Building Back Worse

It's sometimes hypothesized that after a natural disaster, populations "Build Back Better," meaning that the reconstruction of damaged infrastructure leaves the population better off after the disaster than they were before it struck.  There is some economic logic to this hypothesis, since we know that populations don't always update expensive capital investments when they should.  If capital is outdated, then an exogenous shock that motivates the population to replace the old capital with new capital might end up increasing the economy's output in the long-run.  Many of us are familiar with the example of a cell phone that is old and frustrating, but we don't feel like its worth replacing until we drop it in the pool by mistake -- and then find that upgrading to the latest smartphone makes us much more productive.

Politicians in the US, it seems, are required to tell the local population that they will "build back better" after a disaster strikes.  After Hurricane Sandy, we heard a lot of leaders talking about how the tri-state area will be stronger and better than it ever was, probably in part because nobody wants to hear otherwise and in part because this kind of logic is important for obtaining reconstruction funding.  Healy and Malhotra have a nice article (here) demonstrating that obtaining this kind of funding for reconstruction is important for an incumbent's re-election (recall: Hurricane Sandy -> Federal relief funding -> NJ Governor Christie's endorsement -> Obama earns votes in reelection).  And just before the Superbowl, I saw this video about the Superdome's post-Katrina reconstruction, which is not shy about endorsing the BBB hypothesis.

Importantly, though, the BBB hypothesis still remains a hypothesis, and there is no robust empirical evidence that populations actually do build back better, in aggregate, after catastrophic events. To remind that we shouldn't take the anecdotes and political rhetoric above too seriously, Amir Jina points us to an interesting IRIN report that suggests populations affected by Typhoon Bopha are building back worse:

Temperature and infrastructure

Once while presenting this paper on temperature's influence on economic performance, someone in the audience asked whether any of the observed declines in output could be due to stress on infrastructure. I honestly replied that I didn't know, but that it seemed like a possibility.  If high temperatures began to interfere with the structure or integrity of steel, concrete or other materials used in infrastructure, existing systems might begin to slow down or fail.

Apparently, this is mechanisms is beginning to become an issue. One of today's cover stories in the New York Times described various infrastructure failures that are emerging around the country as effects of the persistent and extreme heat. Some highlights:

On a single day this month here, a US Airways regional jet became stuck in asphalt that had softened in 100-degree temperatures, and a subway train derailed after the heat stretched the track so far that it kinked — inserting a sharp angle into a stretch that was supposed to be straight. In East Texas, heat and drought have had a startling effect on the clay-rich soils under highways, which “just shrink like crazy,” leading to “horrendous cracking....” 

Excessive warmth and dryness are threatening other parts of the grid as well. In the Chicago area, a twin-unit nuclear plant had to get special permission to keep operating this month because the pond it uses for cooling water rose to 102 degrees; its license to operate allows it to go only to 100....

When railroads install tracks in cold weather, they heat the metal to a “neutral” temperature so it reaches a moderate length, and will withstand the shrinkage and growth typical for that climate. But if the heat historically seen in the South becomes normal farther north, the rails will be too long for that weather, and will have an increased tendency to kink. 

I don't know of any work on the economic or social impact of these types of failures. And I similarly don't know of any theory explaining how we ought to alter our patterns of infrastructure investment, based on the realization that this will continue into the future. The NYT article describes a few ad hoc adaptive measures that companies are starting to adopt, but since the lifetime of new infrastructure will extend into 2040 (or longer), we would do well to plan. This seems like an area ripe for research.