Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Economists Prepare Report on Economic Impact of 2008 Floods in Iowa

27.06.2008
A report by Iowa State University's Regional Capacity Analysis Program how the economic impact of this year's flooding across Iowa 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 state's 1993 floods.

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:
Liesl Eathington, Regional Capacity Analysis Program, (515) 294-2954, leathing@iastate.edu
Meghan O'Brien, Regional Capacity Analysis Program, (515) 294-4095, mcobrien@iastate.edu
David Swenson, Regional Capacity Analysis Program, (515) 294-7458, dswenson@iastate.edu

Dan Otto, Economics, (515) 294-6147, (515) 231-7239 (c), dmotto@iastate.edu

Mike Ferlazzo | newswise
Further information:
http://www.econ.iastate.edu/research/webpapers/paper_12954.pdf
http://www.iastate.edu

More articles from Business and Finance:

nachricht Microtechnology industry is hiring – positive developments of past years continue
09.04.2018 | IVAM Fachverband für Mikrotechnik

nachricht RWI/ISL-Container Throughput Index with minor decline on a high overall level
20.03.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Future electronic components to be printed like newspapers

A new manufacturing technique uses a process similar to newspaper printing to form smoother and more flexible metals for making ultrafast electronic devices.

The low-cost process, developed by Purdue University researchers, combines tools already used in industry for manufacturing metals on a large scale, but uses...

Im Focus: First evidence on the source of extragalactic particles

For the first time ever, scientists have determined the cosmic origin of highest-energy neutrinos. A research group led by IceCube scientist Elisa Resconi, spokesperson of the Collaborative Research Center SFB1258 at the Technical University of Munich (TUM), provides an important piece of evidence that the particles detected by the IceCube neutrino telescope at the South Pole originate from a galaxy four billion light-years away from Earth.

To rule out other origins with certainty, the team led by neutrino physicist Elisa Resconi from the Technical University of Munich and multi-wavelength...

Im Focus: Magnetic vortices: Two independent magnetic skyrmion phases discovered in a single material

For the first time a team of researchers have discovered two different phases of magnetic skyrmions in a single material. Physicists of the Technical Universities of Munich and Dresden and the University of Cologne can now better study and understand the properties of these magnetic structures, which are important for both basic research and applications.

Whirlpools are an everyday experience in a bath tub: When the water is drained a circular vortex is formed. Typically, such whirls are rather stable. Similar...

Im Focus: Breaking the bond: To take part or not?

Physicists working with Roland Wester at the University of Innsbruck have investigated if and how chemical reactions can be influenced by targeted vibrational excitation of the reactants. They were able to demonstrate that excitation with a laser beam does not affect the efficiency of a chemical exchange reaction and that the excited molecular group acts only as a spectator in the reaction.

A frequently used reaction in organic chemistry is nucleophilic substitution. It plays, for example, an important role in in the synthesis of new chemical...

Im Focus: New 2D Spectroscopy Methods

Optical spectroscopy allows investigating the energy structure and dynamic properties of complex quantum systems. Researchers from the University of Würzburg present two new approaches of coherent two-dimensional spectroscopy.

"Put an excitation into the system and observe how it evolves." According to physicist Professor Tobias Brixner, this is the credo of optical spectroscopy....

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

Leading experts in Diabetes, Metabolism and Biomedical Engineering discuss Precision Medicine

13.07.2018 | Event News

Conference on Laser Polishing – LaP: Fine Tuning for Surfaces

12.07.2018 | Event News

11th European Wood-based Panel Symposium 2018: Meeting point for the wood-based materials industry

03.07.2018 | Event News

 
Latest News

Detecting damage in non-magnetic steel with the help of magnetism

23.07.2018 | Materials Sciences

Researchers move closer to completely optical artificial neural network

23.07.2018 | Information Technology

Enabling technology in cell-based therapies: Scale-up, scale-out or program in-place

23.07.2018 | Health and Medicine

VideoLinks
Science & Research
Overview of more VideoLinks >>>