Impact of Hurricane Ivan Report - Part II

Hon McKeeva Bush, Leader
of Government Business

The Jolly Roger, an important symbol of tourism in the
Cayman Islands, suffered in the wrath of Ivan

Monday,  January 24, 2005

This is Part Two of a five part series which summarizes ‘The Impact of Hurricane Ivan in the Cayman Islands’ (Ivan Report) an 85 page report, released by the Economic Commission for Latin America and the Caribbean (ECLAC), of the United Nations. Part Two describes the damages to tourism, agriculture and commerce.

“The Ivan Report by the Economic Commission confirms our initial assessment that we had nearly $3 billion in damage,” said the Hon McKeeva Bush, Leader of Government Business. “There was a tremendous impact on the tourism sector which plays a huge part in our economy, as well as the financial sector. This report is important because it affects all aspects of business. It will also be used to pinpoint deficiencies.”

The impact of Hurricane Ivan, although not severe enough to affect the sector’s viability and capacity to host foreign visitors, generated significant losses. Tourism contributes over 50 percent to GDP and 27 percent to employment and has revenues of CI$30.7 million. 

The direct impact stems from the damages to hotels, condominiums, apartments, villas, boats and yachts and estimated at CI$ 281.9 million. Of this amount, CI$ 109.5 million can be attributed to hotels, CI$ 172 million to condominiums, apartments and guesthouses and CI$ 0.4 million to boats and yachts.

The loss in stay-over arrivals amounts to 79,869 tourists in 2004. Based on the average sum that each tourist usually spends when they visit the Cayman Islands which was said to be CI$ 910. in 2003, the loss in stay over tourism revenue for 2004 amounts to CI$ 72 million. 

As a consequence of Ivan the loss of cruise ship arrivals is estimated at 320,438 visitors for 2004. Again based on the revenue that each cruiser represents the loss of revenue from cruise ship activity stands at about CI$25 million. 

Tourism was not the only sector hit. Damage and losses in the agriculture sector, including livestock and fisheries were estimated at roughly $5.6 million. In the crop sector, it is estimated that 90.99 percent of crops were destroyed in Grand Cayman. Given the fairly shallow soils most of the many fruit trees were uprooted. And it is expected that there will not be any mango or avocado and some other fruit crops next year. The small banana crop was hard hit, but should recover to bear fruit within nine months. 

The livestock sector was not as badly affected. Most of the animals were kept in sheds, although some of them lost part of their roofing and walls and large animals fared better than the smaller ones. It is estimated that about fifty cows were lost, also some horses and more than a hundred goats. The local poultry industry suffered serious damage to its infrastructure. Caged poultry suffered heavy losses, with some farmers being completely wiped out, with dire implications for their livelihoods. 

Apart from the direct damage to their boats, fish pots and other equipment, fishermen are set to suffer income losses in the future that would affect their welfare. 

Damage in the commercial sector has been estimated at $463.4 million, of which, $429 million or over 92 percent was direct damage derived from destruction of locations including warehouses and shopping spaces. Some large supermarkets as well as shops in numerous shopping plazas were severely affected by flooding, roof damage and looting. Rebuilding or relocating costs and the loss of stocks are substantial. 

The indirect losses associated with interruption of business will be less significant since most merchants started immediately to operate, reopen and offer business by provisional means, under emergency circumstances or in other locations. 

Since commerce accounts for 13 percent of GDP and 14.5 percent of employment in the Cayman Islands, its rapid recuperation is essential to the functioning of the economy. 

In terms of recovery, larger businesses that were insured are better able to resume operations, whereas, small businesses, which employ about 40 percent of the workforce, are in a more precarious position. Additionally, there is a larger proportion of small and medium merchant and small businesses that were not insured.

The commercial sector suffered significant damage and losses as, but it is one of the fastest recuperating areas of the economy. Loss of stocks and income flows from closure were also important. 

Financial services and offshore activities did not suffer significant direct damage and were quickly operating. Through re-routing of business and by placing staff abroad in an efficient and immediate manner this sector almost did not miss a beat. 

The next article in this five part series will examine the damages to infrastructure including utilities, roads, ports, airports and public buildings. The full Ivan Report can be downloaded from the Internet at www.gov.ky under Latest News.

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