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A Hurricane’s Long-Term Economic Impact: the Case of Hawaii’s Iniki

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Author Info

  • Makena Coffman

    () (Department of Urban and Regional Planning, University of Hawaii at Manoa, University of Hawaii Economic Research Organization)

  • Ilan Noy

    () (Department of Economics, University of Hawaii at Manoa)

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Abstract

The importance of understanding the macro-economic impact of natural disasters cannot be overstated. Hurricane Iniki, that hit the Hawaiian island of Kauai on September 11th, 1992, offers an ideal case study to better understand the long-term economic impacts of a major disaster. Iniki is uniquely suited to provide insights into the long-term economic impacts of disaster because (1) there is now seventeen years of detailed post-disaster economic data and (2) a nearby island, Maui, provides an ideal control group. Hurricane Iniki was the strongest hurricane to hit the Hawaiian Islands in recorded history, and wrought an estimated 7.4 billion (2008 US$) in initial damage. Here we show that Kauai’s economy only returned to pre-Iniki levels 7-8 years after the storm; though 17 years later, it has yet to recover in terms of its population and labor force. As we document, these long-term adverse impacts of disasters are ‘hidden.’ They are not usually treated as ‘costs’ of disasters, and are ignored when cost-benefit analysis of mitigation programs is used, or when countries, states, and islands attempt to prepare, financially and otherwise, to the possibility of future events.

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File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_09-5.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by University of Hawaii at Manoa, Department of Economics in its series Working Papers with number 200905.

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Length: 22 pages
Date of creation: 01 Jun 2009
Date of revision:
Handle: RePEc:hai:wpaper:200905

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Keywords: natural disasters; hurricane; Iniki; Kauai; Hawaii;

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References

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  1. Timothy Halliday, 2005. "Migration, Risk and Liquidity Constraints in El Salvador," Working Papers 200511, University of Hawaii at Manoa, Department of Economics, revised 28 Mar 2006.
  2. Faruk Selcuk & Erinc Yeldan, 2001. "On the macroeconomic impact of the August 1999 earthquake in Turkey: a first assessment," Applied Economics Letters, Taylor and Francis Journals, vol. 8(7), pages 483-488.
  3. Eduardo A. Cavallo & Eduardo Borensztein & Patricio Valenzuela, 2008. "Debt Sustainability under Catastrophic Risk: The Case for Government Budget Insurance," IMF Working Papers 08/44, International Monetary Fund.
  4. Ethan Ilzetzki & Carlos A. Vegh, 2008. "Procyclical Fiscal Policy in Developing Countries: Truth or Fiction?," NBER Working Papers 14191, National Bureau of Economic Research, Inc.
  5. Ilan Noy & Aekkanush Nualsri, 2007. "What do Exogenous Shocks Tell Us about Growth Theories?," Working Papers 200728, University of Hawaii at Manoa, Department of Economics.
  6. Ilan Noy & Aekkanush Nualsri, 2008. "Fiscal Storms: Public Spending and Revenues in the Aftermath of Natural Disasters," Working Papers 200809, University of Hawaii at Manoa, Department of Economics.
  7. Noy, Ilan, 2009. "The macroeconomic consequences of disasters," Journal of Development Economics, Elsevier, vol. 88(2), pages 221-231, March.
  8. Nejat Anbarci & Monica Escaleras & Charles A. Register, 2004. "Earthquake fatalities: the interaction of nature and political economy," Working Papers 0415, Florida International University, Department of Economics.
  9. Mark Skidmore & Hideki Toya, 2002. "Do Natural Disasters Promote Long-Run Growth?," Economic Inquiry, Western Economic Association International, vol. 40(4), pages 664-687, October.
  10. Heger, Martin & Julca, Alex & Paddison, Oliver, 2008. "Analysing the Impact of Natural Hazards in Small Economies: The Caribbean Case," Working Papers RP2008/25, World Institute for Development Economic Research (UNU-WIDER).
  11. Crespo Cuaresma & Hlouskova & Obersteiner, 2008. "Natural Disasters As Creative Destruction? Evidence From Developing Countries," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 214-226, 04.
  12. Jacob Vigdor, 2008. "The Economic Aftermath of Hurricane Katrina," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 135-54, Fall.
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  1. The long-term impact of hurricanes
    by Economic Logician in Economic Logic on 2009-08-28 14:52:00

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