BIG EASY BUSINESS RETURNS

So read the banner at the Café du Monde, New Orleans’ iconic eatery in the French Quarter.

Other signs, proudly plastered above the doors of reopened businesses, beckoned to customers in the weeks and months following the Crescent City’s massive 2005 flooding.

Professor Nina Lam, Chair, Department of Environmental Studies* stands before a map of New Orleans. Photo credit: Kevin Duffy

The return of city commerce is a watershed, signaling the point at which a story of destruction becomes one of rebuilding. Seizing the chance to learn how businesses return and what drives decision-making after catastrophe, three Louisiana researchers embarked on a one-of-a-kind inquiry funded by the National Science Foundation’s Small Grants for Exploratory Research program.

The group includes Kelley Pace, director of the Real Estate Research Institute, GIS expert Nina Lam of the department of environmental studies, and Richard Campanella, assistant director, Center for Bioenvironmental Research at Tulane University.

“NSF realized this was really an historic opportunity to look at the major forces in play,” said Pace. “Usually in these cases, by the time you get geared up to collect data [the local businesses] have made so much progress you can’t see the recovery from the beginning.”

Professor Kelly Pace, Director of the Real Estate Research Institute. Photo credit: Jason Peak

Pace, Lam and Campanella launched their project just six weeks after the passing of Hurricane Katrina, as the first New Orleans neighborhoods began to re­populate.

The team’s research design was two-pronged: Pace and Lam, with support from the LSU Public Policy Research Lab, conducted telephone surveys of all business owners in Orleans Parish (over 9,100 listings), starting in December of 2005 and continuing at intervals through October of 2007. This provided a timely, first-hand perspective on the challenges of rebuilding New Orleans’ economy.

Respondents were asked first, “Are you open for business?” then questioned about major difficulties, which included insurance coverage, labor shortages, customer base, financing and construction. Business owners were then asked to estimate company prospects over the next six months; follow up surveys would compare responses and chart the process of business recovery as it happened.

Campanella, meanwhile, took to the streets. From the seat of his bicycle, he conducted weekly surveys of three major commercial corridors: Magazine Street, a high-end shopping district that remained dry; St. Claude Avenue, transecting the mostly poor, flooded neighborhood between the French Quarter and 9th Ward; and Carrolton Avenue, an eclectic business and residential area, flooded severely in parts.

Like the phone surveys, Campanella’s ground campaign canvassed all business types. Retail, wholesale and service outlets visible from the street were categorized by size, ownership status, clientele and other measures. Distinguishing between providers of basic services and luxury items (the “needs” versus the “wants”) would prove particularly important to the picture of overall recovery.

The researchers then overlaid the results of their repeated surveys, visual inspections and statistical analyses with spatial and environmental data (like street maps, flood levels and satellite imagery) to produce an unprecedented look at one city’s economic recovery.

Certain findings were unexpected: Locally owned, independent businesses returned sooner than large, cash-rich chain stores (73% versus 47% over the course of the study). Both phone and ground surveys reflected the trend.

Luxury providers, such as gourmet coffee shops, spas, jewelry stores and restaurants opened faster than those providing for basic needs, like grocers and drug stores. Magazine Street, which escaped flooding, benefited doubly as a locus of high-end shops and boutiques. Nearly all its businesses reopened within four months.

Other findings were less surprising. Heavily flooded business districts returned more slowly than others, with every foot of flood water diminishing the rate of reopening by roughly 10%. Poor areas also struggled, with the median income of surrounding neighborhoods proving crucial to business success: by late fall, 2006, only 53% of businesses in areas of below-average income had returned, while 97% of those serving areas of above-average income were back in business.

After its initial exploratory grant, the group recently received a three-year award from NSF’s Human and Social Dynamics program to support data analysis and develop models for business decision making amid uncertainty. Pace, Lam and Campanella have presented findings in various public hearings and in news features for both local and national media.

* The Editor regrets the misidentification of Professor Lam in the print edition of this issue. Although formerly the Richard J. Russell Professor in the Department of Geography and Anthropology, Dr. Lam is now a member of the faculty in environmental studies. The current R.J. Russell Professor is Patrick A. Hesp, Ph.D.

...from the Autumn 2007 Issue