Association for Public Policy Analysis & Management

Rachel Meltzer (The New School)

Ingrid Gould Ellen (New York University)

 The density of urban areas is what makes them productive, but it is also what makes them particularly vulnerable in the face of natural disasters.  This is all the more true as the threat of, and damage from, natural disasters has become more severe, especially for coastal cities like New York.  In this paper, we consider small businesses, a critical part of the urban economy, and the nature of their risk, both actual and perceived, in the context of Hurricane Sandy.  Specifically, what share of businesses, and the economic activity that they represent, is vulnerable to extreme flooding?  What are the characteristics of the businesses, and the nature of their economic activity, in the areas of highest perceived risk, compared to those in areas of lower perceived risk?  And is the geography of perceived risk accurate—that is, do the business characteristics and economic activity differ in the areas that actually experienced moderate to severe storm flooding?  Finally, armed with more information on how and where businesses are vulnerable, what policies might cities put in place to help mitigate their risks?

 To answer these questions, we rely on a combination of several rich micro-datasets on business activity, employment, sales revenues, property characteristics and neighborhood demographics in New York City.  We currently have data for five to ten years leading up to the storm and, in some cases, one year immediately following the storm.  We overlay these data with spatial information on locally determined evacuation zones and federally determined flood zones, both of which capture pre-storm risk perceptions, and then inundation zones that show us exactly where, and to what height, the flood waters surged.  We compare a range of outcomes, related to businesses, their employees, and the services they provide, across these three zones in order to understand the pre-storm vulnerability of small businesses and the very immediate repercussions from Hurricane Sandy.  Finally, we consider a set of policies to mitigate the flooding risks faced by small businesses and the potential impact on the broader urban economy.