Business Recovery
Business Sector Flood Impacts and Recovery
The Event
In December 2007, more than 200 businesses and farms in Lewis County,WA were severely damaged when severe rain-on–snow events triggered massive landslides and flooding inundating areas throughout Southwest Washington. The hardest hit areas, nestled on the floodplains between the Chehalis, Newaukum, and Skookumchuck Rivers, inlcuded the cities of Chehalis and Centralia, WA.
After the initial flood, small businesses that were inundated-and some that were not-had to close because of direct damage to equipment and property. Indirect effects on the businesses in the aftermath of the flooding included lack of funds to repair and a loss or degraded customer base.
What was the Research?
The study team sought to research three questions:
- How are businesses impacted by floods?
- How do they recover?
- What types of businesses engaged in flood preparedness activities, and was it helpful?
The Resilience Institute coordinated with the local Offices of Economic Development in Lewis County to formulate a 28 -question survey to identify the risk perception and preparedness in the business community, as well as the impacts and recovery strategies they employ.
Administrative officials from the Centralia and Chehalis Economic Development Department provided The Resilience Institute with more than 160 businesses either directly or indirectly impacted by the flood. Of the 138 businesses contacted, 63 surveys were conducted-mostly in person and some over the phone. Thirty-seven of these businesses were flooded in the event and 26 did not receive any direct flood damage. The businesses included in the study consisted of retail, manufacturing, and service sectors.
Students from the Disaster Reduction and Emergency Management (DREP) track in Western Washington University’s Huxley College of the Environment, traveled down on February 22, 2008 to administer the surveys to the local businesses.
The Findings
The survey administered to the 63 businesses had three major themes: risk perception and preparedness, impacts, and recovery.
Risk Perception and Preparedness
The survey asked participating businesses several questions to gauge their perceived risk of flooding and preparedness before the 2007 event. There were only few flooded and unflooded businesses in the 2007 event that had believed flooding was likely, even though some were located in higher risk areas. Previously flooded businesses were more likely to believe flooding was likely, though, 31 percent still believed flooding was unlikely prior to the December 2007 floods.
Survey questions also included details about preparedness activities the businesses had undergone prior to the flood. The questions were designed to determine businesses overall preparedness for flooding and how helpful that preparation was after the 2007 flood event. The majority of the flooded businesses had done some kind of preparedness activities for the flood, but nearly one third of unflooded businesses had not taking any preparedness measures before the event in 2007. The most helpful preparation methods utilized by businesses in the survey were creating emergency/recovery business plans and arraigning to move stock. Reading information about preparedness was the least helpful technique, according to the survey.
An overwhelming majority of the businesses, both flooded and unflooded, had insurance coverage. Though most insurance products do not include flood damage and business interruptions from hazard events, which are essential for businesses to recover quickly after a flood. Only about one-third of flooded businesses, and a small number of unflooded businesses, had flood insurance.
Impacts
To determine the impact on businesses from the flood, the survey included questions about flood-water height, severe disruptions to their business, revenue in the aftermath of the flood and if they had to close or suspend business after the event. Almost all the businesses flooded-and 40 percent that were not-had to close after the December 2007 event. It took nearly three to five weeks for the majority of the businesses to reopen. Sales diminished for all the businesses surveyed in the weeks following the event. Many businesses reported poor sales up to two months after the flood.
Recovery
Survey questions also assessed the status of recovery for the businesses and what government action they believed would help in future events. Less than one third of flooded businesses believed they had already recovered from the event at the time of the survey. Slightly more than a third believed they would recover within a year. Most businesses stated that tax breaks, recovery grants and a business recovery helpline would be the best measures of government action to help speed the recovery for their businesses after a flood event.
Conclusions
This study on business recovery outlines the importance of understanding and accounting for the indirect impacts from hazard events. The business leaders suggested that the indirect impacts on the businesses in Centralia and Chehalis were fueled by three processes: media images and portrayal of the damage in Lewis County as heavy and widespread, a local customer base focused on addressing residential damage, and a drop in discretionary spending among households-even those undamaged by the flooding. This research shows that individual preparedness may not be enough when other businesses and residents are heavily impacted by a disaster, because it does not necessarily account for the indirect impacts. Business disaster planning was considered the most helpful action that businesses had taken in the affected areas.
Future Work
The Resilience Institute is seeking additional funding to continue the research with follow-up studies on the effected businesses in Lewis County to track their recovery. The computer model, ResilUS, will be utilized to quantify indirect impacts to the business community.
A full report and presentation is available on our Publications Page.