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Business Recovery After a Natural Disaster

NSF Award:

Collaborative Research: (DRU) Modeling Business Return Amid Post-Disaster Uncertainties: New Orleans After Katrina  (Louisiana State University & Agricultural and Mechanical College)

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Following Hurricane Katrina, researchers found that sole-proprietor businesses in areas that experienced less flooding reopened more quickly than businesses in areas hit harder by flooding. In addition, they found that these decisions positively impacted the re-opening decisions of neighboring establishments.

This interaction between business decisions suggests the need to revise traditional economics models that treat business decisions as independent of one another. Such revisions would take into account the impact of neighborhood commercial networks.

Determining the key factors that affect the likelihood of business return after a major disaster will help planners devise optimal aid strategies to speed economic recovery. Responses to a disaster must consider local businesses as an interconnected network instead of individual entities to optimize aid resources by targeting sole-proprietor businesses in short-term disaster relief.

The team of researchers from Louisiana State University, Texas State University and Tulane University provided a first-hand look at business recovery using spatial economic modeling. Their study produced estimates of direct and indirect indicators that increased and decreased the probability of business reopenings.

Decision-making related to catastrophic events, especially by businesses and organizations, can have a large, direct impact on the overall recovery of a community following a disaster. In addition, interdependence of reopening decisions among local businesses post-disaster raises the importance of having adequate insurance coverage across businesses, as well as hazard mitigation plans.

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  • a business in the french quarter one month after katrina
A business in the French Quarter one month after Katrina.
Nina Lam, Louisiana State University

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