Page 12 - Yucaipa Valley Water District

Macro- and Micro- “If you live or work in retrofitted structures,” FEMA
determined, “you’re less likely to be injured during an
Economic Impacts earthquake. After the earthquake, you’re also more likely
to have a home and a job to which you can quickly return.
Businesses that use retrofitted buildings are more likely to
Apart from the loss of life and
survive damaging earthquakes and to sustain shorter
limb, the impacts of a major xv
business interruptions and fewer inventory losses.”
earthquake can strike on many
levels.
ECONOMIC IMPACTS OF DISASTER
Macro-economic Impacts:
• Widespread destruction of The year 2011 experienced the highest economic losses
neighborhoods and due to earthquakes on record. According to the Center for
infrastructure Disaster Management and Risk Reduction, more than
• Disruption of public services 20,000 people died and about a million people lost their
• Business disruption and loss homes due to earthquakes that year.
• Widespread homelessness
and unemployment Most significant were the earthquakes in Christchurch,
• Economic turmoil New Zealand; and Tohuku, Japan; with more than 1 million
• Reconstruction costs
xvi
buildings damaged in Japan alone.
Micro-economic Impacts: Protecting life and limb is the primary objective in any
• Damage/destruction to threatening situation. But once the shaking and damage is
homes and businesses
• Loss of employment over, what happens then? Some of the most challenging
• Homelessness aspects of recovery are the displacement of residents and
• Demolition and businesses, the loss of affordable housing stock,
reconstruction costs widespread business disruption, unemployment and
• Bankruptcy damage to uninsured homes and other structures.

Widespread Business Disruption

Apart from the social chaos that can come from any disaster, one major issue is the disruption of jobs
and economic activity following a major earthquake. People without homes have a harder time
reporting for work and that can hamper business activity. Deliveries from vendors may be shut off for
weeks or even longer as a result of damaged buildings and infrastructure. All this has the potential to
lead to a distressed workforce, reluctant consumer climate and a downward spiraling economic cycle.

The potential impacts on small business is particularly troublesome, when considering that many of
these enterprises occupy the very buildings that are at risk of failure during an earthquake.

Small businesses employ 56.8 million people representing 48 percent of the U.S. workforce, the Small
xvii
Business Administration reported in 2016. In short, they constitute much of the economic health of
local communities, states and the nation. A disruption in the ability to do business – even for a short
while – can quickly lead to serious financial consequences, even bankruptcy. This in turn, exacerbates
the problem with an increase in unemployment and residual impacts on other businesses and vendors.

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Yucaipa Valley Water District - March 8, 2018 - Page 12 of 40