Saving for Natural Disasters: Evidence From Pennsylvania Local Governments

Abstract

For all governments—federal, state, or local—natural disasters impose significant costs. Among the three, local governments typically respond first using their own resources. Thus, a proactive fiscal mechanism providing resources for initiating disaster response (e.g., emergency debris removal, medical services, rescue) appears necessary, especially for governments vulnerable to disasters. This study explores the role of natural disasters on fiscal savings strategy using data collected by Pennsylvania municipal executives via our Pandemic Management Survey. Following our findings, Pennsylvania local governments appear to weigh both their experiences and preparedness level to face a disaster. While more disaster experiences motivated fiscal savings accumulation, lower savings were retained among prepared governments. As such, disaster learning and adaptation not only could limit loss of life and property, but also lead to an efficient fiscal savings strategy.