Disastrous Uncertainty: How Government Disaster Policy Undermines Community Rebound

Abstract

In the aftermath of large-scale disasters, policy makers frequently respond by developing and directing topdown recovery plans and launching a variety of expensive and complicated programs to rebuild cities and compensate victims. This was certainly the case after Hurricane Katrina.

However, these plans tend to ignore the innate abilities of individuals, communities, and businesses to use a variety of resources and sources of information to guide their decisions about whether and how to rebuild. These decisions are not made in isolation, but rather depend substantially on the signals sent by similarly situated people.

Recovery efforts guided by the signals that emerge from action on the ground produce faster, more robust, and more sustainable redevelopment than efforts stemming from a politically-produced and centrally-executed recovery plan. Moreover, large-scale redevelopment programs can overwhelm and obfuscate the signals created locally, stalling and distorting the organic recovery that is crucial to long-term sustainable development.

Public policy can foster an environment which encourages sustainable, organic recovery by: 1. Providing quick, clear, and credible commitments about what goods and services governments will provide and when, 2. Creating in advance alternative regulatory regimes specific for post-disaster environments, and 3. Avoiding policies that distort local economies and hamper civil society rebuilding.

Because policy mistakes can have serious retarding effects on post-disaster rebuilding efforts, policy makers must understand the systemic reasons why government help so often goes awry, why private citizens with a stake in the outcome are best situated to lead their own recovery, and how to craft policy responses in a way that keeps signal noise to a minimum.

Keywords: signal noise, disaster, redevelopment programs

JEL Classification: O1,O2