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Variables affecting the economic impacts of a disaster

The degree to which a disaster impacts economically on a location varies considerably due to the spatial, social and economic characteristics of that location.

Geographic context, including the economic, social and cultural attributes of a location, affect economic and social behaviour for economic development and growth37. While economic performance of the location is influenced by these attributes, so too is the economic impact of an emergency event. The severity of consequences stem from the nature of the event itself, however, the location is also important as the pre-existing economic conditions can influence the ease and speed of recovery38.

The capacity of a diverse and well-performing economy to recover quickly and decisively from the economic impacts of a disaster or crises, characterised by strong and thriving businesses and communities, is likely to be much greater than in a weaker economy. From a business recovery perspective, locations with narrower economic bases, smaller numbers of key businesses, or those reliant on natural resources or agriculture that can easily be impacted by natural disasters and biosecurity hazards, are more vulnerable to economic downturn and longer recovery time-frames if these businesses are unable to return quickly to their previous levels of performance.39

This disparity has implications for the economic recovery role of government. It suggests that the role should be tailored to the economic characteristics and conditions of the affected location, with consideration of distributional and equity issues, rather than a uniform approach being applied to consequence management.

Further, while the term ‘recovery' can sometimes imply that the approach should aim to support businesses and regions returning to their previous state, recovery inevitably comprises some form of transition to a new state …because the impact of the disaster will inescapably alter the lives of those experiencing it.40 The recovery response from government should therefore focus as much on community and economic resilience …enabling and assisting the disaster affected community to renew, rebuild, adapt and thrive in the “new normal”.41 In the economic context, this can be seen not only as a desirable aspiration but even an opportunity, especially if the recovery response can stimulate new business activity, alleviate existing inequity, and/ or the recovery focus is on improved prevention and mitigation efforts:

Project investments should recognise the longer term trends happening within and across industries and reposition their economic development strategies to meet the new business demands being created by these changing market forces.42


References

37 Department of Regional Australia, Local Government, Arts and Sport, 2015. Regional Australia Standing Council: Framework for Regional Economic Development. [Online] Available at: https://web.archive.org/web/20150311070754/regional.gov.au/regional/publications/files/RASC_Framework_For_ Regional_Economic_Development.pdfExternal Link [Accessed 05 May 2020].

38 See for example, National Association of Development Organisations Research Foundation, Disaster Recovery Peer Learning Forum, June 2011 and Restoring Regional Economies in the Wake of Disaster, December 2010.

39 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.pdfExternal Link [Accessed 05 May 2020].

40 Norris et al, 2008. quoted in 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.pdfExternal Link [Accessed 05 May 2020].

41 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.pdfExternal Link [Accessed 05 May 2020].

42 Economic Development Administration, 2009. US Department of Commerce, East Missouri Economic Recovery Plan.

Reviewed 01 July 2022

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