Predicting the Path to Recovery from Hurricane Katrina through the Lens of Hurricane Andrew and the Rodney King Riots

Hurricane Katrina caused the greatest damage of any hurricane in American history. We look at the rebuilding effort in New Orleans through the lens of two other disasters that occurred in 1992: Hurricane Andrew in Miami and the Rodney King riots in Los Angeles. The rebuilding effort in New Orleans shares similarities with both events, combining the impact of a hurricane on infrastructure and private businesses, and the prospect of an uneven recovery biased against racial minorities and the economically disadvantaged. Using the experience of the King riots, our concern is that the rebuilding effort will be modest at best in poorer areas and slow to develop. There is the prospect of long lasting negative effects on income in poor neighborhoods. In wealthier areas, the pecuniary incentive for private business and citizens to rebuild is stronger, and in some cases the rebuilding effort can cause net income gains in response to a natural disaster of the scale of Hurricane Andrew. Based on these events, we recommend targeting a disproportionate amount of federal transfers towards poorer areas to stimulate growth.