Economic impact of the floods are too soon to call: industry experts

7/31/16 / RTI

CLARKSBURG — Five weeks after devastating floods hit southern West Virginia, economists are certain that monetary damages will take a hefty toll on the state, but say it is too early to quantify the economic impact.
“Impacts from flooding this severe are tremendously costly, but with the damage still being tallied and cleanup efforts ongoing, I’d hate to speculate on a specific figure or percentage,” said Kent Sowards, director of research and strategy for the Rahall Transportation Institute, Marshall University Center for Business and Economic Research. “It is quite likely that the costs will be significant for individuals, municipalities and the state.”
“The economic impact on the state as a whole — damage to people’s homes and businesses — is difficult to measure at this point,” said Brian Lego, the WVU Bureau of Business and Economic Research’s economic forecaster.
Lego said, however, that the impact on infrastructure could spread beyond the southern region.
“A knock-off effect of infrastructure damage in the south is that the labor market will tighten, meaning wages will go up and the cost for building materials might increase throughout the state,” Lego said. “In early July, the state DOH estimated the cost to fix road damage to be near $47 million, but there might have been subsequent estimates.”
“Areas needing improvements or expansions to infrastructure (such as bridges and highways) that aren’t in federal recovery aid eligible areas are likely to feel the pinch as budgets are tightened even more,” Sowards said. “This is exacerbated by the recent budget gaps and the anticipated future revenue shortfalls in upcoming budget years.
“Current and/or planned infrastructure projects might be impacted if construction resources are pulled in to make emergency repairs or as project timelines are adjusted,” Sowards said. “Also, tourism dollars and the respective state revenues that accompany them aren’t flowing in the region in the wake of the flooding, which stands to extend the issue further.”
Meanwhile, federal and non-federal funding sources have already pitched in.
“As of July 15, the Red Cross estimates that emergency relief efforts could cost more than $5.5 million, and we have raised approximately $2 million in designated donations and pledges for the West Virginia floods,” said Krista Farley Raines, regional communications officer, American Red Cross West Virginia region.
Federal assistance has reached $72 million for West Virginia flood survivors, FEMA reported Thursday. That includes nearly $29.8 million in housing assistance, more than $5.4 million in other needs assistance and $1.43 million in public assistance.
In addition, the SBA has approved 426 low-interest disaster loans totaling more than $27.9 million. And 939 National Flood Insurance Program claims have been filed, totaling more than $7.5 million in payouts.
“The most visible economic impact will be job and revenue losses the state will experience from a decline in income taxes,” Lego said. “The most visible secondary issue will be the cost of road repair, which will whittle down the state’s rainy-day fund as a result.”
Staff writer Lisa Troshinsky can be reached at (304) 626-1445 or at ltroshinsky@theet.com