Most decisions have an opportunity cost. In the case of former New Orleans residents, the decision to return nine months after hurricanes Katrina and Rita destroyed more than 200,000 homes and much of the city is a difficult and complicated one. We use two theories to approach repopulation: 1) a cost-benefit analysis: and 2) the “herding” effect—people following family and friends with the same nostalgia to get back home.

With any natural disaster, the degree of damage to homes and the ability for state and local governments to aid in rebuilding is a major driver in repopulation rates. Three factors have slowed this effort in Louisiana: the process of demolishing homes, the delayed Federal Emergency Management Agency (FEMA) flood maps, and mortgage financing from the government. The anxiously awaited FEMA maps, released in early April, determined whether a home needs to be elevated—a major factor in construction costs. Government financing, on the other hand, is still running in stages. So far, the state has received $6.2 billion in aid, and an additional $4.2 billion is still in the queue to be approved by Congress. This money is factored into Louisiana's “The Road Home” plan, which will reimburse homeowners up to $150,000 if they qualify.

Where Have They Gone and How Has the Demographic Landscape Changed? Residents who fled the state beginning in September are still dispersed across the United States; Texas and Georgia are estimated to have the highest concentration of evacuees. The Census Bureau's newly released demographic characteristics paint a different picture of New Orleans post-Katrina (September-December 2005). During the survey period, whites made up an even greater percentage of the population than before, while the percentage of blacks had decreased. The percentage of Hispanics also rose slightly, possibly due to the demand for low-wage workers to aid in the cleanup. The housing picture also changed: owner-occupancy increased, while renter occupancy decreased. Not surprisingly, since renters are at the mercy of their landlord, and while the government has encouraged homeowners to return, public housing projects are still undergoing cleanup, delaying some residents who had previously rented and want to return.

A greater percentage of those enrolled in school (aged 3 years and over) left New Orleans, as compared to those aged 25 years and over who left. This suggests that for families with children in the K-12 grades who settled out of state, timing is critical. Returning after the 2006 hurricane season ends is likely for a percentage of these evacuees, but there is lingering uncertainty about how quickly the notoriously weak New Orleans school system can rebound. Indeed, 34% of the schools in the New Orleans metro are still closed, and not all may reopen due to the current restructuring. A cost-benefit analysis suggests that for those without young kids, the cost of repairing their home and securing a job are the deciding factors in whether they will return. Employment is still down 31% from a year ago in the metro area, and down across all sectors due to the lack of infrastructure. Some businesses have relocated to Houston or Baton Rouge.

For all evacuees, regardless of household size, the “herding” effect may also be a deciding factor in returning. In addition, the government’s ability to restore residents’ trust that the levees will not fail again may be a "make or break" for many. In the meantime, the hurricane season is upon us and will most likely postpone any major jumps in population until the fall.

The Numbers: Louisiana's Estimated Population and Returning Evacuees

	2005	2006	2007	2008
Q1	4.519 million	+43,000 (those with least damage to homes return)	+35,000 (rebuilding quickens; more rental units are repaired/rebuilt)	+13,000
Q2	4.524 million (U.S. Census Population Estimate, July)	+38,000 (construction workers to help with cleanup and levee repairs)	+20,000	+11,000
Q3	150,000 leave state	+68,000 (families with kids K-12; extra funding from gov't. is approved)	+35,000	+10,000
Q4	270,000 more leave state	+40,000	+14,000	+9,000