Why Small Business Recovery Should Be Post-Disaster Priority

Cities trying to rebound after a natural disaster must focus their support efforts equally on the needs of both the residential and business communities, new research finds.

A study by researchers at Texas A&M University shows that following a devastating hurricane, tornado or other disaster, household and business recovery are mutually dependent upon one another. The study argues that homes provide labor to businesses and consume goods and services from businesses, and that an interruption to either one will affect the other.

"The reopening of businesses can influence nearby households’ decisions to return to their homes and the return of households in the market area will increase the chances for businesses to return," researchers Yu Xiao and Shannon Van Zandt wrote in their study.

The research was based on data of 980 homes and 145 businesses after 2008's Hurricane Ike, which made landfall near Galveston, Texas, creating what has become the fourth costliest hurricane. Upon their analysis, Xiao and Van Zandt found that within a 1.5 mile (2.42 kilometer)  radius, the greater the percentage of businesses in operation, the more likely it is that a household will be occupied.

"These findings suggest that the re-opening of businesses can significantly influence household decisions to return to their homes," the researchers wrote. "Reasons for this may vary, but may include the availability of jobs and the availability of lower-order goods (those with a limited range) to facilitate a return to normalcy."

The study found that businesses' survival following a disaster isn't as dependent on nearby residential areas being populated as they are the greater geographical area as a whole.

"Because market areas for businesses stretch out beyond the close vicinity, the dislocation of households in the close vicinity may not be fatal for business survival," Xiao and Van Zandt wrote. "However, hollowing out of the larger market area is detrimental."

Since the housing and business markets are so closely linked, the researchers conclude that businesses should take a more active role in disaster management, improving protection at the business site as well as investing in overall community resilience. In addition, Xiao and Van Zandt believe federal and state governments need to provide proper disaster relief to businesses.

"Due to the significant influence of businesses on household occupancy, one way to help households is to help businesses," the researchers wrote. "Businesses and households need to recover together."

The study, "Building Community Resiliency: Spatial Links between Household and Business Post-Disaster Return," was published in the August issue of the journal Urban Studies.

Follow Chad Brooks on Twitter @cbrooks76 or BusinessNewsDaily @BNDarticles. We're also on Facebook & Google+.