasters. Local governments prepare similar disaster management plans. Businesses are encouraged to prepare for disasters, using resources such as Ready Business and similar programs. Households also have a variety of resources to prepare for and recover from disasters, including Extension Disaster Education Network (EDEN) resources.

Disasters provide a clear picture of the importance of non-financial wealth. McIntyre Miller (2012) described the role of social, cultural, and political capital in rebuilding post-war Sierra Leone. In response to a natural disaster, Stofferahn (2012) considered the role of community capitals, especially cultural capital, in disaster recovery in North Dakota.

Hales (2012) found that, among elderly individuals, those who saw a need for assistance and who felt connected to the community were more likely to be civically engaged in recovery efforts following Hurricane Katrina. However, transportation issues and a lack of information on initiatives were barriers to their participation. The study also found that volunteering was good for the senior citizens’ own well-being.

Hales, Walzer and Calvin (2014, p. 541) state that natural disasters alter “the ability of a community to communicate, interact, and therefore exist in a manner prior to the onset of the disaster.” Clearly, the community’s existing relations and assets (all forms of capital) impact its ability to communicate and respond to disaster. But some communities may be able to build relational and personal capitals in the recovery process, building their stock of wealth even in the face of adversity.

 

Resources:

Fannin, J. Matthew, and Beth Walter Honadle. 2014. Defining and measuring public sector wealth: how much control does the public have over public wealth in a fiscally stressed world? In Rural Wealth Creation, John L. Pender, Bruce A. Weber, Thomas G. Johnson, and J. Matthew Fannin, eds. Routledge, New York, p. 102-114.

Hales, Brent D. 2012. “Untapped: elderly civic engagement in the rebuilding of the Mississippi Gulf Coast.” Community Development 43(5): 599-613.

Hales, Brent, Norman Walzer, and James Calvin. 2012. “Community responses to disasters: a foundation for recovery.” Community Development 43(5): 540-549.

McIntyre Miller, Whitney. 2012. “Moving forward in Sierra Leone: community-based factors for postconflict development.” Community Development 43(5): 550-565.

Stofferahn, Curtis W. 2012. “Community capitals and disaster recovery: Northwood ND recovers from an EF 4 tornado.” Community Development 43(5): 581-598.
See also:

Rural Wealth Creation
www.rurdev.usda.gov/Reports/rd-ERR131.pdf – USDA-ERS report related to the book

http://www.choicesmagazine.org/choices-magazine/theme-articles/rural-wealth-creation/theme-overview-rural-wealth-creation – Choices Magazine issue on the subject of rural wealth, mostly by book authors

WealthWorks
http://www.wealthworks.org/

Wealth Creation and Rural Livelihoods
http://www.wealthworks.org/ – includes a forum and listserv

Pender, John, Alexander Marre, and Richard Reeder. 2012. Rural Wealth Creation: Concepts, Strategies, and Measures. U.S. Department of Agriculture, Economic Research Service. Economic Research Report Number 131. Washington, DC: March. www.rurdev.usda.gov/Reports/rd-ERR131.pdf

 

 

About Rebekka Dudensing

Dr. Rebekka Dudensing is an Associate Professor and Extension Economist - Community Economic Development with Texas AgriLife Extension and Research in the Department of Agricultural Economics at Texas A&M. Her research interests include the evaluation of economic development opportunities, taxation and public/private goods issues, entrepreneurship, and regional economic cooperation.
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