The Case For, or Against, New Orleans
Management Decision Models
Dr. Usha Dasari
We will look at many factors in our case for rebuilding or not rebuilding New Orleans. This recommendation will be reviewed by state and local governments for their decision. We will perform a Cost-Benefit Analysis which will represent the residents of New Orleans, the residents of the surrounding floods plains, the Mayor of New Orleans, and the federal government represented by FEMA (Federal Emergency Management Agency) and the taxpayers. We will look at scenario models, risk management, and decision trees to support our decisions and ...view middle of the document...
With such a booming tourist attraction and the port handling the most bulk tonnage in the world (Effects of Hurricane Katrina, 2012) you would think New Orleans was a booming city with a low unemployment rate. Prior to Katrina New Orleans led the nation in unemployment. Poverty, poor school systems, and high crime rates plagued New Orleans. Out of almost a half a million citizens of New Orleans 27% lived in poverty, 47% of the schools did not meet national standards, 67% of the population was black, and the homicide was ten times higher than the national level. Twenty-five percent of adults did not have their high school education (Shafer, 2005). Insurance policies that were written for the region were not up to par. For building units there were policies in place for $250,000 and $100,000 for personal property (Shafer, 2005). When Katrina hit the devastation was extensive for the population. The buildings were not suited for a hurricane much less anything to such an extent. Most of the properties were built post 1949 with most of the properties residential and business not being insured with flood insurance.
New Orleans was not as strong financially as we thought. Even though tourism was such a big attraction as we see from the earlier summary the cities weekly wage was below the national average. Most of the wages were a result of tourism, the colleges, and the restaurant industry. The fact of the severe gap in wages drove the population down in New Orleans before Katrina. From 2000 to 2004 New Orleans population declined by 23,000 and 16,000 jobs were lost (Effects of Hurricane Katrina, 2012). If this staggering statistic was not enough Katrina hit in 2005 and which left the city in ruin.
Katrina hit many southern cities. Louisiana, Texas, and Mississippi were all hit but the most damage occurred in New Orleans. With the city mostly under sea level this presented much of the problem. The majority of the city was flooded. More than $200 billion dollars in damages were estimated. The loss of life, property, and business were devastating on New Orleans. This was the most costly of all natural disasters in the United States of America in my lifetime. This natural disaster disturbed the economic system of New Orleans, the labor markets around the U.S., and the individual businesses in New Orleans. The trending effect was a loss of 100,000 jobs in ten months and almost 2.9 billion in wages were lost (Effects of Hurricane Katrina, 2012). The storm helped to crush New Orleans and put a devastating effect on the economy of the U.S. Gas prices rose, product prices rose, and the tourism rate in New Orleans went to zero. The port was unable to open, the colleges were closed due to the devastation, and as I stated earlier tourism became null and void.
The hurricane brought social, economic, and morale parameters into play. New Orleans lost 95,000 jobs in the first ten month after the hurricane (Effects of Hurricane...