BS4 - Rebuilding After Hurricane Helene: An Economic Model of Optimal Farm Reconstruction After Disaster
SCURS Disciplines
Economics
Document Type
General Presentation (Oral)
Invited Presentation Choice
Service-Learning — Oral
Abstract
In September 2024, Hurricane Helene made landfall in the Southeastern United States and left behind a trail of destruction. Agriculture was one industry heavily impacted by this storm. According to the South Carolina Department of Agriculture, agribusiness accounts for nearly 260 thousand jobs in South Carolina and $51.8 billion in economic impact. Within the state, an estimated $2.54 billion in agricultural production and over 16,000 farms were in the path of Hurricane Helene (American Farm Bureau Federation). After this disaster, farmers faced crop destruction, livestock loss, and land damage. These farmers face the decision of whether to repair the destruction quickly and get their farms back up and running or build back in a way that protects against future destruction, including not only hurricanes, but other weather events such as tornadoes, droughts, and floods.
This study develops an economic model to identify the optimal rebuilding strategy for farms after (or in preparation for) a natural disaster by evaluating the long-run input demands from an expected profit maximization problem. We utilize a three-input Cobb-Douglas production function with two types of capital: original, or traditionally employed, capital and more expensive capital that is more resilient to environmental disasters. The production function incorporates a loss of capital stock in the event of a natural disaster, where the original capital is more prone to loss than the resilient capital. Our model shows that the decision to rebuild is determined by the difference in price between the two capitals, the probability of the disaster, and the potential loss of capital. Although resilient capital has a higher up-front cost, it is significantly less likely to be affected by future disasters than traditional capital. Ultimately, this model provides a framework for decision making in the wake of increasing environmental disasters and can be used to compare the decision a farmer should make when comparing scenarios, like Hurricane Helene, that have a low probability but cause a lot of damage, and scenarios, like floods and droughts, that have a high probability but cause less damage.
Keywords
Hurricane Helene, Farm Rebuilding, Disaster Resilience, Agricultural Economics
Start Date
10-4-2026 3:10 PM
Location
CASB 102
End Date
10-4-2026 3:25 PM
BS4 - Rebuilding After Hurricane Helene: An Economic Model of Optimal Farm Reconstruction After Disaster
CASB 102
In September 2024, Hurricane Helene made landfall in the Southeastern United States and left behind a trail of destruction. Agriculture was one industry heavily impacted by this storm. According to the South Carolina Department of Agriculture, agribusiness accounts for nearly 260 thousand jobs in South Carolina and $51.8 billion in economic impact. Within the state, an estimated $2.54 billion in agricultural production and over 16,000 farms were in the path of Hurricane Helene (American Farm Bureau Federation). After this disaster, farmers faced crop destruction, livestock loss, and land damage. These farmers face the decision of whether to repair the destruction quickly and get their farms back up and running or build back in a way that protects against future destruction, including not only hurricanes, but other weather events such as tornadoes, droughts, and floods.
This study develops an economic model to identify the optimal rebuilding strategy for farms after (or in preparation for) a natural disaster by evaluating the long-run input demands from an expected profit maximization problem. We utilize a three-input Cobb-Douglas production function with two types of capital: original, or traditionally employed, capital and more expensive capital that is more resilient to environmental disasters. The production function incorporates a loss of capital stock in the event of a natural disaster, where the original capital is more prone to loss than the resilient capital. Our model shows that the decision to rebuild is determined by the difference in price between the two capitals, the probability of the disaster, and the potential loss of capital. Although resilient capital has a higher up-front cost, it is significantly less likely to be affected by future disasters than traditional capital. Ultimately, this model provides a framework for decision making in the wake of increasing environmental disasters and can be used to compare the decision a farmer should make when comparing scenarios, like Hurricane Helene, that have a low probability but cause a lot of damage, and scenarios, like floods and droughts, that have a high probability but cause less damage.