Study: Look To Big Box Stores During Disasters

  • May 13, 2008

With hurricane season about to begin, those living in high-risk areas should heed the lessons learned from Hurricane Katrina: think Home Depot, not Homeland Security.

A study by St. Lawrence University Dana Professor of Economics Steven Horwitz determined that the most effective relief felt by those hit by the disaster came from the so-called "big box" chains, including Home Depot, Wal-Mart and Lowe's, and from the U.S. Coast Guard, rather than from federal government agencies.

The study, from the Mercatus Center at George Mason University, stresses that successful disaster relief depends upon responders having detailed knowledge of their own local area and the right incentives to act on that knowledge. Examining federal and private responses to Hurricane Katrina, the study by Horwitz shows why the Federal Emergency Management Agency (FEMA) was destined to fail, and why for-profit firms succeeded at disaster recovery. It also looks at the Coast Guard -- the only federal agency lauded for its Katrina performance -- which rescued more than 24,000 people in the two weeks following the storm.

"Disaster response happens at the local level," Horwitz said. "FEMA is not local to anyone except people who live in Washington, D.C."

The study by Horwitz shows that Wal-Mart, Home Depot and Lowe's made use of their local knowledge about supply chains, infrastructure, decision-makers and other resources to provide emergency supplies and reopen stores well before FEMA began its response. Their local knowledge enabled the big-box stores to make plans ahead of the storm and put them into effect immediately after. Also, leadership gave tremendous discretion to store managers and employees to make decisions rather than waiting for instructions from upper-level management, allowing for more agile disaster response.

The Coast Guard also places a strong emphasis on local knowledge. A flat organizational structure and unique agency culture allow for subordinate officers to alter the plans for a specific operation so long as they follow the commander's intent. The Coast Guard's day-to-day activities (search and rescue operations and work in the marine environment) as well as its division into specific geographic areas provide greater expertise for disaster response.

Based on the study, Horwitz makes four recommendations for disaster-relief policy:

1. Give the private sector as much freedom as possible to provide resources for relief and recovery efforts and ensure that its role is officially recognized as part of disaster protocols.

2. Decentralize government relief to local governments and non-governmental organizations and provide that relief in the form of cash or broadly defined vouchers.

3. Move the Coast Guard and Federal Emergency Management Agency (FEMA) out of the Department of Homeland Security (DHS).

4. Reform "Good Samaritan" laws so that private-sector actors are clearly protected when they make good faith efforts to help.

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