Calculating the Costs

A little low-tech magic visited some 5,000 homes in southwestern France last week: after nearly three weeks without electricity, light bulbs flickered back on and heating systems groaned to life. The power-deprived households were among nearly 3.45 million plunged into darkness when terrible-twin storms named Lothar and Martin pummeled France with hurricane-force winds on Dec. 26 and 27, claiming 91 lives and causing at least $11.8 in damage.

But even as storm-groggy France brightened with the news of full electricity restoration, a long and costly rebuilding process began. Socialist Prime Minister Lionel Jospin unveiled a $2.5 billion relief package to help homeowners and businesses deal with the damage, but that was only the beginning. Jospin promised that the initial funding "will be supplemented in coming months with additional measures." President Jacques Chirac added his assurance that "the state will see to it that all losses that can be compensated will be."

Despite their outwardly calming tones, however, Chirac's words also acknowledged that some losses will not be recoverable. In addition to 91 human lives lost in the storms, for example, over 360 million of the nation's trees were ripped from their roots or snapped in half by winds of up to 200 km/h. Trees in and around the gardens of Versailles--which had witnessed and withstood the ravages of revolution, the tumultuous rise and fall of empires and the violence of two world wars--were twisted and torn as easily as sidewalk saplings in Paris. Elsewhere in France--which classified 69 of its 96 departments as natural disaster sites after the storms--winds transformed enormous swaths of what had been dense woods and forests into barren plains strewn with hundreds of thousands of fallen trees.

The storms were indeed so catastrophic to the nation's tree population that the lion's share of Jospin's initial aid package was earmarked for France's forestry businesses, which in the space of 48 hours found themselves with anywhere from three to 11 years' worth of production blown down. Some $251 million was allotted to emergency cutting, hauling, and stocking of felled timber, while another $1.9 billion has been set aside for loans to help lumber companies survive the calamity and begin the slow procedure of replanting. But given the expected loss from trees rotting and a pre-glut timber market whose prices have already fallen as much as 50%, many wonder whether the worst-hit areas can survive at all.

Another $377 million freed up by Jospin will go to the repair of national and local property and landmarks damaged by the winds, and to individuals and businesses most seriously hit by the storms. Of this $377 million, around $12.6 million will go to the hundreds of communities along France's Atlantic coast battling a spill of 10,000 tons of heavy fuel that began washing up on beaches on Dec. 24. Thousands of volunteers have been shoveling up the massive tide of oil and have pulled over 36,000 incapacitated birds from the morass--around two-thirds of which died. Some wildlife experts predict 100,000 birds will perish in the spill--the worst to hit France in 20 years.

Despite the costs involved in trying to reverse all the damage France suffered at year's end, some observers are already quietly pointing out the extra investment should translate into increased business activity and economic growth. To restore services, the utility Electricite de France, the phone company France Telecom and the railroad SNCF have collectively spent almost $3 billion to repair damaged infrastructure--allowing them to upgrade and modernize networks as they do so. Materials and labor required to repair or replace private property are expected to cost considerably more, but also provide a boost to an already surging national economy. "This disaster will be mostly positive in terms of gross domestic product," enthuses Denis Kessler, vice president of the association grouping France's largest company heads. Construction businesses and their suppliers are also sniffing a windfall, and in anticipation of a flurry of work are asking temporary exemption from the nation's new 35-hour work-week.

Many owners of damaged private property, however, continue to ask where the money will come from to make good their losses. Despite Jospin and Chirac's promises of financial as well as moral support, it's unlikely the state will pay for most private losses. It's also certain insurance companies won't be paying for all damages--even in areas classified as natural disaster sites. Kessler, who also presides over the French Federation of Insurance Companies, has said that on an estimated damage total of $11.8 billion insurers can be expected to pay only about $4.7 billion. Where will the rest come from? There, too, storm-battered French homeowners are hoping for some magic.