The Economic Impact Of Auckland’s Flooding

Human impact aside, I would like to use this short article to consider the economic impact of the recent catastrophy of Aucklands malicious weather event.

It seems clear to me that the recent flooding will put yet more pressure on the construction industry as labour will be needed to repair damaged buildings. This will push up prices for labour and materials in the sector.

With people unable to travel to work or even able to work in flooded streets and buildings, I expect this to negatively affect the supply of goods and services. This inflationary pressure will be countered by lack of demand for goods and services due to lack of foot traffic and projects being postponed. I don’t know which of these aspects will affect price most significantly, but the only thing that a supply and demand diagram can tell us for sure is that quantity bought/sold will decrease, which you would have to assume would be bad for the economy, reducing company profits in Auckland and ancillary providers to the city.

Finally, the 400+ yellow/red stickered buildings will possibly create additional demand for housing. While I don’t expect this to have an impact of any significance, it may help abate the falling house prices in a minor way in the country’s most populous city.

In summary, I think the only thing we can predict with any surety is that it will be harder to find construction related labour and materials, and these resources will be more expensive.

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