Global Direct Investment Solutions

Corporate Development for a Networked World

OnTheShortList.com     SurgeUSA.org

ShortListNews.com

Hurricane Katrina, August 29, 2005

Bruce Donnelly   bruce@gdi-solutions.com    (Biography)

The purpose of these images is to assist executives and their advisors who may be considering this region as a business location, and put it in perspective, since this was one of the worst storms on record to hit the United States.  It is a rare, catastrophic event.

For perspective, the last Category 3 hurricane to directly hit New Orleans and the Gulfport-Biloxi area was Betsy in 1965, forty years ago.

Hurricane Camille (Category 5) was the second worst storm on record in the US when it hit the Mississippi Gulf Coast in August 1969 with 174 mph winds and a 20 foot storm surge.

Hurricane Frederic hit eastern Mississippi again near Pascagoula in 1979.  Although much less destructive than Camille, Frederic did damage 180 miles inland, disrupting power and business for a week.

The damage from Katrina is far greater, and it will take much longer for some areas to recover, even though it weakened from Category 5 to 4 in the hours before landfall, and soon weakened to Category 3 and lower.  See more damage estimates below.  One of the challenges of this storm is that many homes and buildings in the region did not have flood insurance, and severe flooding rather than wind damage was the main problem.

We would not usually publish images such as the ones below, but Hurricane Katrina was such a catastrophic event for this region that it is likely to be of interest for many years to the executives and advisors we serve as they plan major capital investment projects.

Aside from the urgency of the disaster relief and recovery efforts in the immediate aftermath of the storm, it is therefore useful to take a longer-term perspective on the potential impact of hurricane risks on business location selection decisions for projects which are not local in nature.  In other words, many companies have a wide range of choices about where they will set up their operations, and will therefore need to consider hurricane risks as a potentially unpredictable and uncontrollable disruption of the business for which insurance may not really cover the full impact on the business, as opposed to just the obvious property damage.

In particular, four major hurricanes in the southeast during 2004 and extensive media coverage of these disasters may create misperceptions of the frequency and impact of severe hurricanes in this region.  Although even tropical storms or Category 1 or 2 hurricanes are very dangerous, a devastating storm such as Katrina is extremely rare in the USA, just as massive earthquakes are infrequent events but somewhat predictable location risks, even in places which don't have a reputation for frequent earthquakes, such as the US midwest.

This will probably prove to have been the worst US hurricane since records began.  Major buildings in this region are generally engineered to withstand severe storms, but many old buildings which preceded such construction standards were visible victims of this storm, and flooding can irreparably damage buildings which would otherwise weather such a storm.

Please contact Bruce Donnelly at TEL 847-304-4655 in Chicago for assistance with business location decisions (new factories, offices, distribution, etc.) in any region.

The NASA Earth Observatory published satellite images of the greater New Orleans region before and after Katrina, showing the extent of the flooding around Lake Pontchartrain.  There are similar images of flooded areas in Mississippi and Alabama, and of Biloxi MS.

September 5 : Former Presidents George H.W. Bush and Bill Clinton have announced the creation of the Bush-Clinton Katrina Fund, which the governors in Louisiana, Mississippi and Alabama will be able to use for disaster relief and medical services.

http://www.bushclintonkatrinafund.org

Information about other relief organizations and non-profits active in this region

State of Louisiana official website for Hurricane Katrina information.  Refer also to the usual state website, www.louisiana.gov which includes information about setting up a business, or refer to the Louisiana Department of Economic Development at www.led.state.la.us

There are many websites with content and links related to the recovery efforts.  One source to find many others is the bulletin board postings at http://forums.worldnow.com/groupee

Directories of state, regional, and local economic development organizations

•  Louisiana and the US South Central region, including Texas and Arkansas
•  Mississippi and the US Southeast region
•  Alabama
•  Northwest Florida panhandle

Some of these areas also have military bases which were affected recently by the BRAC recommendations of the Pentagon and the Base Realignment and Closure Commission.

Historical and current forecast information about other hurricanes and weather events can be obtained from sources such as the National Hurricane Center or National Weather Service of NOAA, and The Weather Channel or AccuWeather.

The only other Category 5 hurricanes to hit the US since records began were Camille in 1969, Hurricane Andrew which devastated Homestead and southern Florida in 1992, and the Labor Day hurricane of 1935 which hit the Florida Keys.  Katrina did not officially make landfall as a Category 5 storm because it weakened just a few hours earlier.

Hurricane Hugo caused severe damage in South and North Carolina in 1989, but wasn't a 5.  Hurricane Floyd in 1999 was a 5 at one point, but came ashore in North Carolina as a far less damaging Category 2.  Hurricane Ivan was a Category 3 storm when it hit Gulf Shores, Alabama in 2004.  See selective images from 2004 and earlier major hurricanes below.

Katrina made landfall east of New Orleans early on the morning of August 29.  It had already weakened overnight and the path had shifted east, taking the devastating northeast side of the storm directly over Gulfport and Biloxi, Mississippi, with strong hurricane winds and storm surge there as well as in Mobile, Alabama and into northwest Florida.

The winds soon subsided from around 140mph before landfall as a Category 4 hurricane, and diminished to 100-125 mph as a Category 3 storm by 11am as it slowly moved inland, but this was clearly the worst storm to hit this region since records began, and possibly the costliest in terms of damage in US history, exceeding Andrew.  The torrential rains and strong winds caused flooding and wind damage far inland as it moved up the Tennessee Valley and northeast toward Indiana, Kentucky, Ohio and the eastern Great Lakes.  It caused tornadoes in areas as far away as eastern Alabama and Atlanta, Georgia.  This can be visualized from the image below at 1pm, several hours after landfall.

Storm surge damage to the levee system that protects the city of New Orleans, which is actually below sea level between the Mississippi River and Lake Pontchartrain, soon caused severe flooding in areas which had survived the wind damage.  The winds had been much less severe than originally feared because the storm passed to the east.  The Gulf Coast region of Mississippi, particularly Harrison County (Biloxi and Gulfport), was devastated by the very high storm surge and the strongest winds as the storm passed, while New Orleans suffered more devastation from the flooding of most of the city as the levees and pumping system failed after the hurricane had already moved north.

Note that hurricanes are not the only source of damage from weather in this region.  For example, in May 1995 an estimated $3 billion in damage was caused in New Orleans and nearby areas such as Slidell, Louisiana when heavy rains remained over the area, causing major flooding.  New Orleans had 11 inches of rain in six hours, and 16 - 20 inches during a 36 hour period, while Slidell reported 25 inches of rain in that period.  Unlike the situation after Hurricane Katrina, however, the massive pumps were soon able to drain New Orleans again.

•  FEMA list of charities expected to be active in Hurricane Katrina relief efforts, and links to other FEMA press releases and information about federal disaster relief
•  American Red Cross    www.redcross.org   1-800-HELP-NOW
•  Salvation Army            www.salvationarmyusa.org
•  Catholic Charities        www.catholiccharitiesusa.org   1-800-919-9338
•  AmeriCares                www.americares.org
•  Refer also to our directory of humanitarian and philanthropic organizations active in other regions of the world (poverty and famine relief, war victims, natural disaster relief, emergency health services, education assistance, etc.)

As with the tsunami disaster in Asia, reconstruction of these communities will take a long time after the initial emergency response work.  Business support of the local economic development organizations will also be welcome as the recovery effort moves forward.  These small non-profit organizations, which will play an important role in redevelopment of their local areas, typically rely heavily on contributions from local businesses which will now have been disrupted or devastated (physically or economically) by this disaster.

•  Louisiana
•  Mississippi
•  Alabama
•  Florida

Hurricanes in the US are now categorized according to wind speeds by what is known as the Saffir-Simpson scale, as developed in the 1970's, which characterizes their usual storm surge and level of destruction.

•  Tropical depression   < 63 km/h - 39 mph
•  Tropical storm    63 - 119 km/h = 39 - 74 mph
•  Category 1  119-153 km/h = 74 - 95 mph
•  Category 2  154-177 km/h = 96 - 110 mph
•  Category 3  178-209 km/h = 111 - 130 mph
•  Category 4  210-249 km/h = 131 - 155 mph
•  Category 5  >250 km/h = >155 mph

Hurricane Gilbert was a Category 5 storm with gusts up to 359 km/h (210 mph).  It hit Jamaica and parts of Mexico in 1988 as the strongest hurricane in the western hemisphere.  As another example, Hurricane Mitch hit Central America in October 1998 with 155mph winds and 50 inches of rain in some areas, causing massive flooding.  Hurricane Allen hit the Texas border with Mexico in August 1980 with 150 mph winds, but was ranked as Category 3.  Few US storms exceed Category 3 at landfall.

Many Atlantic hurricanes never reach the US mainland, and damage estimates such as those at right exclude the impact of storm damage in other countries.

These figures are therefore more useful as a relative indicator of the devastation caused by various major storms rather than as an accurate measure of their actual impact on the communities involved, which is affected by many factors other than storm strength.

Initial estimates are that Katrina caused $25 billion or more in damage.  The following are the estimates of damage from other major US storms in recent years, adjusted to 2005 dollars.  This would not include damage outside the USA.

Once again, the damage to insured property does not reflect the full economic impact, particularly because people in coastal areas sometimes cannot obtain or afford insurance, and some damage such as public infrastructure may not be insured.  Similarly, the cost of government relief programs does not reflect the full impact of such disasters.  It is quite difficult to estimate the total economic impact, which can continue for many years.

Note that 2004 was already an unprecedented year for US hurricanes, with four major storms causing heavy damage.  The damage from Katrina, however, is estimated to exceed all four of those major 2004 hurricanes put together.  That shows the scale of it.

Refer to the National Hurricane Center report on the deadliest, costliest, and most intense hurricanes from 1851 to 2005 for additional insights into major US hurricane patterns.

The National Weather Service of NOAA (National Oceanic and Atmospheric Administration of the US Department Commerce) also provides useful forecast and historical information.