THE FLOODING crisis may have a small silver lining for the economy in the longer term, according to a leading economist.
Prof Richard Tol of the Economic and Social Research Institute (ESRI) has said that while the flooding has caused widespread damage, there may be an unexpected fillip to the economy once the clean-up operation begins.
“Floods are bad but flood restoration can actually provide a stimulus to the economy,” said Dr Tol.
Some 1,500 people have been evacuated from homes due to flooding and the insurer Hibernian Aviva has estimated the damage to homes and businesses may exceed €250 million.
Dr Tol pointed out that he was not downplaying the impact the floods had on people who lost their homes and businesses, some of whom were not insured. However, he said that one of the unusual consequences of the restoration work, once it begins, is that it will provide an economic stimulus, generating local work and business in construction, engineering and in retail sales.
“What the water has done is it has destroyed many things. But once insurance is paid, there will be a lot of money coming into the country. Most of the funds will come not from Irish insurance companies but will be called in from international reinsurers. So it will be mostly coming from abroad, which is a stimulus.”
He said that consumption would increase in affected areas as restoration work began, providing a measurable boost. “As such there is a silver lining to the flood,” he added.
An Oireachtas committee has heard that over 400 urgent needs payments with a total value of over €125,000 had been made to people affected by floods by last Friday. Fine Gael TD Jim O’Keeffe said this was “just buttons” and called for a “better effort” to be made at national level to deal with the distress caused by flooding.
“The average value of a single house, even in these restricted times, is about €250,000. We are talking about half the value of an individual home being made available,” he said.
Minister of State for the Office of Public Works Martin Mansergh said he had always given priority to flood risk management and prevention, and would keep doing so.
“I can see myself having ongoing discussions with the Department of Finance ... to ensure that the effort is sustained because the needs are very, very great,” he said.
Brian O Raghallaigh, assistant secretary at the Department of Social and Family Affairs, told the committee claim forms for long-term costs were published on the website www.welfare.ie yesterday.
The Government’s humanitarian aid scheme would cover damage to owner-occupied homes and loss of essential items such as bedding, household appliances, furniture, flooring and carpets.
The cost of medical treatment and supplies, in cases where medical cover in the form of private health insurance or a medical card was not already in place, would also be covered.
Examples of losses that are not covered would be the loss of “inessential or luxury items” and damage to rented accommodation, which is the responsibility of the landlord.