The Political Economy of Hurricane Katrina and Community Rebound

The Political Economy of Hurricane Katrina and Community Rebound

New Thinking in Political Economy series

Edited by Emily Chamlee-Wright and Virgil Henry Storr

In 2005 Hurricane Katrina posed an unprecedented set of challenges to formal and informal systems of disaster response and recovery. Informed by the Virginia School of Political Economy, the contributors to this study critically examine the public policy environment that led to both successes and failures in the post-Katrina disaster response and long-term recovery. Building from this perspective, this book lends critical insight into the nature of the social coordination problems disasters present, the potential for public policy to play a positive role, and the inherent limitations policymakers face in overcoming the myriad challenges that are a product of catastrophic disaster.

Chapter 11: The Road Home: Helping Homeowners in the Gulf After Katrina

Eileen Norcross and Anthony Skriba

Subjects: economics and finance, austrian economics, public choice theory, public sector economics, environment, disasters, politics and public policy, public choice


1 Eileen Norcross and Anthony Skriba INTRODUCTION 11.1 The 2005 Gulf Hurricanes destroyed or damaged more than 300 000 homes in five states.2 Entire communities were abandoned, and the storms left many homes unsalvageable. Because damage in Louisiana was particularly acute, helping homeowners became an early recovery policy goal. Acting through the newly established Louisiana Recovery Authority (LRA), 3 the Office of the Governor directed $6.9 billion of $10.4 billion in federal Community Development Block Grant (CDBG) funds to create the Road Home program, ‘the largest single housing recovery program in U.S. history’.4 Road Home received approval from the Department of Housing and Urban Development (HUD) and the Louisiana legislature. LRA awarded the private firm ICF International a $756 million contract to manage the Road Home program. Road Home began accepting applications in August 2006, one year after Hurricane Katrina hit Louisiana.5 This amount was later increased to $912 million in the final weeks of Governor Kathleen Blanco’s administration (Hammer 2008). Road Home was designed to serve as more than a disaster compensation program; it was designed to function as both planning and housing policy. The program aimed to simultaneously compensate victims, to recreate existing neighborhoods by awarding larger sums to those choosing to stay in Louisiana and to develop affordable housing options. The program targeted a broad population, extending eligibility to those who suffered wind damage (an event typically covered by homeowner’s insurance).6 The program’s efficacy has been widely criticized. By August 2007, only 23 percent of applicants...

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