Disaster-Caused Increases in Unit Repair Cost

Disaster damage estimates customarily assume that labor and materials will be readily available for repairs. When major disasters do more damage than the local building industry can repair, the resultant shortage of repair resources causes prices to escalate. Examination of the factors that effect the supply of and demand for repair services in the context of such recent disasters as Hurricane Camille and Tropical Storm Agnes suggests the amount of direct damage divided by the annual volume of contract construction in the local BEA Economic Area as a reasonable index to the degree of escalation. Information on 15 disasters suggests that serious escalation begins at an index value of about 1.0. Information on damages caused by Agnes to Wilkes-Barre, Pa., indicates that an event of index value 9.1 increased repair costs by a factor of 2.7 and total damages (including relief programs) by a factor of 4.0, an effect that more than doubled average annual flood damages.