We know the 2008 floods devastated Iowa, with 83 of the state's 99 counties being declared disaster areas by Gov. Chet Culver. But what we won't know for some time is the actual economic impact of those flood-damage losses, according to a new report by economists from Iowa State University's Regional Capacity Analysis Program (ReCAP).
The report, "Economic Impacts of the 2008 Floods in Iowa", details how the economic impact of this year's flooding will be calculated. Once all of the official losses are reported, ISU economists say the total may approach or exceed the $1.45 billion in losses to crops, livestock, and personal property/income reported in the 1993 floods. (ISU Professor of Economics Dan Otto was lead author of that October 1993 report.)
But until the current numbers are in, any early projections putting losses in the billions of dollars are premature, the ISU economists say.
"We can measure lots of things. What we can't measure is the thing that people really, really want to know -- and that's the cost to the state in terms of losses from the flooding," said Liesl Eathington, director of ReCAP and lead author on the report. "We won't know that until everyone reports the damage. We also won't know that until some of the (state, federal and private) aid starts to flow in, which could take months -- or in some cases, even years."
Eathington says economists will rely on government accounts of the economy, which come out quarterly, but only at the state level and usually with a one-year lag.
"And so it may be a year, two years, or three before we can actually look at the overall performance of the economy and figure out what the net effect was," she said.
Otto's 1993 report also figured in the net effect. Taking into consideration offsets such as insurance, federal disaster payments and/or grants, and additional contributions, the report put total net ag losses at $676 million, net wealth losses at $113.1 million and lost personal income at $112 million from the '93 floods.
For now, economists can only estimate losses. As an example, the ReCAP report estimates the loss to farmers from this year's flooding. The USDA reported that nine percent of corn acres and eight percent of soybeans have been flooded. Assuming that half of that land is still able to be planted or replanted into soybeans, then ISU economist Dave Swenson calculated that the change in anticipated gross sales for Iowa's crop farmers might be as much as $1.2 to $1.5 billion less than it otherwise might have been in a normal growing year.
When losses are officially reported and the economists begin to calculate the full extent of the damage, Eathington points out that the economic impact may overstate the effects on businesses and understate the effects on households.
"It's easier to get numbers for businesses because they have those types of records," Eathington said. "They're more likely to keep track of what they had and what they lost. It's much harder to get numbers for households. And in a lot of cases (of people who experienced flood losses), there's no point in even tallying the household losses because they're not going to be compensated."
"I would think by next year, when you start looking at business in these towns that were flooded, you're going to start seeing decline," said Meghan O'Brien, a ReCAP economist who specializes in retail business. "You might have a better picture of the overall health than you would with households, but even then, it's something that will play out over years. So I don't know that you'll have a firm grasp on actual business loss for a while."
In the 1993 floods, real nonfarm Gross Domestic Product (GDP) in Iowa actually posted a 2.7 percent gain. But the ISU economists warn that it may be different this time around because the economy was coming out of a recession in 1993 and could be entering one this summer.
But GDP isn't really a good gauge when it comes to measuring a disaster's economic impact anyway.
"A contributing reason GDP went up in '93 is because of the rebuilding and disaster dollars that came into Iowa," Otto said. "These are measured by GDP and from an aggregate statewide measure, this was an economic stimulus. On the other hand, there were certainly losses in personal wealth which is not measured in GDP accounts."
"Caution must be used when looking at GDP growth following a disaster," O'Brien said. "It does not capture the whole story nor should it imply that floods have some net benefit for the economy. Real people, especially those affected by the floods, can no more feel GDP growth than they can recover what was lost in the floods."
The ReCAP staff plans to continue analyzing the economic impacts of the 2008 floods to Iowa as data becomes available.Contact:
Dan Otto, Economics, (515) 294-6147, (515) 231-7239 (c), email@example.com
Mike Ferlazzo | newswise
Mathematical confirmation: Rewiring financial networks reduces systemic risk
22.06.2017 | International Institute for Applied Systems Analysis (IIASA)
Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO
Plants and algae use the enzyme Rubisco to fix carbon dioxide, removing it from the atmosphere and converting it into biomass. Algae have figured out a way to increase the efficiency of carbon fixation. They gather most of their Rubisco into a ball-shaped microcompartment called the pyrenoid, which they flood with a high local concentration of carbon dioxide. A team of scientists at Princeton University, the Carnegie Institution for Science, Stanford University and the Max Plank Institute of Biochemistry have unravelled the mysteries of how the pyrenoid is assembled. These insights can help to engineer crops that remove more carbon dioxide from the atmosphere while producing more food.
A warming planet
Our brains house extremely complex neuronal circuits, whose detailed structures are still largely unknown. This is especially true for the so-called cerebral cortex of mammals, where among other things vision, thoughts or spatial orientation are being computed. Here the rules by which nerve cells are connected to each other are only partly understood. A team of scientists around Moritz Helmstaedter at the Frankfiurt Max Planck Institute for Brain Research and Helene Schmidt (Humboldt University in Berlin) have now discovered a surprisingly precise nerve cell connectivity pattern in the part of the cerebral cortex that is responsible for orienting the individual animal or human in space.
The researchers report online in Nature (Schmidt et al., 2017. Axonal synapse sorting in medial entorhinal cortex, DOI: 10.1038/nature24005) that synapses in...
Whispering gallery mode (WGM) resonators are used to make tiny micro-lasers, sensors, switches, routers and other devices. These tiny structures rely on a...
Using ultrafast flashes of laser and x-ray radiation, scientists at the Max Planck Institute of Quantum Optics (Garching, Germany) took snapshots of the briefest electron motion inside a solid material to date. The electron motion lasted only 750 billionths of the billionth of a second before it fainted, setting a new record of human capability to capture ultrafast processes inside solids!
When x-rays shine onto solid materials or large molecules, an electron is pushed away from its original place near the nucleus of the atom, leaving a hole...
For the first time, physicists have successfully imaged spiral magnetic ordering in a multiferroic material. These materials are considered highly promising candidates for future data storage media. The researchers were able to prove their findings using unique quantum sensors that were developed at Basel University and that can analyze electromagnetic fields on the nanometer scale. The results – obtained by scientists from the University of Basel’s Department of Physics, the Swiss Nanoscience Institute, the University of Montpellier and several laboratories from University Paris-Saclay – were recently published in the journal Nature.
Multiferroics are materials that simultaneously react to electric and magnetic fields. These two properties are rarely found together, and their combined...
19.09.2017 | Event News
12.09.2017 | Event News
06.09.2017 | Event News
22.09.2017 | Life Sciences
22.09.2017 | Medical Engineering
22.09.2017 | Physics and Astronomy