Towards a Theory of Economic Recovery from Disasters

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Stephanie E. Chang
Adam Z. Rose
Economic recovery refers to the process by which businesses and local economies return to conditions of stability following a disaster. Its importance and complexity are being increasingly recognized in disaster risk reduction research and practice. This paper provides an overview of current research on economic recovery and suggests a research agenda to address key gaps in knowledge. Empirical studies have provided a number of robust findings on the disaster recovery of businesses and local economies, with particular insights into short- and long-term recovery patterns, influential factors in recovery, and disparities in recovery across types of businesses and economies. Modeling studies have undertaken formal analyses of economic impacts of disasters in which recovery is usually addressed through the incorporation of resilience actions and investments in repair and reconstruction. Core variables for assessing and understanding economic recovery are identified from the literature, and approaches for measuring or estimating them are discussed. The paper concludes with important gaps in the development of a robust theory of economic recovery. Systematic data collection is needed to establish patterns and variations on how well and how quickly local economies recover from disasters. Research is urgently needed on the effectiveness of resilience approaches, decisions, and policies for recovery at both the business and local economy levels. Detailed, testable theoretical frameworks will be important for advancing understanding and developing sound recovery plans and policies. It will be especially important to consider the relationship between economic recovery and recovery of the built environment and sociopolitical fabric of communities in developing a comprehensive theory of disaster recovery.