After Hurricane Sandy, New York State’s Buyout and Acquisition Program Spurred Economic Recovery
A new paper finds that, following Hurricane Sandy, New York State’s NY Rising Buyout and Acquisition Program had its intended effect.
💡 What’s the story?
With an increasing number of properties at risk of major damage from natural disasters, acquisitions and buyouts—processes in which damaged properties are purchased by the government and razed or rebuilt to higher standards—offer strategies to improve resilience during disaster recovery. But despite growing interest, there has been little research on how these options affect communities.
A new paper by a team from Resources for the Future (RFF), the RFF-CMCC European Institute on Economics and the Environment (EIEE), and the Rochester Institute of Technology examines the economic impacts of buyouts and acquisitions. The researchers find that, following Hurricane Sandy, New York State’s NY Rising Buyout and Acquisition Program had its intended effect. The program increased property values and improved business performances and urban amenities in the neighborhoods where the buyouts and acquisitions occurred.
While both buyouts and acquisitions had positive impacts, acquisitions (buying damaged property and rebuilding to a higher standard) had a more pronounced economic benefit than buyouts (buying damaged property and converting it to open land).
🏠 How are buyouts and acquisitions similar and different?
Buyouts and acquisitions send different signals. Buyouts can create more natural barriers between infrastructure and the ocean, but can also have negative impacts on the local economy and tax base.
Acquisitions, on the other hand, help retain local housing stock and urban amenities. But they can also encourage people to live and develop in at-risk areas.
The paper found that, compared to buyouts, acquisitions
- have a more pronounced economic effect on damaged neighborhoods than buyouts;
- attract more wealthy households and induce more home improvement loans in the surrounding neighborhood than buyouts; and
- have more positive effects on the service industry, restaurants, and bars than buyouts (which still had positive effects).
But, both acquisitions and buyouts
- increase the number of mortgage applications in the broader neighborhood;
- attract mortgage applicants that have higher average income and a higher share of racial minorities than comparative neighborhoods that did not have properties participating in the program; and
- were effective at creating jobs and increasing the number of business establishments in affected areas.
“Overall, we found that the NY Rising program had positive economic effects in the neighborhoods surrounding properties that participated in the program. It shows that there are viable pathways that governments can take to help foster that recovery. But the program’s success also raises new questions about the long-term viability of acquisitions, as they foster new growth in at-risk areas.”
—Yanjun (Penny) Liao, RFF Fellow
🌊 What does this mean for New York State’s disaster resilience?
The paper found that the positive effects from buyouts on a neighborhood’s economic condition decayed over time. But the effects of acquisitions persisted and even strengthened over time; the authors suggest that this is because the acquisition and rebuilding efforts motivated nearby property owners to also make improvements.
However, despite these benefits, it is unclear whether acquisitions save public money in the long term. Acquisitions help maintain the housing stock in at-risk areas, and potentially place more assets in harm’s way as wealthier households move in and businesses stay in place. More research will be needed to better understand the long-term impacts of these policy options.
📚 Where can I learn more?
To learn more about the results and methodology, read the paper, “Managed Retreat and Flood Recovery: The Local Economic Impacts of a Buyout and Acquisition Program,” by Wei Guo (EIEE), Yanjun (Penny) Liao (RFF), and Qing Miao (Rochester Institute of Technology).
To learn more about the findings and their implications, read a Q&A with Liao in Common Resources.
Resources for the Future (RFF) is an independent, nonprofit research institution in Washington, DC. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy.
Unless otherwise stated, the views expressed here are those of the individual authors and may differ from those of other RFF experts, its officers, or its directors. RFF does not take positions on specific legislative proposals.
Working Paper — Dec 15, 2023
Managed Retreat and Flood Recovery: The Local Economic Impacts of a Buyout and Acquisition Program
This working paper evaluates the property- and neighborhood-level impacts of a buyout and acquisition program in New York State following Hurricane Sandy.
Common Resources — Dec 15, 2023
Boosting Recovery and Resilience in New York State after Hurricane Sandy
A program in New York State aimed to help areas impacted by Hurricane Sandy recover and become resilient against future disasters—and yielded local economic benefits.
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