The Economic Impact of Hurricane Katrina
Sid van der Woude
Natural Disasters EES:1400:A08
Once the storm finally passed, the flood waters finally receded, and the levees were put into some sort of repair, Hurricane Katrina, through its path of destruction left New Orleans and the surrounding areas in one of the costliest states of disrepair ever seen from a natural disaster in U.S. history. From the damage to infrastructure, to the lost jobs, to the loss of life, Hurricane Katrina left a devastating impact causing damages in the billions of dollars, hurting the area people and economy in many ways.
Hurricane Katrina left in its wake an estimated 300,00 homes either destroyed or made uninhabitable, and somewhere between $96 - $125 billion dollars in damages (Kimberly Armadeo). New Orleans is surrounded by water and in many cases, below sea level. Although there are many protective levees and barriers in place to protect residents from storms, a powerful storm surge like the one brought in from Hurricane Katrina, can easily top the walls and leave the city trapped in a flood for weeks. Emergency officials agree that many of the buildings in these areas would not survive the winds of a high category storm in this situation (McQuaid and Schleifstein, 2002). Billions of dollars have been invested in levees, sea walls, pumping systems and satellite hurricane tracking that has saved thousands over the years (McQuaid and Schleifstein, 2002). Despite these new tools, Hurricane Katrina still managed to catch New Orleans off guard with the magnitude of destruction it brought leaving a death toll of more than 1,200 and putting tens of thousands out of their homes (Michael L. Dolfman, Solidelle Fortier, and Bruce Bergman, 2007).
In addition to the infrastructure damage and loss of life and welfare, Hurricane Katrina had a big effect on the cities economy, labor market, and individual businesses. According to the Quarterly Census of Employment and Wages program of the Bureau of Labor Statistics, during the first 10-month post-Katrina period, total employment was down 105,300 from the previous year. To go along with the loss of jobs, the total loss of wages in this same 10-month period was approximately $2.9 billion with the private sector taking $2.2 billion of that major blow to the economy (Michael L. Dolfman, Solidelle Fortier, and Bruce Bergman, 2007). When taking into account more than just the damages and loss of individual wages, estimates on the total economic loss from Hurricane Katrina have been set as high as $250 billion (Bernard Weinstein, 2007). These numbers take into account the 19% of total US oil production affected by the hurricane along with the hundreds of destroyed and damaged offshore oil and gas platforms and pipelines. Other economies of New Orleans that were hurt include the port of New Orleans which sustained $260 million in damages and had to be completely shut down for weeks (Kimberly Amadeo). In addition to the industrial part of New Orleans, a huge and often overlooked economic loss is that of tourism. Before Hurricane Katrina, New Orleans had one of the biggest tourism industries in the U.S. that created $9.6 billion annually. It took years for tourism in New Orleans to return to its normal level of attracting 7.1 million visitors a year after falling to 2.6 million in 2006 (Kimberly Amadeo). One last permanent economic toll that residents of New Orleans and the surrounding area constantly face is the high cost of insurance prices. According to the Insurance Information Institute, the average annual homeowners insurance in the U.S. is $533. With few companies willing to offer coverage in this area, the competition isn’t there to help keep the price down, resulting in some residents living in flood hazard zones to have annual bills as high as $2,000 annually (McQuaid and Schleifstein, 2002).
Hurricane Katrina was one of the deadliest and...
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