Welcome to the seventh edition of McKinsey’s US State & Local Government newsletter. This edition focuses on disaster recovery – specifically, how state and local governments can increase their resilience before and after natural disasters.

Weather and climate disasters are becoming more frequent, wide-ranging, severe, and costly. While consequences for life and health are always at the forefront, one way to measure disaster impact is through estimates of economic impacts. The National Oceanic and Atmospheric Administration (NOAA) estimates that from 2019 to 2023, the US experienced more than 100 $1 billion disasters, with total costs in excess of $0.5 trillion. The number of states experiencing $1 billion disasters has also steadily risen year over year since 2000.

Given current trends, state and local government leaders are seeking ways to help their communities recover and rebuild effectively in the wake of disaster, restoring not only infrastructure and homes but also economic competitiveness and social well-being.

To help inform state and local recovery planning efforts, McKinsey partnered with the Belfer Center at Harvard’s Kennedy School to examine quantitative and anecdotal evidence from US communities that have demonstrated robust resilience in the face of disasters—what we termed leading recoveries—as well as for communities that experienced lower resilience where we saw lagging recoveries.

The team identified four key strategies associated with ‘leading recoveries’:

1. Focus on resilience for growth - Conducting pre-disaster resilience assessments with an eye toward future growth and economic competitiveness—rather than simply as a prerequisite for public funding—could prove foundational to future recovery when disaster hits. In planning, local leaders could consider which high-growth industries to prioritize, how to mitigate hazards to these industries, and which sectors could likely spur economic growth in the aftermath of disaster.
2. Planning ahead for fast, flexible recovery funding - A well-structured financial strategy that includes various funding sources could ensure access to funds that help in the immediate aftermath of a disaster and support long-term recovery and economic growth.
3. Building a rapid response roadmap - Pre-disaster recovery planning, including prioritizing where and how to deploy resources to ensure specific areas of vulnerability are supported, appeared in this analysis to influence recovery trajectory.
4. Identifying and addressing inequity - Ensuring that recovery initiatives are accessible and beneficial to all community members, regardless of socioeconomic status, can help avoid exacerbating inequity following a disaster and foster a more inclusive and resilient society.

You can read more about the leading and lagging recoveries and disaster resilience in the full report, “Bounce Back Better: Four Keys to Disaster Resilience in U.S. Communities.”

Please contact us with topics you would like us to cover, other feedback or questions.

Thank you for your service,
David Nuzum and Jess Kahn from McKinsey’s US State & Local Government Practice

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