Economic Recovery Briefing - TAMUCCstedc.tamucc.edu/files/Harvey_Workshop_2017-10.pdf · 2017. 10. 12. · Source: EMSI, 2017. Farming $0.5 Mining, & Oil/Gas Extraction $12.1 Utilities

October 11, 2017

Economic Recovery Briefing

Harvey’s overall damage costs (preliminary)

Immediate impact on the metro area

Property losses in affected communities

Analysis of recovery efforts with model simulations

Implications for the community and the region

Lesson from recent events

Overview

2

Groundwork and conceptual framework for today’s program …

Harvey’s impact in PerspectiveLatest expert estimates range from $70 billion to $108 billion

Harvey2017

$70b − $108b

Discrepancies are mostly due to

comparing appleswith oranges

3

Sources: NOAA, fivethirtyeight.com, and New York Times.

Casualties (economic losses due to deaths/injuries)

Property damages (insured and uninsured)

Infrastructure damages (industry and public facilities)

Temporary disruption to local business and economic

activity (evacuation, direct impacts)

Permanent loss of local businesses and residents

Increase in insurance cost (homes and businesses)

From the macroeconomic perspective, only lost output

(GDP, employment, earnings) counts!

Hurricane’s Costs

4

Most reported estimates cover only parts of the list …

Disaster AreasTAMUCC UAS began surveillance 2 weeks after landfall …

Location: Holiday Beach community in Rockport, Texas.

5

About 80% structures damaged to different degrees from winds and storm surge

Equivalent of 26% structures destroyed (uninhabitable) in Port Aransas, and 43% across Aransas County

Statistically significant characteristics:No meaningful difference between two communities, all else equal

Age of structure mattered

Tile roofs provided 10% more protection than shingle roofs

Standalone structures 15% more vulnerable

Waterfront properties 25% more vulnerable

Mobile homes sustained 20% more damage

Majority of roof damages were associated with N/NW winds

Property DamagesStatistical findings from a random sample of 600 properties in Port Aransas and Rockport …

6

Community Profiles

Port Aransas Rockport

Aransas

County

Population (2016 Census) 4,054 10,645 25,721

Housing Units 4,289 6,290 15,614

- Detached Unit 2,341 3,993 10,145

- Attached Unit 1,716 1,470 1,979

- Mobile Home 232 746 3,288

- RV, boat, van 0 81 202

Annual Business Sales ($Mil) $361 $73 $885

Business Establishments 208 313 646

Property Damage from Harvey:

% Destroyed (equivalence) 26% 45% 43%

Total Home RCV ($Mil) $219 $557 $1,320

Sources: 2016 Census, EMSI, and South Texas Economic Development Center.

7

Baselines for impacted communities … reflecting vulnerability and capacity

Pre-Harvey Economic Profiles by SizeTourism and real estate together made up >50% of Port Aransas economy; retail and hospitality were the largest sectors in Aransas County …

Source: EMSI, 2017.

Farming$0.5

Mining, & Oil/Gas Extraction

$12.1

Utilities$0.2

Construction$27.9

Manufacturing$32.6

Wholesale Trade$14.7

Retail Trade$25.8

Transportation & Warehousing

$14.9

Information$14.2

Finance & Insurance$9.7

Real Estate $84.5

Professional & Technical Services

$3.2

Administrative & Waste Management

$6.0

Educational Services$0.2

Health Care & Social Assistance

$3.2

Arts & Recreation

$11.8

Accommodation & Food Services

$83.7

Other Services $16.1

Port Aransas Economy ($Mil Sales)

Farming$36.4


$117.5

Utilities$3.1

Construction$94.3

Manufacturing$18.5

Wholesale Trade$34.8

Retail Trade$123.0


$20.4

Information$17.3

Finance & Insurance$48.9

Real Estate $66.1


$49.2


$50.7

Educational Services$1.2


$54.7

Arts & Recreation$16.9


$94.9

Other Services $37.5

Aransas County Economy ($Mil Sales)

8

Pre-Harvey Economic Profiles by NumberTourism and real estate together made up 55% of Port Aransas businesses; retail and hospitality made up 31% of Aransas County businesses …

Source: EMSI, 2017.

Manufacturing5

Retail Trade31


15

Information5

Finance & Insurance4

Real Estate 26


9Administrative &

Waste Management9

Educational Services1


4

Arts & Recreation8


66

Other Services 25

Port Aransas Business Establishments

Farming3


12Utilities

1

Construction64

Manufacturing19

Wholesale Trade16

Retail Trade97


12Information13

Finance & Insurance34

Real Estate 40


48


27

Educational Services1


57

Arts & Recreation17


102

Other Services 52

Aransas County Business Establishments

9

One week of business shut down in metro area• $1.2B in gross sales activity, including wage earnings, etc.

Loss in capital stock

• Property damages in other areas are considered relatively modest

and scattered

• No direct impact on land

Harvey’s Immediate ImpactsKnown knowns of immediate direct economic damage …

Port Aransas Aransas County

Residential $219M $1.3B

Nonresidential $12M $240M

10

Short- and long-term impacts on local

businesses and residents, including Winter

Texans

Increases in insurance costs for local

businesses and households

Recovery paths of impacted communities

Harvey’s Extended ImpactsUnknown knowns whose values to be realized … beyond direct damage

11

3 Phases:

• Direct Impact (immediate): Loss of economic activity and capital

• Recovery (transitory): Rebuilding efforts take effect

• New Normal (equilibrium): Long-run occurs years later

Model Assumptions:

• All industries shut down when the area was hit

• Immediate loss of residential and nonresidential capital stock (values correspond to observed damages)

• Separate capacity (resources) constraints for local and regional economies

• Three alternative speeds in restoring businesses and residential and nonresidential capital losses (100%; 25%; 10% per year)

Self-adjustment back to baseline occurs even without government intervention, but “in the long run, we are all dead!”

Recovery ScenariosSimulations of direct impact and response over time with a regional economic model

12

Road to RecoverySlower rebuild efforts are more costly … cumulative output loss doubles with each delay

13

-1,200

-1,000

-800

-600

-400

-200

0

200

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

Source: South Texas Economic Development Center.

Port Aransas Output ($Mil Sales)

Immediate Recovery (1 year)

Rapid Recovery (4 years)

Slow Recovery (10 years)

Need for SpeedMore rapid recovery is less painful … but challenged by available capacity

14

-8,000

-7,000

-6,000

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036


Aransas County Output ($Mil Sales)

Immediate Recovery (1 year)

Rapid Recovery (4 years)

Slow Recovery (10 years)

Communities with highest impacts and lowest estimated capacity:

• Aransas Pass• Austwell• Fulton• Gregory• Refugio• Rockport• Woodsboro

15

HIGHEST IMPACT HIGH IMPACT

LOW

C

AP

AC

ITY

HIG

H C

AP

AC

ITY

High Storm Impact, Low CapacityImplication: More spillover economic impact on other parts of the Coastal Bend …

Source: Community Planning and Capacity Building RSF by Richard Martin, FEMA, October 5, 2017.

Indirect Impact on RegionRebuild efforts boost regional construction and other industries …

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000

Farming

Mining & Oil/Gas Extraction

Utilities

Construction

Manufacturing

Wholesale Trade

Retail Trade


Information

Finance & Insurance

Real Estate


Management


Educational Services


Arts & Recreation


Other Services


Full Recovery’s Impact on Regional Employment (Job Years)

16,000

16

Corpus Christi MSA

Aransas CountyPort Aransas

High economic impact from kick-starting businesses and restoring capital infrastructure and properties sooner

But capacity matters: Reconstruction activity requires financial capital, labor input and other resources

So it is not a community problem, but a regional solution

Speedy recovery is vital for minimizing long-term economic losses ─ Resilience is the ability to “rebound economically from a disaster and to take

advantage of post-disaster market opportunity”… Jeffrey Sjostrom, 2012

Possible to move above pre-disaster levels, especially with federal/state support (rebuild vs. restoration)

No magic number: Reimagining the future of Coastal Bend

─ Tourism for coastal communities

─ New (more expensive) homes for displaced residents

─ Possible population loss in rural communities, particularly in Refugio

Takeaways

17

A Tale of Two CitiesWhat to learn from two recent storms and distinctive responses?

18

20

40

60

80

100

120

-5 -4 -3 -2 -1 0 +1 +2 +3 +4 +5 +6 +7 +8 +9 +10

Year struck by Hurricane

Population Trends (Base Year = 100)

New Orleans (Katrina 2005)

Galveston (Ike 2008)

Source: U.S. Census Bureau.

On

Impact

Jim Lee

(361) 825-5831

[email protected]

SouthTexasEconomy.com

Thank you!

Documents

Economic Recovery Briefing - TAMUCCstedc.tamucc.edu/files/Harvey_Workshop_2017-10.pdf · 2017. 10. 12. · Source: EMSI, 2017. Farming $0.5 Mining, & Oil/Gas Extraction $12.1 Utilities