Hurricane Irene impacted 20% of the US population and will cost billions in recovery dollars. Now that the water has begun to subside, the real long term work begins. And it is this work that can be another disaster, or, a real economic benefit to a state.
How so? FEMA and the states will coordinate recovery efforts, returning infrastructure to its pre-disaster condition or updating things to make them more storm resilient. In effect, mitigating against future similar disasters. This process means a lot of administrative paperwork, approvals, project designs, etc., all of which ultimately lead to checks being written to companies working with local governments to rebuild power lines, roads, schools, bridges and homes. This can lead to economic growth in a region by not just repairing, but in many cases, improving infrastructure. Getting this money to work as quickly as possible is key to not only recovery and a return to normalcy, but also potentially restoring the economy of a hard hit area.
The Federal government, mainly through FEMA, reimburses states for 75% of damage caused to public infrastructure. In some disasters, this amount can go to 90 or even 100% Federal dollars, although it appears at this early stage this is unlikely for Irene. States and/or local governments will absorb the other 25%, which will clearly have a huge impact on already tight state and local government budgets. Those costs will likely fluctuate as the recovery process extends over years, as the costs for materials fluctuate, labor costs change and unseen damages are detected, all adding costs to the initial estimates.
In many cases the initial assessments of damages from an event like this are off by a factor of three for public infrastructure repairs alone. If full recovery takes three to five years, how will that cost variance impact a state budget in the future? Do states have the proper analytics processes in place to accurately predict those budget impacts? Applying predictive models to these types of questions will allow impacted governments to properly distribute the funds necessary for future years, and get money into the hands of stricken communities in a timely manner
To do this as quickly, efficiently and effectively as possible, states will have to know exactly where the dollars and projects are at all times. With potentially thousands of projects involved, each with its own environmental, historic and financial reviews, this process can often bog down in bureaucracy. One opportunity for improvement is to focus resources on the review process and manage it throughout, shining light on the potential bottlenecks and keeping executives in each level of government informed of the status of approvals. This is transparency at its highest level. There will inevitably be hundreds of calls, meeting and emails on the status of each project. Integrating information together from all relevant sources to have as complete a picture as possible will not only speed up the recovery process, it will get more money into the hands of the hardest hit communities, spurring not only disaster recovery but economic growth.
To get the most from this potential economic impact, states need the ability to predict the most effective recovery projects. Projecting economic impacts from the resizing of a waste water treatment facility, or choosing alternatives to simply rebuilding is a key to getting communities on their feet, maybe even in better condition than before Irene.