Florida storms cutting a wide economic path

Hurricane Frances may have almost doubled the estimated recovery cost for Florida as relief officials gear up to deal with the devastation of two hurricanes striking the same state within three weeks.

As the first rays of sunlight in days break out across the Sunshine State, hard-hit residents are beginning the grim task of assessing damage - while drying out rain-soaked carpets, furniture, and clothing. They are also facing long lines for necessities such as food, water, ice, and gasoline.

At the same time, state and federal officials are beginning to fan out across the impact zone to make an official survey of the damage. Their job won't be easy: Most hurricanes leave behind a clearly visible path of destruction, but hurricane Frances was so large that its destructive impact seems to be almost as wide and long as the state of Florida.

Arriving just weeks into what had been a well-organized regional recovery effort in the wake of hurricane Charley, the latest hurricane now presents officials with the challenge of mounting a statewide recovery effort. As if that wasn't enough, hurricane forecasters say a new storm, hurricane Ivan, is headed in the general direction of south Florida and could arrive as early as this weekend.

Gov. Jeb Bush acknowledges that the economic challenges to his state are substantial. But he insists: "We'll rebound."

The overall cost of insured losses for both hurricanes Frances and Charley could range from $9 billion to as much as $20 billion, according to estimates by two risk forecasting firms.

Although the storms were quite different in size and intensity, the cost of destruction could end up being similar, the risk forecasts suggest. Hurricane Charley, with winds of 140 miles per hour, was a much more potent storm than hurricane Frances, with top winds in the 100 mile-per-hour range. But hurricane Frances was more than three times as large as hurricane Charley.

"You are not going to find [in the wake of Frances] very many areas like Punta Gorda" where Charley caused nearly total devastation, says Michael Gannon of AIR Worldwide Corp., a Boston-based risk forecasting company.

"There will be pockets of damage, but since the storm was so large those areas will add up," he says. "There will be a lot of claims for a very wide area of Florida."

In addition to roughly $6 billion to $10 billion in insured losses from Charley, Floridians are facing an additional $5 billion to $10 billion in losses from Frances, according to AIR Worldwide. A similar forecasting firm, Risk Management Solutions of Newark, Calif., places the cost of Frances slightly lower, at $3 billion to $6 billion, in addition to $6 billion to $8 billion for insured losses from Charley.

The estimates represent only insured losses. Uncounted in the estimates is damage to roads, bridges, and other public infrastructure, along with the cost of business disruptions. They also do not include hurricane insurance deductibles, as well as flood losses, which are not covered by private insurance companies. "Generally, the total economic losses are roughly double the insured losses," Mr. Gannon says.

Although natural disasters cause a significant setback to the economy, government officials and economists say recovery efforts can also trigger an economic boom within certain industries. Debris removal and tree-trimming companies are in high demand, as are roofers and general contractors. Those who sell construction materials will be busy for years in certain parts of Florida. The ripple effect from these activities will help dampen other economic losses in the hardest-hit areas.

But the destruction and any prolonged lack of electric power may cause some struggling business to fail. While roofers and insurance adjusters (mostly arriving from out of town) are hard at work, some hurricane survivors may find themselves both homeless and unemployed.

Of course, not all the costs can be measured in dollars and cents. "To people who lose all their belongings, the insurance company is going to say that photo album is worth nothing. But to the people whose wedding photos were in it, it is irreplaceable," says James Gilkeson, a finance professor at the University of Central Florida in Orlando.

The storm's arrival over the Labor Day weekend caused significant disruption to the state's No. 1 industry - tourism - forcing evacuations along Florida's east coast and closing popular theme parks in central Florida. But analysts say those disruptions are only temporary, with Disney World and other attractions reopening, and most seaside hotels surviving with little structural damage.

The state's important citrus industry may not fare as well. After Charley, federal agriculture officials estimated that 20 percent of the year's citrus crop had been lost after young fruit was blown from branches and many trees pushed over. Hurricane Frances made landfall in the Indian River growing region, which is a major producer of grapefruit. The storm then crossed the state over large expanses of orange groves.

"On the east coast there is fruit on the ground, but the trees look all right," says Casey Pace of Florida Citrus Mutual, the state's largest grower organization. "While the damage may be more widespread [than in hurricane Charley], it may not be as severe because the winds weren't as strong." But she adds that citrus growers are anxiously watching the horizon: "Between Frances and Charley, and now we have Ivan on the way, I don't know if we are going to have any growers who make it through this OK."