There is considerable evidence in the literature regarding disaster recovery showing a strong link between economic and community recovery. In particular, the central premise of reports by the Regional Australia Institute (RAI) is that the restoration of and support for businesses in disaster-affected areas are integral to the achievement of community recovery and resilience, as well as economic recovery:
The process of business recovery, and its critical interconnections with community recovery, enables broader economic recovery in a disaster affected region. ‘Business recovery’ should therefore be regarded as the critical process with ‘economic recovery’ being the desired outcome in a disaster affected region.43
The RAI identifies a strong inter-relationship between business recovery and population return post-disaster and argues that, in general, disaster recovery funding by governments should be designed and targeted so as to more strongly recognise this connection:
The lack of funding for small business recovery reflects a lack of appreciation of the critical interdependencies between business recovery and community recovery, particularly in rural settings where the majority of businesses are owned and operated by local residents. This trend is not unique to Australia. International experiences highlight the abundance of support provided for community recovery (i.e. social/emotional), whilst a survey of the business disaster recovery literature shows a pattern of business failure and failed assistance programs extending for nearly 20 years. 44
The RAI notes that:
… from the perspective of displaced residents, a key factor in the decision to return to a disaster-affected region is the extent to which businesses commit to rebuild and re-open, while promoting the rapid recovery of housing, along with keeping residents in the local area during the rebuilding process is central to facilitating business recovery.
The RAI suggests that the relationship is more heavily dependent on businesses re-opening, meaning that business re-opening will pull residents back into a disaster affected location.45 Therefore, provided that economic recovery support is targeted to accelerating business reinstatement, the evidence suggests that this will have a positive and much broader impact on a community's recovery and resilience.
As the externalities of a positive nature associated with economic recovery are unlikely to be reflected in the behaviours of individual businesses or other market mechanisms, there is a role for government in accelerating business reinstatement, with a particular focus on emergencies that have a significant social and community impact.
References
43 Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disaster-to-Renewal.pdf [Accessed 05 May 2020].
44 Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disaster-to-Renewal.pdf [Accessed 05 May 2020].
45 Regional Australia Institute, 2013. From Disaster to Renewal: The Centrality of Business Recovery to Community Resilience. [Online] Available at: http://www.regionalaustralia.org.au/wpcontent/uploads/2013/08/From-Disaster-to-Renewal.pdf [Accessed 05 May 2020].
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