The words “widespread massive flooding” are seldom associated with Colorado, especially in the month of September. Annual precipitation, including rain and snow, for the state ranges between 7 and 33 inches per year, with the mountain communities receiving higher amounts. Unfortunately the rains hit this past week and areas of the state surpassed their annual total in less than 48 hours. Unlike a tornado or a fire that is more localized, the flooding has touched 14 counties throughout the state.
As the clouds began to part and the sun peaked out, thoughts turned from dealing with this natural disaster, to recovery, and understanding what its impact will be on the state economy. This brief commentary deals with the latter.
There are many factors to consider when measuring the costs of damage or the economic impact of a natural disaster, such as fire, flooding, blizzards, hail storms, drought, or tornadoes. The overall impact includes human costs, time, damage to infrastructure, impact on the private sector, impact on individuals and the benefactors.
Human Costs – Without a doubt, it is impossible to measure the human costs associated with the flooding. This includes loss of lives, personal injuries, and the loss of homes or irreplaceable personal property. While it is possible to replace material goods (damaged carpet, cars, landscaping) it is not possible to replace photo albums, heirlooms, or other property with sentimental value. The human costs also include the psychological challenges associated with the disaster and the recovery.
Time – As well, it is impossible to measure the countless hours that businesses, nonprofits, government agencies, volunteers, and victims will spend dealing with the direct and indirect impacts of the storms. Those hours would normally be spent producing goods, providing services, or putting food on the table for the family.
Infrastructure – Towns have been submerged in water, roads and bridges have been washed out and utility systems (water, gas, electricity, and communications) have been damaged. In time they will be repaired.
The larger communities have a stronger asset base that will allow them to more effectively deal with the recovery than smaller or rural areas. In many instances, communities will receive state and federal funds to rebuild their infrastructure. The down side is that those funds may only cover a portion of the damage.
Private Sector – The flooding will disrupt the operations, increase the expenses, and reduce the productivity of many businesses. Money that might have been spent on pay increases, product development, or promotion may now have to be allocated to repairs. Even though state or federal assistance may be available for small businesses, they will be hit the hardest and many will not have adequate insurance coverage or other resources to keep their doors open.
Individuals – The hardest hit group will be the individual citizens. Many simply will not have the insurance or resources to cover the expenses to their property. This will be particularly true in rural areas, where expenses may include damage to houses, barns, septic tanks, cesspools, roads, propane tanks, solar panels, farm equipment, or livestock.
For many individuals this is a zero sum game. Money that would have been spent to improve their quality of life will now be spent to maintain it or return it to its previous level.
Income that would have been spent in restaurants, on clothing, or other discretionary items will now be used to replace carpet in the basement, repair damage caused by a leaking roof, or purchase a new vehicle because their water damaged one is no longer useable.
The Benefactors – At the risk of sounding insensitive (and that is not the intent), there will be industries that temporarily benefit from this natural disaster. The obvious benefactors are the home repair, furnishing, financing, and construction industries. At the same time there may be a temporary decline in other business sectors.
The Costs and Impact – At some point, officials will estimate the cost of the damage and the economic impact associated with the storm and flooding. The estimated tally will be in the hundreds of millions. Unfortunately, that total will not capture the long term impact the flooding will have on the individuals or the unexpected changes it has brought to the lives of many Colorado residents.
Colorado residents are resilient. Best wishes to those who have been impacted and to those who are helping restore life for the victims.
©Copyright 2011 by CBER.
