Civilization exists by geologic consent, subject to change without notice. – Will Durant
Disaster safety nets are inadequate internationally and fraying here in the United States.
A month has passed since Hurricane Melissa first made landfall in Jamaica, then tracked north, striking glancing blows on Haiti and Cuba. Here are the statistics (still subject to change). About 100 fatalities: including 46 in Jamaica; 43 in Haiti; 2 in the Dominican Republic (information sparse from Cuba). Financial losses were greatest in Jamaica, which sustained a direct hit and had the most vigorous economy (therefore the most to lose, in absolute amount). The Jamaica sums included $9B damage to physical property, affecting 100,000 homes and thousands of other structures; these and other costs amounted to some 40% of Jamaican GDP. Losses elsewhere added a few billion dollars more to Melissa’s total. Over 75,000 homes were damaged in Cuba. Haitian circumstances were dire even prior to the hurricane’s arrival; Melissa was merely the latest in compound disasters hitting the country over an extended period of years.
Some of the dollar losses were covered by insurance. Moody’s (an American business and financial services company) estimates private insured losses from Hurricane Melissa to be between US$3 billion and US$5 billion, with a best estimate of US$3.5 billion. This estimate represents insured losses associated primarily with wind impacts in Jamaica, the island hardest hit by the Category 5 hurricane. Insured losses for other impacted Caribbean islands, including the Bahamas, Haiti, and the Turks and Caicos Islands, are expected to be minimal. A further bit of detail: according to Insurance Journal, wind and storm surge damage triggered a $70.8 million payout from the Caribbean Catastrophe Risk Insurance Facility (CCRIF) to the Jamaican government.
For comparison, here are figures for the outside international aid that has been forthcoming for nations lying across hurricane Melissa’s path. The United States has so far provided $24M for the region, including $12M for Jamaica and $8M for Haiti. The United Nations has not yet released figures, but one UN agency, the World Food Program is seeking $18M in food aid from donors. These numbers are uncertain; different sources provide a range of estimates, but one thing is clear: outside international aid is making up little more than a puny 1% of the loss.
Bottom line? In the face of natural disaster, countries are largely on their own.
To deal with this challenge, nations can pursue at least two policy options: purchase of catastrophe bonds (as in the Jamaican case); and planning and investments in building resilience (as also in the Jamaican case).
(In this latter respect, Haiti is too poor and disorganized to develop such plans in-house; plans extant are those of the United Nations’ World Food Program and the International Organization for Migration, as well as the World Bank.)
Jamaica had a plan for building resilience. Vision 2030 Jamaica, covering the years 2009-2030, comprised four national goals. The fourth – Jamaica has a healthy natural environment – included an outcome labeled Hazard Risk Reduction and Adaptation to Climate Change. The country clearly recognized the risk.
But it was too little. Planning and the available resources were inadequate in the face of Melissa’s scale and intensity.
As well as too late. In the context of the historian Will Durant’s warning, Melissa arrived “too soon.” One of the biggest barriers to preparing adequately for such events is the uncertainty in the timing of the next natural extreme. Planners ask: do we have 5-10-year window to prepare (in which case the annual drain on national resources each year is unpalatably large) or might we have 30-70 years to get ready (allowing a smaller rate of investment and freeing up funds to address competing national priorities)?
The return on resilience investments is uncertain in large part because no one can forecast the time frame. (By contrast, consider the global kerfuffle with the approach of Y2K. Potential for loss was great though uncertain – some have argued post-hoc that the risk was hyped – but the timing was known to within seconds. This certainty sharpened minds; after years of world preparation, Y2K disruption was minimal.)
Natural-disaster risk is particularly great for small-island nations. A single tropical storm, an earthquake, a volcanic eruption can overwhelm such countries in their entirety. There’s no larger, unaffected portion of the population and the economy to help shoulder the burden of the needed recovery. Haiti provides a stark reminder of what concatenated natural disasters can do when they recur before recovery from prior disasters has been completed.
In principle, larger nations with stronger economies should be better able to withstand such localized events. A single earthquake, flood, or the like generally affect only a small fraction of the country and the population. Such countries can readily self-insure. Historically, in the wake of disaster, the larger, unaffected populations chip in to help those in need.
However, the United States seems to be taking steps to make such dependence on federal-scale generosity less dependable. Hurricane Katrina hit New Orleans in 2005 causing about $100B in direct damage and totaling more than $200B in economic loss. Of this, insurance covered about $100B. At the time, voices raised concern about the seeming lack of attention and help the administration was providing local leaders of a different party. But in the end, the federal government supplied about $100B. Some detail:
According to the LSU Law Center, The most significant deliberate response was additional appropriations of more than $100 billion targeted to disaster-affected areas. The largest share of those appropriations ($50 billion) was for the Federal Emergency Management Agency (FEMA). Significant funding also went to the Department of Housing and Urban Development (HUD, $20 billion), the U.S. Army Corps of Engineers ($16 billion), and the Department of Defense ($9 billion).
By contrast, according to JP Morgan, the Altadena fires this year caused $50 B in losses, of which $20B was insured. The Small Business Administration made $2B available; FEMA provided and additional $140M; but these sums were for the entirety of the fire-season damage in the larger area; not just Altadena proper. Across the country, towns like Asheville and Canton NC, hit by hurricane Helene more than a year ago, sustained losses exceeding $50B. Like Cave City, Arkansas (hit by a tornado last spring), they all are still awaiting federal help. To date that help has amounted to no more than $3B. (Compare with current NC Governor Josh Stein’s request this past fall for another $13B in aid for Hurricane Helene recovery.)
It could be argued that the smaller scale of these losses justifies a policy of requiring the states to do more. It could also be argued that for these more recent disasters, it’s early days yet. Federal support will accumulate over time.
But with apologies to an old adage (about justice), aid delayed is aid denied. And there are further signs that the federal supply of aid to states is increasingly at risk of being politicized. The damage that trend may do the country could extend far beyond mere dollar sums. The key to nation-building-and-maintenance is unity, a sense that “we’re all in it together.” – a spirit of E pluribus unum. And there are some big, existential disasters drawing one day closer each day for some of our larger, marquis cities. Seattle, San Francisco, Los Angeles, New Orleans, Miami, and New York come to mind. Each has experienced major disaster in the past. Each has grown economically and at the same time more vulnerable since. Absent a strengthened national-level commitment to disaster reduction, any one of these could be reduced to tomorrow’s Jamaica – or Haiti. The stakes are too high to let the vagaries of nature determine our common destiny. And the same holds true with respect to our hemispheric neighbors. We benefit in the long run by being more generous to our neighbors in need.
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A closing note. Space doesn’t permit a detailed look at the vulnerabilities of each of our major cities or individual states. But here’s a link laying out an emerging realization of what heavy rain can now do to New York City.
Bill:
I agree wholeheartedly with “You’re on your own.” But reaching a solution is going to be a lot more difficult than simply “increase the budget for disaster recovery.” And it’s going to be political whether we like it or not.
The sad fact is that our massive financial debt is coming due at the same time as the moral bankruptcy of our politicians. The [sort of] tried and true “Throw more money into the pot” can’t work if the money isn’t there. We need innovative approaches that increase the impacts of whatever dollars we do have.
In DHS’ first Quadrennial Plan, there was an interesting twist that I believe might be a path toward a better place. While acknowledging DHS and FEMA’s role as the nation’s first responder, the QR also posited another role: first among equals, a sort of Great Convenor for all of those involved in disasters.
Why not take this role seriously? Rather than waiting on the politicians to slouch their way toward an unsatisfying political solution, the states and DHS/FEMA should reason together to forge a new and more potent “disaster compact.” One that lays out what the states should do (mitigation, as well as prep for recovery) and what the Feds should do. The compact would not ignore current law and regulations but would try to strip away the inconsistencies and inefficiencies embedded in the current regime.
Is this a good suggestion – heck if I know. But what I do know is that unless we try something new, you’ll be writing the same dreary post next year, and the year after and… And the story will keep getting drearier!