Puerto Rico (The United States of America)

Assessing the Cost of Disaster Recovery and Identifying Funding Sources in the HSOAC Puerto Rico Economic and Disaster Recovery Plan Project

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by Michael Kennedy, David Metz, Elaine K. Dezenski, Joshua Birenbaum, Cedric Kenney

Research Questions

What is the estimated cost of the 276 courses of action (COAs) that comprise Puerto Rico's economic and disaster recovery plan?

Who are potential funders for the COAs? How much total funding, by funder, can now be identified? Is there a resulting gap between funding available and the cost of the plan?

In August 2018 the government of Puerto Rico submitted an economic and disaster recovery plan to Congress describing a strategic approach toward recovery from the destruction caused by Hurricanes Irma and Maria, building resilience to withstand future disasters, and restoring the struggling economy. The Homeland Security Operational Analysis Center (HSOAC) provided substantial input for the plan's development. This report describes the work of the HSOAC cost and funding team—work that informed the overall development of the recovery plan on estimating the costs of courses of action (COAs) that comprise the plan, and on identifying potential funding sources for each COA.

A primary challenge was the sheer diversity of the activities included in the plan, which is due to the substantial number of COAs (276), their sectoral specificity, and the technical complexity of infrastructure and other investments. The total cost of the recovery plan is estimated to be $139 billion. This report also identifies potential funders for the COAs of the plan. Almost all the COAs are eligible for U.S. federal funding, but only $86 billion of such funding was estimated to be available when the recovery plan was submitted. $8 billion of private insurance claim funding was also estimated to be available, which leaves a $45 billion gap. Potential additional funders to close this gap include Puerto Rico government entities, either at the commonwealth or municipal level; proceeds from COAs that are revenue-generating projects; and non-government sources, such as private-sector funding, public-private partnerships, and philanthropies.

Key Findings

The primary challenge of estimating the cost of the courses of action (COAs) that comprise Puerto Rico's economic and disaster recovery plan is sheer diversity of the plan's COAs. This is due to the substantial number (276) of COAs, their sectoral specificity, and the technical complexity of infrastructure and other investments. Total cost of the recovery plan is estimated to be $139 billion. This includes $105 billion in "upfront" costs; that is, those that are incurred once in the course of carrying out a COA. It also includes $34 billion in "recurring" costs; that is, those that are incurred regularly over the course of the recovery plan. The primary contributors to cost are the housing ($33 billion), water ($30 billion), energy ($26 billion), and education ($15 billion) sectors, which together make up 75% of the total cost.

Almost all the COAs are eligible for U.S. federal funding, but only $86 billion of such funding is estimated to be available. $8 billion of private insurance claim funding is also estimated to be available, which leaves a $45 billion gap.

Potential additional funders to close this gap include Puerto Rico government entities, either at the commonwealth or municipal level; proceeds from COAs that are revenue-generating projects; and non-government sources, such as private sector funding, public-private partnerships, and philanthropies.

Recommendations

Estimating the cost of courses of action for disaster recovery can be done at varying levels of detail; the best level of detail will vary case by case, depending in part on time and resources available for the work. Further research into cost estimation methodologies, incorporating some of the complexities we could not address in this report, would have high value for future disaster recovery work. Further research into formal methodology for allocating potential funders to courses of action, incorporating some of the complexities we could not address in this report, would also have high value for future disaster recovery work.

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