Does Economic Diversity Enhance Regional Disaster Resilience?

Abstract

Problem, research strategy, and findings: Little research examines the effect of diversity on regional economic resilience to natural disasters. We examine whether economic diversity benefits regional economies in typical circumstances and in recovery after a natural disaster, using the case of the 1993 U.S. Midwest flood. By matching counties in the nine states affected by the flood to control counties, we isolate the influence of diversity on employment and income in normal circumstances and after a substantial shock. We found economic diversity to have mixed associations with employment and income in typical circumstances. On average, economically diverse counties tended to experience faster employment gains but slower growth in per capita income than less diverse areas. The effect of economic diversity upon resilience following a natural disaster was unambiguous. Economic diversity aided counties in weathering the downturn following the flood and sped their return to long-term patterns of employment and income growth. Takeaway for practice: In promoting policies to enhance economic diversity, planners in communities located in areas prone to natural disasters should consider both the goal of disaster resilience and the potential tradeoffs between different aspects of economic performance. Research support: None.