Economic Resilience

It is becoming increasingly apparent that regional economic prosperity is linked to an area’s ability to prevent, withstand, and quickly recover from major disruptions (i.e., ‘shocks’) to its economic base.  Many definitions of economic resilience limit its focus on the ability to quickly recover from a disruption.  However, in the context of economic development, economic resilience aims to better prepare regions to anticipate, withstand, and bounce back from any type of shock, disruption, or stress it may experience.  Establishing economic resilience in a local or regional economy requires the ability to anticipate risk, evaluate how that risk can impact key economic assets, and build a responsive capacity.  Often, the shocks/disruptions to the economic base of an area or region are manifested in three ways:

• Downturns or other significant events in the national or international economy which impact demand for locally produced goods and consumer spending;
• Downturns in particular industries that constitute a critical component of the region’s economic activity; and/or
• Other external shocks (a natural or man-made disaster, closure of a military base, exit of a major employer, the impacts of climate change, etc.).

At the regional or community level, economic development practitioners are instrumental in building the capacity for economic resilience. Economic development professionals and organizations often become the focal point for post-incident coordination, information dissemination, responding to external inquiries, and the lead grant administrator for federally-funded recovery initiatives.

In building economic resilience, it is critical that economic development organizations consider their role in the pre- and post-incident environment to include steady-state and responsive initiatives.

Steady-state initiatives tend to be long-term efforts that seek to bolster the community or region’s ability to withstand or avoid a shock.  Responsive initiatives can include establishing capabilities for the economic development organization to be responsive to the region’s recovery needs following an incident.

Examples of steady-state economic resilience initiatives include:

• Engaging in comprehensive planning efforts that involve extensive involvement from the community to define and implement a collective vision for resilience that includes the integration and/or alignment of other planning efforts (e.g., hazard mitigation plans) and funding sources;
• Undertaking efforts to broaden the industrial base with diversification initiatives, such as targeting the development of emerging clusters or industries that (a) build on the region’s unique assets and competitive strengths; and (b) provide stability during downturns that disproportionately impact any single cluster or industry;
• Adapting business retention and expansion programs (e.g., economic gardening or other enterprise supports) to assist firms with economic recovery post-disruption;
• Building a resilient workforce that can better shift between jobs or industries when their core employment is threatened through job-driven skills strategies and support organizations;
• Maintaining geographic information systems (GIS) that link with municipal business licenses, tax information, and other business establishment data bases to track local and regional “churn” and available development sites. GIS can also be integrated with hazard information to make rapid post-incident impact assessments;
• Ensuring redundancy in telecommunications and broadband networks to protect commerce and public safety in the event of natural or manmade disasters;
• Promoting business continuity and preparedness (i.e., ensuring businesses understand their vulnerabilities—including supply chains—in the face of disruptions and are prepared to take actions to resume operations after an event); and
• Employing safe development practices in business districts and surrounding communities.  Strategies may include locating structures outside of floodplains, preserving natural lands that act as buffers from storms, and protecting downtowns and other existing development from the impacts of extreme weather.

Some examples of responsive economic resilience initiatives include:

• Conducting pre-disaster recovery planning to define key stakeholders, roles, responsibilities, and key actions;
• Establishing a process for regular communication, monitoring, and updating of business community needs and issues (which can then be used after an incident) ;
• Establishing/using a capability to rapidly contact key local, regional, state, and federal officials to communicate business sector needs and coordinate impact assessment efforts; and
• Establishing/using coordination mechanisms and leadership succession plans for short, intermediate, and long-term recovery needs.

The CEDS provides a critical mechanism to help identify regional vulnerabilities and prevent and/or respond to economic disruptions. Therefore, embracing economic resilience must be a key component of the CEDS document.

Integrating resilience into the CEDS should be undertaken as part of a two-pronged approach:

1. Planning for and implementing resilience through specific goals or actions to bolster the long-term economic durability of the region (steady-state), and
2. Establishing information networks among the various stakeholders in the region to encourage active and regular communications between the public, private, education, and non-profit sectors to collaborate on existing and potential future challenges (responsive).

Planning for and Implementing Resilience

All communities, whether those in locations likely to experience significant natural disasters or those dealing with immediate or pending economic shifts, must be able to recognize their vulnerabilities.  They should then develop goals, strategies, and actions that can mitigate the effects of an economic incident and support long-term recovery efforts.   While there is no universal blueprint for building regional economic resilience, the following items may help in establishing a general framework or identifying specific activities/projects:

• Identify persistent economic challenges or deficiencies:  What are the region’s economic “weak spots” (i.e., vulnerabilities)? Is there a specific asset deficiency (e.g., poorly educated workforce, excessive dependency on a single employer or industry, lack of transportation access/options, low levels of broadband availability and/or adoption, impediments hindering a firm's ability to gain access to the financial resources required to advance its business, major employers located in vulnerable areas)?  Has a “planning horizon” been established (e.g., 10 to 15 years) for assessing economic vulnerabilities?
• Prepare for disruptions by identifying “early-warning” tools:  Does the region have an “anticipatory focus” that will help it react quickly when confronted with potential disruptions and challenges?  Do community economic development professionals work with their local/regional emergency managers to address the risks identified through hazard mitigation planning?  Do community leaders employ mechanisms (e.g., scorecards, state of the region reports, economic dashboards) that offer a regularly updated assessment of the regional economy?
• Build mechanisms that create flexibility: Do the local governments have detailed and tested disaster response and recovery plans?  Do the local governments and major employers have access to “surge” capital/credit resources?  Does the region have a good handle on its assets to help identify emerging economic sectors that may lead to a diversified economic base? Has the region established mechanisms to realign and retrain its workforce post-disruption?
• Promote a positive vision for the region: Is the messaging about the region’s assets and opportunities positive (to encourage investments in both times of tranquility and disruption)? Do stakeholders understand that actions that build resilience are good for the regional economy whether or not an economic shock occurs, and have they reached consensus on a set of actions they can take proactively? Are economic shocks used as an opportunity to “re-vision” (i.e., reassess) the region’s economy?

Regardless of the specific steady-state approaches considered or undertaken, the CEDS, at a minimum, should include an identification of the region’s key vulnerabilities and resilience-building goals, measureable objectives, and/or projects in the action plan.

Establishing Information Networks

In addition to identifying regional vulnerabilities and specific actions to address them, the region should establish mechanisms to facilitate active and regular communication between the relevant sectors to collaborate on common challenges.  The economic development organization should be prepared to serve as a responsive participant in economic recovery efforts.  The region should also be prepared to serve as an information hub by collecting data and convening the appropriate players to facilitate recovery post-disruption.  The effectiveness of a region’s response to a major economic disruption is often enhanced if the public, private, education, and nonprofit sectors are aware of each other’s roles and responsibilities – particularly as they pertain to recovering from economic shocks.  Established communication networks and information collection protocols coupled with broadly understood knowledge of key elements (such as supply-chain relationships) can help speed a region’s response. Once the networks are established, participants can be called upon in times of crisis to provide services and support in the case of a disruption.

More experienced economic development organizations will find opportunities to enhance and expand their business retention and expansion programs as a vehicle to mobilize action and facilitate information sharing.  Other networking examples include the establishment of Business Emergency Operation Centers (BEOC) or Business Recovery One-Stop Centers.  Among other actions, BEOCs  serve as a hub of business-to-business collaboration and communication to connect private sector organizations with each other and with emergency response and recovery efforts while interfacing with local and federal emergency operations centers to ensure assistance and resources are being directed to businesses in need.

Regardless of the specific responsive approaches considered or undertaken, the CEDS, at a minimum, should demonstrate how the region serves as both a source for information to deal with an economic challenge and as a convener of regional stakeholders to gather data and encourage collaboration post-disruption.

A note on structure:  The two-pronged approach to resilience noted above can be included in the CEDS as a separate section. However, resilience could also be addressed by weaving the concept throughout the document (e.g., identifying a region’s vulnerabilities in the SWOT section, then developing specific goals or action items to counter those vulnerabilities in the strategic direction/action plan, followed by an exploration of ways to measure success in the evaluation framework).  Regardless of how resilience is included in the CEDS, it is critical for regions to identify vulnerabilities and, where possible, bolster the capacities that may lead to economic resilience as part of regional planning efforts.

Pre-Disaster Recovery Planning

It should be noted that a number of regions, particularly those that are prone to natural disasters, have engaged in resilience planning by focusing on the development of disaster recovery strategies.  Developing and implementing a strategy for disaster recovery is often a good first step in establishing resilient regions.  Specifically, certain regions have integrated economic development strategies, sustainability principles and hazard mitigation planning to ensure such activities are undertaken in a complimentary fashion.  Examples of the benefits from this “cross-pollination” planning include promoting local procurement and hiring, the pre-prioritization of the resumption of major employers, and the siting of new commercial and industrial development in locations that are out of harm’s way.

In addition to providing a vehicle to approach resilience in a comprehensive fashion, a CEDS can often fill an important role in ensuring that disaster mitigation efforts are well-coordinated across municipal and county-lines to shape stronger, more resilient regions.  Regardless of focus (i.e., broader economic resilience or a more directed look at disaster recovery planning), the CEDS should still include the two primary elements:  1) “steady-state” initiatives that seek to bolster the community or region’s long-term ability to withstand or avoid a shock and, 2) “responsive” initiatives that establish and utilize capabilities for an economic development organization to be responsive to the region’s recovery needs post-disruption.

Climate Resilience

Over the past few decades, there has been an increase in the frequency and severity of climate and weather disruptions that are associated with climate change.  Climate change threatens the well-being of businesses, supply chains, economic infrastructure, and other community assets – and the private sector is increasingly interested in investing in areas that have attempted to become more resilient to these climate events and shifts. By planning for and becoming more resilient to climate change, communities and regions can protect their investments while also taking advantage of new economic development opportunities driven by environmental sustainability. 

Climate resilience is the ability to anticipate, prepare for, and respond to hazardous events, trends, or disturbances related to the climate [1]. Improving climate resilience involves assessing how climate change will increase risks, and/or create new risks, and taking steps to better cope with these risks. It includes mitigation strategies that tackle the causes of climate change and reduce or eliminate risks to people and property from these hazards.  It also includes adaptation techniques that help people and built/natural systems to adjust to the new conditions to reduce risks to valued assets. Because the impacts of climate change are by nature regional, the CEDS provides a distinctive platform to help address climate hazards as part of regional economic development planning.  As with economic resilience in general, there is no “one-size-fits-all” approach to incorporating climate resilience into the CEDS. Addressing climate resilience requires an iterative process of: 1) assessing risks and vulnerabilities, 2) prioritizing identified actions, and 3) investigating options to implement.

In addition, EDA supports projects that address climate mitigation strategies, which are strategies to help tackle the causes of climate change (e.g., clean energy).

Assessing Risks and Vulnerabilities

A region’s climate change risk is a function of the climate-related hazards it will face and its potential vulnerabilities (e.g., financial losses) from such hazards. Therefore, the first step in building climate resilience is to explore the potential climate-related hazards for the region and determine which regional economic assets (potentially identified in the SWOT) may be exposed to those hazards.  Considering the sensitivity and adaptive capacity of these assets can reveal if they are truly vulnerable.  The below questions will help a region assess its vulnerabilities to climate change hazards: 

• What are the dominant stresses and existing vulnerabilities facing the region, independent of future potential climate change risks?  What natural hazards (extreme heat, wildfires, drought, sea level rise, inland flooding, etc.) are currently confronting the region (or have confronted the region in the past)?  What natural hazards are projected to threaten the region in the future?  What socio-economic factors, including where vulnerable groups reside and how such neighborhoods have fared in past weather extremes and disasters, come into play?  What are the primary economic sectors and commercial centers whose losses or inoperability would have severe impacts on the community and the ability to recover from a disaster?
• How might changes in the climate increase these stresses?  What natural hazards may become more frequent or increase in severity due to climate change? How might these future hazards affect local businesses, industrial facilities, business centers, workers, and the community as a whole?  
• What are the vulnerabilities of the built environment?  What are the locations of population and business centers (including their proximity to potential hazards)? What are the life expectancies of critical infrastructure, hazardous land-uses, transportation and communication networks, etc.? Are the communities building codes sufficient?
• How may infrastructure, including water, sewer, telecommunications/broadband, energy distribution systems, and transportation systems be affected by more severe weather patterns and projected climate change effects?  What and where are the key infrastructure assets in the region?  How would the construction standards, age and capacity of these assets stand up to climate hazards such as prolonged or severe rain, wind or storm events?  Are there back-up or redundant systems or alternative power generation opportunities?
• How may the workforce be affected by the effects of climate change? How will climate shifts that impact the local and regional labor market be anticipated?  Is the workforce sufficiently adaptable to endure potentially large shifts? Does the training infrastructure exist to assist workers?  To what extent can we maintain current workforce industry allocations, while focusing on resilience and adaptation, as opposed to large sectoral shifts?
• What assets currently exist that may increase resiliency?  What natural and other resources exist in the region that could help mitigate or reduce the impact of climate change hazards?  How can the region take advantage of these assets and the growth in cleaner industries?  How can the region help buffer the effect of economic transitions or changes to the workforce caused by climate change? How can climate change considerations be integrated into economic development, capital improvement, or infrastructure decisions?

Regions will want to increase their familiarity with projected climate hazards by securing up-to-date, localized information from expert sources (including from tools such as the Climate Explorer (https://crt-climate-explorer.nemac.org) or the Climate Mapping for Resilience and Adaptation portal and assessment tool (https://resilience.climate.gov/), and, where applicable, potentially mapping the hazards and threats in the region.  While current disaster information is informative, projected data are also important as threats will likely intensify over the next few decades.

Identifying and Prioritizing Actions

Once the risk to specific assets has been characterized, groups can begin examining potential solutions which could reduce risk.  The goal is to think broadly to develop a range of potential efforts that could reduce specific risks. In identifying actions to mitigate climate risks, it is important to consider many factors, such as: network effects (how vulnerable is a large area to an outage of a particular utility [e.g., electricity]), population vulnerability (traditionally disadvantaged, persistently impoverished populations), and scalability (scaling climate resilience from one area to wider reaching effects).  It is also important to think about past events when developing potential actions. Factors of consideration and a review of past hazard-related events can and should be informed by individuals or groups with direct knowledge of particular vulnerabilities or important aspects of the community. Key stakeholders to consult may include:

• Representatives from all potentially affected industries (e.g., recreation/tourism; marine and boating; fishing/agriculture; small businesses; grassroots organizations)
• Emergency managers and disaster mitigation planners
• Experts in natural resource management (e.g., flood plain managers; forestry experts; drought experts; land-use planners)
• Utility representatives (e.g., energy and water utilities; communications)
• Infrastructure professionals (e.g., transportation; broadband)
• Financial interests (e.g., insurance sector; climate financing or green bond experts; banking)
• Vulnerable groups and those hard-hit by disasters and climate changes (e.g., non-english speaking residents; uninsured businesses; disadvantaged or underserved communities)
• Civic organizations
• Local government entities
• Labor organizations
• Academia and other institutes of higher education
• Local philanthropic organizations

In addition, strongly consider investigating how other communities and regions have addressed climate resilience as part of their regional planning efforts. NADO’s CEDS Central site (https://www.cedscentral.com/resilience.html) and StatsAmerica’s CEDS Resource Library (https://www.statsamerica.org/ceds/Default.aspx) may provide thought-provoking examples of the actions other regions are taking to bolster climate resilience.

With a deeper understanding of threats and vulnerabilities, as informed by preemptive planning and consultation with key stakeholders and other communities, regions can recognize their vulnerabilities and risks and make plans to address them. 

Additional factors to consider in identifying actions may include:

Industry/Business - Climate change will lead to substantial economic and business shifts. Changes may be like those that occurred as a result of the COVID-19 pandemic that highlighted how international supply chains, health issues and workforce shortages can affect local economic development.  Climate change will affect natural resource dependent industries, such as: commercial fishing and aquaculture (mariculture); small- and large-scale agriculture; tourism and outdoor recreation, etc.

Sea level rise will affect the functionality and location of ports and businesses along the coast.  Convening discussions with specific industry and labor sectors and businesses to understand how natural hazards may impact operations, how climate change may exacerbate these stresses, and how communities can support businesses in responding to these risks is critical. Additionally, what economic dependencies (e.g., supply chains) exist between inland cities (e.g., Las Vegas) and coastal port cities (e.g., San Diego) that could be impacted or disrupted by extreme events?  Similarly, regions may want to consider how to encourage investment and create jobs in climate resilient and new green industries, such as renewable energy, green infrastructure and flood resilience technologies, carbon sequestration and the like. 

Infrastructure - Electrical power, drinking water, wastewater, and communication system outages are becoming increasingly common in certain parts of the country following severe disasters.  Regions will want to inventory their infrastructure, utilities, buildings, transportation systems, and other economic development assets to determine how they will stand up to extreme events.  Developing a climate resilience inventory of infrastructure may help to inform where to locate new businesses, workforce training centers, business districts, and infrastructure based on current and future risk to ensure long-term safety.  Overlaying climate change data with land-use plans will be helpful for planning purposes. Consider more resilient land-use patterns and resilient building techniques for new and existing buildings (e.g., elevation requirements, updating building codes, green building techniques, wildfire resistant landscaping, etc.).  

Workforce/People - Consider how climate change effects, as well as adaptation and mitigation efforts, may adversely impact existing jobs and consider ways to help workers make this transition.   Such impacts may be felt more severely by disadvantaged communities and minority businesses.  Evaluating the economic development potential of climate resilience activities, including private investment and job creation, can help regions identify new job and economic development opportunities.  Moreover, repeat disasters and climate change can lead to mental health issues, anxiety and even trauma.  Regions and communities may want to consider ways to support the total well-being of residents and employees when planning for climate resilience.

After characterizing risk and understanding the relationships among the assets involved, it is important to identify an optimal sequence for addressing potential losses.  The prioritization of specific actions should be based on the severity of risk associated with the exposed economic assets.  While identifying specific actions to address all asset vulnerabilities may be the intent, it may be more practical/feasible to focus on those actions that will help build the resilience of the most important assets. Consider prioritizing actions by comparing the cost to implement the effort to the expected value of the benefit it will provide. If the total value of reduced risk to the asset through heightened resilience is expected to result in equal or better value than the cost of implementing the project, then that may be a project to prioritize.  The social benefits of a project in the cost-benefit analysis are also important to consider.  Though they can be difficult to quantify, projects which build equity and community can be as important as those that have positive, predominantly financial effects.  Consider hiring risk management consultants to assist with this cost-benefit process if needed.  Once complete, this set of prioritized actions may find its way into the CEDS as either a measurable goal or objective or a key project in the action plan.

Investigating Options to Implement

With climate risks/hazards identified and priorities set, the next step is initiating implementation of the identified actions.  In order for these efforts to come to fruition, a range of public and private funding and financing must be investigated and secured.  There are many sources of funding available for climate resilience planning and implementation, as well as many types of funding/financing options (climate or green bond programs, infrastructure/green/resilience grants, planning grants, etc.), and it is important to understand the particular advantages and challenges posed by each of these financial instruments before securing funding. It may also be helpful to consider hiring specific staff resources (e.g., climate resilience coordinators) to help drive the planning and implementation of this issue.

Framing the Issue

Climate risks and hazards can have various impacts on economic development planning that may impact stakeholders and various interests differently. To reach all relevant audiences, consider elevating intersecting priorities for stakeholders that demonstrate the links between the benefits, and co-benefits, of building climate resilience and the stakeholders’ economic development priorities. This will aid in framing the issue in a way which is accessible to the widest possible stakeholder group. For example, consider highlighting the links between climate resilience and public safety (e.g., “safe infrastructure is required to effectively protect everyone in the community.”), as a regional differentiator (e.g., “businesses want to start and grow in places that are better prepared to deal with climate hazards.”), or as a good business practice (e.g., “climate-related enhancements may improve the value of the land beneath them and lead to increased property tax revenues.”).  Demonstrating the links between climate resilience and other issues, while focusing on shared values and expectations, can lead to a wider degree of buy-in from the community at large, and foster increased understanding around the importance of integrating climate resilience into economic development planning. 

Measuring Resilience

Measuring the economic resilience of a community or region, including the actions taken to foster resilience, will vary depending on the assets and vulnerabilities of each region. Two common measures are the degree of regional income equality (i.e., how evenly income is distributed across a regional population) and the degree of regional economic diversification (i.e., degree to which economic activity is spread across sectors).  Regardless of the specific types of data collected and measures used, it may be helpful to benchmark data collected against national averages to help identify trends and better inform the development of key strategies.