Academic journal article Public Finance and Management

Post-Disaster Local Infrastructure Reconstruction Finance: A Comparative Analysis of Policy Intervention in the Japanese Earthquake and Queensland Flood Disasters

Academic journal article Public Finance and Management

Post-Disaster Local Infrastructure Reconstruction Finance: A Comparative Analysis of Policy Intervention in the Japanese Earthquake and Queensland Flood Disasters

Article excerpt

ABSTRACT

While local infrastructure damage represents only one dimension of the catastrophic effects of natural disasters, given the critical role of local infrastructure - such as local roads, power supplies and water provision - in sustaining human life and enabling recovery, post-disaster infrastructure reconstruction constitutes a capstone in any disaster planning regime. This paper considers local infrastructure reconstruction efforts in the aftermath of the Great East Japan Earthquake on 11 March 2011 and the massive floods which struck Queensland over the summer of 2010/11 in order to identify common problems facing policymakers concerned with post-disaster reconstruction. It is argued that given the critical need to rapidly gather information on post-disaster damage, coordinate intergovernmental cooperation in reconstruction, and have in place the requisite administrative capacity to legitimately and speedily authorize intergovernmental transfers, an ongoing administrative structure should be established which can fulfil these key functions in the event of any natural disaster.

1. INTRODUCTION

Local government systems across the developed world have confronted mounting financial challenges over recent years (Shah, 2006). Although the causes of fiscal stress vary between countries, they typically derive from vertical fiscal imbalance between the different tiers of government, a limited local tax base, externally imposed restrictions on local revenue-raising activities and rising demands on local expenditure (see, for example, Dollery et ak, 2008; Savitch and Kantor, 2002). Furthermore, broad similarities are often apparent in the consequences of fiscal austerity, with local infrastructure rather than local service provision bearing the burden resource scarcity (see, for instance, Broadway and Shah, 2009). The net outcome has characteristically been inadequate financing local infrastructure investment and maintenance which has spawned local infrastructure backlogs of varying degrees of severity. Put differently, local government systems across the industrialised world typically presently possess local infrastructure deficient in many respects (Dollery et al., 2013).

However, the challenges posed by local infrastructure funding pale into insignificance compared with the enormous local infrastructure reconstruction problems experienced after natural disasters, such as earthquakes and floods (Birkland, 2006). For example, post-disaster infrastructure reconstruction typically happens in chaotic and fluid circumstances (Athukorala and Resosudarmo, 2005; Bosher et al., 2007). As a consequence, numerous bottlenecks constrain reconstruction by inhibiting resource flows, impeding transportation, constraining resource procurement, and the like (Corbacioglu and Kapucu, 2006; Jayasuriya and McCawley, 2008; Wamsler and Lawson, 2012). From a financial perspective, this serves not only to increase the costs of reconstruction efforts and extend the time period involved, but also has other severely damaging economic effects associated with economic disruption and the 'Dutch Disease' often attendant upon capital inflows from borrowing abroad and foreign aid which drive up exchange rates and inflate prices in the shortrun (Godschalk, 1999; Lorch, 2005).

Public policies aimed at post-disaster reconstruction also face severe constraints in the immediate post-disaster environment, not least the need for governmental agencies to transcend standard methods of financial allocation and distribution in order to expedite reconstruction projects (Burby, 2006). Since almost all countries operate in a multi-tiered governmental structure, usually characterised by a high degree of vertical fiscal imbalance between the different levels of government, with the central government typically collecting the bulk of public revenues (Bird and Vaillancourt, 2006), in practice this necessarily means that national government agencies and departments must accelerate normal procedures for intergovernmental transfers to state, regional and local governments in disaster afflicted areas. …

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