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What Is the State of U.S. Disaster-Preparedness? A Freakonomics Quorum

In the last few years, magazine covers and newspaper front pages have often been dominated by disaster coverage: wildfires in California, hurricanes in the Gulf and elsewhere, and of course the Sept. 11 attacks and their myriad repercussions. (Whether the incidence of such events is higher or coverage is just noisier is a separate question, which is addressed below.)

So we asked five smart people who spend their time thinking about disasters to answer the following question:

What’s wrong — and what’s right — with American disaster preparedness and response?

You will find their compelling answers below. It was interesting to me that avian flu and SARS didn’t come up, nor any form of bioterrorism. Have these threats subsided, or merely fallen off the radar?

Although there are some surprises among the answers, the attributed causes of most disaster-preparedness shortcomings will not surprise you: bureaucratic inefficiencies, political gamesmanship, and, according to some of the respondents, corporate interests that don’t serve the public very well.

Also, I couldn’t help but feel that some of the respondents generally overstated the levels of risk we face today — but I guess that is their job, and they shouldn’t be expected to do otherwise.

All that said, there is an awful lot to learn from their answers, and I thank all of them for their time and efforts.

Dr. Erwann Michel-Kerjan, managing director of the Wharton Risk Management and Decision Processes Center:

Some continue to argue that disasters have always existed, so there is nothing new here. While not new, the disasters America is now facing have very few precedents in scale and rhythm.

On the financial side, one figure is eye-opening: if you consider the twenty most costly insured catastrophes in the world over the past 36 years (1970 to 2006), all of them occurred after 1987. (In 2006, prices corrected for inflation, so you can compare apples to apples.) Further, among these 20 catastrophes, half of them have occurred since 2001, nine of which were here in the United States. That’s the new era we have entered. The number of presidential disaster declarations in the U.S. has dramatically increased as well, from 162 over the period of 1955 to 1965 to 545 for 1996 to 2005.

America has been hit on almost every front since 2001. Think about it: failure in our national security (9/11); profound distrust in corporate America (Enron, WorldCom, and the subsequent overweighed SOX regulation); and failure in our technology (the Shuttle Columbia disaster, the 2003 blackout, the Minneapolis bridge collapse and poor levee system). And four years after the 9/11 attacks, a violent but long-anticipated hurricane overwhelms a vulnerable coastline, meets a still-unprepared government, and inflicts lasting damage on a population. As such, a superpower fails to meet the most basic needs of its citizens in crisis; further, this disaster is watched on live TV by several billion people worldwide.

What is fundamentally at stake here is the capacity of the U.S. and other exposed countries to rethink what I call “The New Risk Architecture,” with large-scale disasters occurring at an accelerated rhythm.

The following four elements should be central for American disaster preparedness and response to be adequate:

(1) Short versus long term preparation. We all have a tendency to pay attention only to short-run crises. A good preparedness plan is one that takes a long-term view on these issues.

(2) The revolution of globalization. As a result of growing globalization, social and economic activities are becoming increasingly more dependent on one another. While this is not totally new, we have reached a degree of interdependence that no other society has experienced before us: what happens 5,000 miles away today can affect you tomorrow. (Think of a pandemic starting in a poor area of Asia for instance, and spreading all over the world thanks to the fantastic development of the jet; viruses now fly business class, too.)

(3) Local to large-scale disasters. Dealing with large-scale disasters is much more challenging than handling a series of small local accidents. It is a radically different ball game that many do not appreciate; the resources and collaborative efforts that are needed, all at the same time, are not simply additional, but exponential.

(4) Private action can reduce public vulnerability. When it comes to disaster preparedness, the conventional wisdom is often wrong. If one asks people on the street, “Who do you think is in charge of preparing the country against future disasters?” the most cited response will certainly be “local, state, and federal governments.” While these entities certainly play a critical role, today nearly 85 percent of the critical services that allow our country to operate are owned or operated by the private sector. The time has come to look at how private actions affect public vulnerability so we are better prepared for prime time. (See Seeds of Disaster, Roots of Response for more.)

Charles Perrow, professor of sociology at Yale University and author of The Next Catastrophe: Reducing Our Vulnerabilities To Natural, Industrial, And Deliberate Disasters:

The history of disaster preparedness and response is not uniformly bleak. Lyndon Johnson‘s administration, at the height of popular resistance to the Vietnam War, responded remarkably well to the largest Alaska earthquake in modern times, and Florida has handled modest hurricanes adequately over the last 10 years. But it is very doubtful that even the best of administrations could sufficiently handle a direct hit upon Tampa or Miami, or a serious earthquake near San Francisco or Los Angeles. Our organizations are simply not up to preventing or handling large disasters, whether they be from natural, industrial, or terrorist sources. Even if the money available to the Department of Homeland Security was wisely spent, it would make only a little difference in preparedness and response.

What we need to do is reduce our vulnerabilities by downsizing the targets that have catastrophic potential. At one third of its pre-Katrina size, New Orleans could be protected from hurricanes and still serve its vital economic functions as a major port and oil and gas facility. By removing federal subsidies for wind and water insurance, and insisting upon appropriate building standards and land use policies (for example, those as good as Holland’s, which is mostly below sea level), huge cities in vulnerable areas such as Miami, Tampa, or Galveston would slowly shrink to manageable sizes. If we don’t limit their size, hurricanes such as Katrina will do it for us, and at enormous costs to human lives and property.

Also, our nation is strewn with weapons of mass destruction in the form of concentrations of hazardous substances in and near cities. Railroad tank cars that do not meet even the low federal safety standards carry toxic and explosive substances through our cities, and the graffiti on them shows how easy it would be for a terrorist to plant a bomb and escape upwind. A 90-ton tank car of chlorine that could be dislodged by a bomb, a tornado, or a mere railroad accident could kill a few hundred thousand, and such cars can be standing a few blocks from the White House. The government has established that there are 123 total concentrations of hazmats in the U.S., each of which threatens the lives of over one million people. A two-mile stretch of northern New Jersey alone has a concentration of hazmats that could endanger the lives of millions in New York City.

There are only a few isolated instances of reducing these concentrations; we could have many, many more, and the economic costs are small compared to the benefits. Some states, such as New Jersey, have tried to pass legislation to reduce these concentrations or use safer substances, but the federal courts have ruled that lower federal standards preempt higher state standards.

Increasing concentrations of economic and political power in the corporations that run our critical infrastructures such as electric power, water, banking, and the Internet have also made us more vulnerable. For example, following the deregulation of the electric power industry in the 1990s, outages have increased, along with profits and the cost of power, even controlling for increased fuel costs. The 2003 Northeast blackout, the largest of many that year, cost the public $10 to $12 billion, but the responsible utilities lost only a trivial amount. Legislation to make the grid reliable is opposed by the industry. It would take investments of $10 to $12 billion each year for 10 years to substantially improve the grid — which sounds like a lot of money, until you realize that each year the cost of all the outages combined is usually over $100 billion per year.

In my recent book, The Next Catastrophe, I consider other corporate concentrations in transportation, chemicals, agriculture, computer operating systems, and so on. All of them are targets that have catastrophic potential. That potential could be reduced through regulation, which in turn requires an aroused public. But almost no one is calling for actions to reduce vulnerability. Instead of a Department of Homeland Security, what we should have is a Department of Vulnerability Reduction, which would draw upon the national academies and professional groups to assess our vulnerabilities to natural, industrial, and terrorists disasters, and make highly publicized recommendations that Congress and state officials would find hard to ignore. This tactic has worked reasonably well in the contentious area of military base closures. As it is now, the DHS is a vast spoils system, grossly inefficient and even corrupt.

Amanda Ripley, homeland security writer for Time magazine and author of the forthcoming book, The Unthinkable: Who Survives When Disaster Strikes — and Why:

America has some of the best emergency planners and responders in the world. We know which disasters are going to strike where, and, in the case of hurricanes, we even get enough warning to name them. The problem is not about the technology, the forecasting, or even money, in most places. It’s about ideology and risk perception. It’s about people, in other words.

Your fate in a disaster in America depends to a large degree on where you live. We are very enamored of states in this country, and so in any emergency, everything comes down to the state and local officials. The feds do almost nothing, and this is by design. Despite how satisfying it is to blame FEMA for everything that goes wrong, and despite the fact that FEMA could be much, much better, it is not really meant to do much more than process checks and paperwork.

This arrangement is okay if you live in a place like California or Florida, which have excellent emergency planners and responders, and if the disaster is manageable. (Then again, one reason California and Florida are so good at responding to most disasters is that they do it all the damn time. So actually, it would be even better to be in Delaware or Vermont, and avoid the disaster to begin with.) But if the skies open up in, say, New Orleans, Dallas or Oklahoma City, all places with less-than-impressive emergency plans, then you could be in serious trouble. Even in California, when the big one hits, it will be at least three to seven days before any first responders make it to your house.

Meanwhile, Americans increasingly insist on living in dense, vertical cities near water. About 91 percent of Americans now live in places at a moderate-to-high risk of earthquakes, volcanoes, tornadoes, wildfires, hurricanes, flooding, high-wind damage, or terrorism, according to an estimate calculated for Time last year by the Hazards and Vulnerability Research Institute at the University of South Carolina. So disasters are getting more frequent and more destructive. The question is, when will the disincentives for living in high-risk places finally overwhelm the incentives? And can the process be forced?

Lee Clarke, a professor of Sociology at Rutgers and author of Worst Cases: Terror and Catastrophe in the Popular Imagination:

The most broken thing about disaster preparedness and response is, to use a shorthand phrase, the Command and Control model. This says that effective social organization entails strong leadership (because otherwise people are lost), tight social control (because otherwise people will act like animals), centralization of decision (because otherwise chaos ensues), and centralization of resources (because otherwise inefficiencies run rampant). The result of all that is: bring in guns when in doubt (e.g., “shoot to kill” orders in New Orleans), keep information (especially bad or embarrassing news) close to the vest, and keep non-officials away from a disaster scene.

Meanwhile, at every disaster scene, at least those in the U.S., local people self-organize for rescue and response (the Coast Guard and L.A. Wildlife and Fisheries were smashing) and rarely panic. Indeed, it is the wealthy who are most likely to panic, and their panic is more important than the panic of regular people. Concerns about looting take precedence over lives and well-being. Economic efficiency is a trivial concern in such circumstances.

Psychological belief in and organizational commitment to Command and Control leads us away from investing resources at the very local level, and this is a mistake. In California, people are already looking to Governor Arnold Schwarzenegger as a hero and formal organizations as saviors. The governor has indeed done a good job, and the organizations have worked well together. That’s important. But I predict that a close investigation would reveal that neither saved many lives.

The elephant in the room, though, when it comes to the California fires, or Katrina, or all the great catastrophes to come, is that people make themselves targets for hazards. They live in dangerous places (Malibu, New Orleans, West Palm Beach, central New Jersey), they fly in big airplanes (Airbus A380), they work in tall buildings, and so on. We concentrate ourselves, and the mere fact of concentration makes for greater calamity when the hazard, whatever it is, strikes. That we concentrate ourselves in places that are naturally dangerous (the canyons are beautiful but burn quickly) makes it worse. Ultimately, our disrespect and disregard for the environment (we assume we can tame nature) is something that, if unabated, will lead to more suffering.

Howard Kunreuther, professor of Decision Sciences & Public Policy at Wharton and co-director of the Wharton Risk Management and Decision Processes Center:

The California wildfires highlight an interdependent risk. Even if you take protective action, you may be endangered by others who fail to do so. Interdependency, which is common to many other risks, suggests the need for public and private sector involvement to reduce the likelihood that a disaster of this magnitude will occur in the future. Let me illustrate the concept of interdependency with a simple example:

Suppose the Holzes, a family residing in an area outside of San Diego designated as a red or high hazard zone, want to make their house more fire retardant. The Holzes are considering replacing their wood shake roof with a tile roof to reduce the chances that a fire will damage or destroy their home. Their next-door neighbors, the Wind family, who also have a shake roof, do not follow suit. They feel their roof is attractive, and believe that another fire will not occur again while they are living in their home.

In a dry desert climate, a shake roof is like a match stick that could be ignited by a spark and cause the Winds’ house to burn and likely spread to the Holzes’ home, even if it has a tile roof. When the Holzes realize that all their neighbors still have shake roofs, they may be reluctant to spend the money replacing theirs with a tile roof, because they know it may not do much good. If all their neighbors had installed tile roofs, they would have followed suit. In such an interdependent world, where each homeowner makes decisions on his own, it is very likely that no one will take protective action even though everyone would be better off if they had all invested in fire retardant measures. Voluntarily, coordination is not easy to achieve in these situations.

A roof is vulnerable because embers fly through the air and land on shingles, eaves, and vents. For this reason, well-enforced building codes may be needed to address the problem. All homes in tinderbox zones should be designed so that the likelihood of fires spreading to other homes is reduced. The Federal Emergency Management Agency recommends using tile, terra cotta, metal, and slate for all roofing materials. Eaves that extend beyond exterior walls should also be closed and insulated with fire-resistant materials.

There could be financial incentives to reward property owners for taking these actions. Insurers could be allowed to lower their premiums to reflect the reduced chances of future fires to these homes. For insurers to want to provide this discount, they would have to be assured that all the homes in the area were designed according to code. Otherwise, a well-designed home could be damaged from a fire that started in a house with a shake roof. For insurers to be receptive to lowering premiums, they would also have to be able to charge rates reflecting risk. Today, regulators often restrict insurance rates so they are artificially low. In these situations, insurers do not have a financial incentive to provide coverage to the homeowner, let alone provide reductions in premiums for those who take preventive actions.

Coming back to the example with which I began, the Holzes, the Winds and all their neighbors need to be told that they are residing in a red zone and should make their house more fire retardant for that reason. If a state building code is passed that requires all new homes to use tile, terra cotta, metal or slate roofing materials, current homeowners should also be encouraged to follow the new regulations. If this information campaign is ineffective, then the state may want to require both new and existing homes to install these types of roofs, to reduce the likelihood that they will suffer damage from a future wildfire because of the interdependent risk.