Home>Resources>Recovery Capitals (ReCap) Guide>ReCap: Financial Capital

This page is part of the Guide to Disaster Recovery Capitals. The seven recovery capitals are deeply interrelated – click through to explore them all.

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Financial Capital Light Blue Line

Financial strain and assistance

WHAT WE KNOW

Financial strain after disasters may contribute to reduced wellbeing and mental health(3–5) and increased risk of experiencing violence for women(6,7).

It can also create disputes over funding allocation leading to community conflict(8). Financial assistance from governments, charities and insurance is often helpful and necessary for people and communities to recover, yet it is not always accessible, timely and adequate(9,10).

For example, application processes often fail to accommodate for people with disabilities, who may have urgent support needs(11). Funding opportunities often come with timing and reporting requirements for accountability purposes, yet these are often difficult for community groups to meet, which can impede community-led recovery efforts(10).

CONSIDER

  • Recovery is a long and difficult process with various needs emerging along the way, so funds need to be released at different stages over time. While there is a need for accountability in allocation of funds, it is important that processes for accessing financial assistance are as simple as possible.
  • What assistance should be put in place to help people and organisations in accessing funds?  What support can be provided until these funds come through?
Financial Capital Light Blue Line

Inequities worsening

WHAT WE KNOW

What people, communities and countries had before a disaster tends to shape what they can access afterwards(12–16). Income gaps often widen after disasters(16).

CONSIDER

  • What training do staff need to help them identify the ways in which inequities exist in communities and how they can be addressed?
  • Critique proposed recovery strategies for issues of equity and unintended consequences for different groups within the community before proceeding (from multiple perspectives e.g. community, recovery experts, social justice).
Financial Capital Light Blue Line

External ties

WHAT WE KNOW

Significant financial resources for recovery come from outside affected communities, flowing through social and political ties(17). This means that  financial capital at the regional or national level influences the amount of money that can flow to people and communities to support recovery.

CONSIDER

  • Explore connections that community members may have with external decision-makers and networks that could be helpful in bringing additional financial resources into the community – but be aware that well-connected groups may benefit at the expense of others.
Financial Capital Light Blue Line

Equitable funding

WHAT WE KNOW

Distribution of funds following disasters can be inequitable(16,18), and perceived inequities can contribute to a negative social environment(8,12). People most likely to lose income include part-time and casual workers and women(73)(16,19).

CONSIDER

  • Provide clear information to communities about the basis for decisions about recovery funding.
  • Recovery funding and economic initiatives should focus on those that are likely to lose income and on heavily impacted businesses and sectors. How can the impact be mitigated? Can people be supported to transfer their skills or retrain for roles in another sector?
  • Funds for land management and restoration should include eligibility for Indigenous peoples’ social, cultural and political interests in Country, as well as farming and business interests.
Financial Capital Light Blue Line

Businesses

WHAT WE KNOW

Businesses can be heavily impacted by disasters(20,21), particularly when multiple events cascade(22). This can lead to financial strain, loss of employment and training opportunities, relocation and reduced community cohesion(20,23). Business impact and recovery is linked to the size, capacities and sector of the business(20,21,24,25).

CONSIDER

  • Identify businesses that are threatened and may need support to recover. What role do they play within the community, and how can these community benefits be sustained?
Financial Capital Light Blue Line

Insurance and investments

WHAT WE KNOW

Financial investments prior to disasters, such as insurance, can play a key role in the recovery of households, businesses and communities(26,27). However, access to these investments is inequitable(28,29), and non-insurance or underinsurance are major problems that can hinder recovery(30).

CONSIDER

  • What assistance is available for those that are not insured or are underinsured?

References

  1. Stofferahn CW. Community capitals and disaster recovery: Northwood ND recovers from an EF 4 tornado. Community Development. 2012;43(5):581–98.
  2. Jacobs C. Measuring success in communities: The community capitals framework. 2011;
  3. Forbes D, Alkemade N, Waters E, Gibbs L, Gallagher HC, Pattison P, et al. Anger and major life stressors as predictors of psychological outcomes following the Victorian Black Saturday bushfires. Australian and New Zealand Journal of Psychiatry. 2015;DOI: 10.11.
  4. Morgan J, Begg A, Beaven S, Schluter P, Jamieson K, Johal S, et al. Monitoring wellbeing during recovery from the 2010–2011 Canterbury earthquakes: The CERA wellbeing survey. International Journal of Disaster Risk Reduction. 2015 Dec 1;14:96–103.
  5. King A, Middleton D, Brown C, Johnston D, Johal S. Insurance: Its role in recovery from the 2010-2011 Canterbury Earthquake sequence. Earthquake Spectra. 2014 Feb;30(1):475–91.
  6. Molyneaux R, Gibbs L, Bryant R, Humphreys C, Hegarty K, Kellett C, et al. Interpersonal violence and mental health outcomes following disaster. BJPsych Open. 2020;6(1).
  7. Parkinson D. Investigating the Increase in Domestic Violence Post Disaster: An Australian Case Study. Journal of Interpersonal Violence. 2019 Jun 1;34(11):2333–62.
  8. Gibbs L, Gallagher HC, Block K, Snowdon E, Bryant R, Harms L, et al. Post-bushfire relocation decision-making and personal wellbeing: A case study from Victoria, Australia. In: Adenrele Awotona, editor. Planning for Community-based Disaster Resilience Worldwide: Learning from Case Studies in Six Continents. London and New York: Routledge; 2016. p. 333–56.
  9. Van Kessel, G., Gibbs, L., & MacDougall C. Strategies to enhance resilience post-natural disaster: a qualitative study of experiences with Australian floods and fires. Journal of Public Health. 2014;37(2):328–36.
  10. Dibley G, Mitchell L, Ireton G, Gordon R. Government’s role in supporting community-led approaches to recovery. 2019.
  11. Stough LM, Sharp AN, Resch JA, Decker C, Wilker N. Barriers to the long‐term recovery of individuals with disabilities following a disaster. Disasters. 2016;40(3):387–410.
  12. Himes-Cornell A, Ormond C, Hoelting K, Ban NC, Zachary Koehn J, Allison EH, et al. Factors Affecting Disaster Preparedness, Response, and Recovery Using the Community Capitals Framework. Coastal Management. 2018 Sep 3;46(5):335–58.
  13. Tierney K. The social roots of risk: Producing disasters, promoting resilience. Stanford University Press; 2014.
  14. Thomas DSK, Phillips BD, Lovekamp WE, Fothergill A. Social vulnerability to disasters. CRC Press; 2013.
  15. Morrow BH. Identifying and mapping community vulnerability. Disasters. 1999;23(1):1–18.
  16. Ulubaşoğlu M. Natural disasters increase inequality. Recovery funding may make things worse. The Conversation. 2020 Feb 27;
  17. Aldrich DP. Building resilience: Social capital in post-disaster recovery. Chicago: University of Chicago Press; 2012. 232 p.
  18. Williamson B, Markham F, Weir J. Aboriginal peoples and the response to the 2019–2020 bushfires, Working Paper No. 134/2020. Centre for Aboriginal Economic Policy Research, Australian National University, Canberra; 2020.
  19. Richardson D, Denniss R. Gender experiences during the COVID-19 lockdown. The Australia Institute. 2020;
  20. Tierney KJ. Businesses and disasters: Vulnerability, impacts, and recovery. In: Handbook of disaster research. Springer; 2007. p. 275–96.
  21. Ulubaşoğlu MA, Rahman MH, Önder YK, Chen Y, Rajabifard A. Floods, Bushfires and Sectoral Economic Output in Australia, 1978–2014. Economic Record. 2019 Mar 15;95(308):58–80.
  22. Whittaker J, Handmer J, Mercer D. Vulnerability to bushfires in rural Australia: A case study from East Gippsland, Victoria. Journal of Rural Studies. 2012;28(2):161–73.
  23. Xiao Y, Wu K, Finn D, Chandrasekhar D. Community businesses as social units in post-disaster recovery. Journal of Planning Education and Research. 2018;0739456X18804328.
  24. Brown C, Stevenson J, Giovinazzi S, Seville E, Vargo J. Factors influencing impacts on and recovery trends of organisations: evidence from the 2010/2011 Canterbury earthquakes. International Journal of Disaster Risk Reduction. 2015;14:56–72.
  25. Seville E, Stevenson JR, Brown CO, Giovinazzi S, Vargo J. Disruption and resilience: How organisations coped with the Canterbury earthquakes. GNS Science; 2014.
  26. de Vet E, Eriksen C, Booth K, French S. An unmitigated disaster: shifting from response and recovery to mitigation for an insurable future. International Journal of Disaster Risk Science. 2019;10(2):179–92.
  27. Kousky C. The Role of Natural Disaster Insurance in Recovery and Risk Reduction. Annu Rev Resour Econ. 2019 Oct 4;11(1):399–418.
  28. Banks M, Bowman D. Juggling risks: insurance in households struggling with financial insecurity. Brotherhood of St Laurence; 2017.
  29. Blake D, Marlowe J, Johnston D. Get prepared: Discourse for the privileged? International Journal of Disaster Risk Reduction. 2017 Oct 1;25:283–8.

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Artwork on this page by Oslo Davis and Frances Belle Parker.

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