ople, livestock and property. This research examines the economic effects of natural disasters, with special emphasis on two major disasters occurring in the 1990s: the floods of the Midwest in 1993 and the earthquake in Southern California in 1994.
When a natural disaster hits an area, the first obvious effect is to the infrastructure. Communication lines are severed, and it can be several hours before utilities and communications reach even a basic level of service, depending on the type of disaster. Many types of natural disasters, such as tornadoes and hurricanes, involve some type of warning so that emergency communication stations and auxiliary government offices can be set up before the need for their use actually occurs. Other types of disasters, such as earthquakes, provide no such warning, with the result that the surrounding populace is taken by surprise.
After a disaster has hit an area, businesses are destroyed and homes are lost. Residents must find temporary lodging, and businesses must determine whether to repair and rebuild their facilities, cease operations or relocate to a different area altogether. To some degree, the level of devastation that the natural disaster leaves behind determines the level of repair and reconstruction that occurs.
A single natural disaster can also leave a variety of damage in its wake. For example, Hurricane Andrew leveled much of Homestead, Florida, but did considerably less damage to the city of Miami. Even in areas that are hardest hit, some residents and businesses manage to survive intact while others are completely lost.
Besides communication problems, transportation can be a problem in natural disasters, making it difficult to move goods into or out of a disaster area. In some cases, roads are simply destroyed, while in other cases, airports, railroads and major routes into the area suffer varying degrees of damage. This not only makes it difficult for rescue w...