Perfect Storm
Shortfalls in Federal Funding Allocation for Puerto Rican Hurricane Relief
Hurricane Fiona made landfall on September 18th, 5 years after Hurricane Maria previously devastated Puerto Rico, but its impacts will be felt for months to come. Is Puerto Rico equipped to recover from Fiona? Can there and will there be a better recovery than from Maria? And what will this mean for the US economy?
First — some context.
A hurricane is a rotating tropical storm with wind speeds of at least 74 miles per hour. They require warm water temperatures to form, meaning that as the planet’s temperature rises, hurricanes are going to occur more often. Rising sea levels also increase available water sources for hurricanes to draw from, which will cause a 10–15% rise in precipitation from future hurricanes. The bottom line is that hurricanes are becoming more intense and will continue to become larger and more deadly as climate change worsens, something that the United States’ economy and government may not yet be equipped to handle.
How much does a hurricane cost?
Hurricanes have caused $1.1 trillion in damages to the United States in the past 30 years, with an average cost of $20 billion dollars per hurricane. On average, hurricanes directly cost the U.S. $54 billion per year, with the damage divided between the residential, public, and commercial sectors. Some notably expensive hurricanes include Katrina ($180 billion), Harvey ($143 billion), and Maria ($103 billion).
In addition to the costs of hurricane-associated damage, subsequent damage to the economy must also be taken into account. Following Hurricane Maria, Puerto Rico’s economy suffered a loss of $43 billion, largely in the tourism sector. Beaches were closed, services began operating at lower prices, and foreign companies relocated en-masse. Similar effects of economic decline occur after every hurricane.
The US and Puerto Rico
Puerto Rico, while under US control, is not a state but a territory. It has one non-voting representative in Congress but no other federal representation, and Puerto Ricans can vote in presidential primaries but not federal elections, posing the question of whether or not they truly have a say in how their economic policy is managed.
Historically, Puerto Rico has had an incredibly difficult time recovering from hurricanes — with the damages from Hurricane Maria still being felt 5 years after it struck the island. Hurricane Maria caused between $100 billion in damages to Puerto Rican infrastructure and land in 2017. In response, Congress allocated $63 billion for disaster relief, but, in 2021, 71% of the money had yet to reach Puerto Rico.
In total, Puerto Rico only received $18 billion in aid for more than 5 times that amount of damage. Only $407 million of infrastructure financing ever reached Puerto Rico and, while the remaining aid is set to be distributed after 2025, by that point there will be even more damage in the aftermath of Hurricane Fiona. Many public schools, hospitals, and homes, for example, remain destroyed from Maria and have now been further damaged by Fiona, increasing the total amount of funding necessary to rebuild.
Even in places where post-Maria recovery efforts had taken off, Fiona has destroyed the progress, setting Puerto Rico back to its 2017 post-Maria state. Entire towns remain in the dark due to a lack of power, many homes and businesses have no roofs, and flooding abounds. The power grid has also been extremely damaged. Post-Maria blackouts were still occurring daily in 2022, and an even broader area is currently without power post-Fiona. To this date, 1.3 million people in Puerto Rico, which has a total population of 3.1 million people, remain without electricity and 800,000 lack running water.
The Puerto Rican Economy
In 1976, Congress encouraged migration to Puerto Rico by creating a tax break for manufacturers on the island. Under this law (section 936 of US tax code) foreign holding companies with Puerto Rican subsidiaries did not have to pay income taxes on income earned by the Puerto Rican branch as long as the profits were distributed as dividends to shareholders.
This caused a mass migration of businesses, most of which later left in the early 2000s when the tax benefit was repealed. The 2008 recession only worsened the resulting economic crisis, and the big-business-dependent economy was left without local entrepreneurs to fill the economic gaps. The Puerto Rican government responded by selling $61 billion of bonds to Wall Street, but this debt remains unpaid and now has a total value of $70 billion 14 years later.
By 2011, Puerto Rico’s total debt had surpassed its GNP. Public infrastructure bore the brunt of the damage, with structures like hospitals, power plants, and even pensions receiving funding cuts. This context made the destruction of Hurricanes Maria and Fiona even more devastating, as Puerto Rican infrastructure had already been suffering funding cuts and government neglect for many years and was largely in poor condition.
Federal Emergency Response to Maria (2017)
In 2017, the United States was struck by three separate category-4 hurricanes: Harvey in Texas, Irma in Florida, and Maria in Puerto Rico. Families affected by Harvey and Irma received approximately $100 million each in Federal Emergency Management Agency (FEMA) damage relief. Later, Maria survivors each received only $6 million from the same program. Furthermore, the monetary contributions occurred twice as fast for Irma and Harvey than for Maria.
FEMA response money is a form of insurance that is granted for certain types of assistance — depending on the nature of the disaster’s damages — to each affected family. This money can only reach those in need if they can prove damages to their property or quality of life. Oftentimes following large-scale infrastructure damage, property ownership certifications and other documents required to prove the necessity of FEMA assistance are lost or damaged, entailing a long wait time or complete inability to receive the funds at all.
Upon later reflection, member of the Federal Commission on Civil Rights J. Christian Adams faulted Puerto Rico’s non-state status for the inadequate response, while other members of the commission cited language barriers, racism, and geography. Either way, Puerto Rico’s damages and recovery were not properly prioritized in 2017, leading Puerto Ricans to worry what recovery from Fiona may look like in 2022.
Federal Emergency Response to Fiona (2022)
Federal response teams have sprung into action with Fiona, but some issues remain unsolvable, among them Puerto Rico’s geographic location, language barrier, and the pre-existing infrastructure damage. However, the EPA has begun running active cleanup sites and monitoring oil and chemical facilities for signs on spills and runoff in hopes of avoiding long-term environmental effects. Agriculture Secretary Tom Vilsack has directed the U.S. Department of Agriculture to aid recovery efforts for farmers and ranchers affected by Fiona, and President Biden has promised to federally fund 100% of the necessary reconstruction, rescue, debris removal, and other emergency responses. A public health emergency has also been declared due to the environmental conditions and infrastructure damage.
These responses indicate a strong recovery and one that may likely be better managed than the response to Maria. However, just 10 days after Fiona made landfall, yet another hurricane, Ian, struck the United States. As emergency coordinators balance personnel and resource allocation to the responses to the two storms, the American public is left wondering — will we see a repetition of the events in 2017 and how many more hurricanes can Puerto Rico’s economy handle?
