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Economic recovery: interdependencies

Economic recovery is one of four recovery environments. The other recovery environments are social, built and natural.

Economic recovery is one of four recovery environments. The other recovery environments are social, built and natural. The interdependencies across recovery environments is important. Economic recovery is reliant on activities associated with recovery in the social, built and natural environments. Economic recovery outcomes are also dependent on relief and response activities. Relief, response and early recovery activities can set pathways and conditions that have a significant impact on the success of long-term recovery.

Economic recovery is critically linked to the built environment. Enabling business to re-open quickly relies on access to utilities such as power and water, as well as access to transport. Telecommunications, electronic funds transfers and access to the internet are central to business operating models14. Economic consequence management often includes government working with infrastructure providers to support economic recovery.

A critical impact of emergencies can be the destruction of housing. Where destruction is widespread, the consequence of population displacement in the affected region can undermine the capabilities of businesses to recover. Decisions made by government that impact on short and long-term temporary housing options, locations and rebuilding may influence the reinvestment decisions by businesses, or impact on the success of those businesses that do reinvest. While decisions associated with other recovery environments will need to be made, it is important that government consider the impacts of these decisions.

Reviews of disaster recovery have referred to the potential for well-meaning activities to undermine progress on economic recovery. For example, material donations, while an important mechanism for providing quick access to basic items such as toiletries, blankets and clothes, can undermine local economies by saturating it with a supply of free goods, adding further pressures to businesses already dealing with reduced cash-flows. This market over-supply can extend more broadly, depressing demand in businesses that were not impacted by the disaster in question and further extending the economic impact footprint15.

Another issue that may face communities is the focus on building infrastructure or facilities to demonstrate commitment and action, often on the assumption that economic development flows from construction. Evidence suggests that early commitment to rebuilding tends to lock-in pre-existing vulnerabilities and misses the opportunity to fundamentally redesign the future of a disaster-affected location, while failing to support long-term business recovery16.


References

14 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-Disa…External Link [Accessed 05 May 2020].

15 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-Disa…External Link [Accessed 05 May 2020].

16 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-Disa…External Link [Accessed 05 May 2020].

Reviewed 01 July 2022

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