Private sector can shoulder more responsibility for disaster readiness

I just returned from Texas, where I was assessing the relief progress of our partners six months after Hurricane Harvey made landfall. Tens of billions of dollars have been invested into rebuilding coastal towns and cities that endured the worst damage of the storm and armies of volunteers are still working to get these communities back on their feet.  

Hundreds of thousands of homes have been impacted, and that the influx of taxpayer money is a far cry from what is actual needed. But there is another surprising factor that’s made the recovery process unacceptably slow and prevented families from returning to their homes. There simply are not enough skilled tradespeople like plumbers, electricians and roofers— to rebuild homes at the necessary clip.

{mosads}The United States is currently in the midst of a drastic skilled labor shortage and it’s also causing major problems for communities that are recovering from disasters. In a 2017 report, the Associated General Contractors of America found that 70 percent of construction companies nationwide had trouble finding and hiring qualified trade workers.

Many argue that the increased emphasis on earning bachelor’s degrees has come at the expense of public investment in vocational training and has led to decreased interest among young people in trade professions. Moreover, trade job sustained heavy losses during the Great Recession, and many workers chose not to re-enter those jobs when the economy recovered.

If anything, Texas’ recovery is indicative of the symbiotic relationship between disaster resilience and the economy. It shows that the American obsession with making a quick buck, driven by short term incentives for shareholders and policymakers, ignores the foundational elements of economic strength. Yes, fortunes can be made by speculating, but even Wall Street needs plumbers, and so does the Texas Gulf Coast.

With the prevalence and cost of major disasters skyrocketing in recent years, economists and preparedness experts are devising novel ideas to finance recovery. For example, FEMA recently shifted the risks and costs for flood insurance from their balance sheet to private markets. The World Bank established pandemic bonds to help finance response to emerging disease threats. And Great Britain recently announced a disaster hedge fund. 

These speculative approaches are creative new mechanisms for disaster financing and could be useful in this era of growing threats and limited resources. And they are also important steps forward in activating the private sector to shoulder more responsibility for disaster readiness. 

 But the solutions listed above are incomplete and ignore the most basic tenets of the disaster economy. You can’t rebuild a house if you can’t find someone to re-connect the electricity. These fundamentals matter most, and are far simpler and recurring than we seem to be willing to accept.

This is not an issue that FEMA and the disaster preparedness community can solve on its own. Perhaps in addition to disaster hedge funds, the disaster community could consider calling for greater investment in high-school level vocational training, or engage trade unions to encourage robust apprenticeship programs.

This is not easy. Taking the long-view runs against the grain of quarterly earnings reports, annual shareholder meetings, and capital markets that tend to discourage excess inventory and production capacities in the absence of disasters. It also requires bringing together actors in the private sector that are in competition with each other, with government partners that tend to have lukewarm relationships with the private sector at best. But in better quantifying the value to a recovering economy, we can begin to make a business case for sustainable economic conditions that provide greater returns to society — and investors — over time. 

There is a serious human cost of failure to address underlying economic conditions before disaster strikes again. Survivors struggling to get back to normal are at higher risk of long term issues, including mental health, physical health, and disproportionately affect children and other vulnerable populations. Getting people back in their homes and to a new state of normal is critical to the healing process.

But as we are seeing, an unprepared economy can compound the time and costs of recovery and leave many families to rely on charities and volunteer groups to help them where everyone else has failed. This creates fertile ground for scam artists to take advantage of families in desperate situations.

When a disaster strikes, you have what you have. It is too late to change the conditions for Texas and other areas impacted by the 2017 disasters. But the lesson we have learned is that you can’t have a truly disaster resilient community without strong, sustainable development practices across an economy. And you can’t have sustained development without consideration of disasters.

Let’s take this lesson and start building the economic foundations for future disasters so we can get people back in their homes and contributing to the economy faster and stronger than before.

Jeff Schlegelmilch, MPH, MBA, is the deputy director of the National Center for Disaster Preparedness at Columbia University’s Earth Institute. Follow him on Twitter at @jeffschlegel.