'ResilieNomics'
a new book by Aris Papadopoulos

After surviving the World Trade Center on September 11, 2001, I switched from asking ‘why are hazards strong?’, to ‘why are assets weak?’. Working in the building industry, I soon realized that vulnerable development is a systemic problem.

Upon retiring thirteen years later, I wrote the book Resilience – The Ultimate Sustainability. It became an audiobook, was translated to Spanish and inspired the 2018 documentary Built to Last?, which has been broadcasted over 500 times.

Many of the book’s warnings and predictions are happening. Disaster losses round the world have escalated, with over a third of them in the US. Despite talk of the contrary, hazard denial is widely practiced and vulnerable development continues on a high-speed track.

The word ‘resilience’ now appears in many contexts: personal, health, agriculture and energy, to name a few. This book continues to focus on my core expertise, the built environment. Why are buildings important? They are society’s ‘cocoons’, the shelters where we spend most of our lives. Buildings are meant to protect us, our possessions and activities from Nature’s harm. They form the front-line of hazard defense and are the largest investment class.

In 2015 I contributed to launching the United Nations Sendai Framework for Disaster Risk Reduction: 2015-2030 (SFDRR), a milestone international agree¬ment, signed in Sendai, Japan by 187 countries. While as important as the 1992 UN Framework Convention on Climate Change (Rio Declaration), its visibility remains suppressed. With scant media coverage and limited awareness among officials, businesses and communities, I often call it ‘the UN’s best kept secret’. It explicitly calls to build better from the start and build back better.

The 2016 Paris Agreement elevated the importance of adaptation, a synonym to hazard resilience, but climate advocates continue to underplay it. They fear that adaptation might divert attention and resources away from climate mitigation, the reduction of greenhouse gases. What they miss is that mitigation cannot be achieved without resilience.

As disaster losses mount we remain fixated on Nature’s hazards, rather than the vulnerability of assets we created. Those who buy, own and occupy buildings remain in the dark, barely knowing how weak their homes and communities are. Distracted by marketing, media and official communications, they make decisions based on looks, cosmetics and efficiencies.

The US regulatory system for development and construction remains a fragmented, disjointed and inconsistent patchwork of local rules, which have been primarily shaped by the property industry. An industry that strongly defends local control and shapes the ‘divide and conquer’ landscape to its liking.
On the positive side, advances in information transparency and data democracy promise to help make consumers ‘resilient-smart’. Most of these have not come from the public or property sector, but from non-profits, innovative start-ups and international organizations.

The title ‘ResilieNomics’ was coined by fusing the words resilience and economics. While much published materials examine risk and disasters from the viewpoints of government, the environment and society, none have studied it as an economic activity. This means looking at risk-producing development as a marketplace, with suppliers, customers, promotion, policies, incentives intermediaries and most important… profit.

What’s been overlooked is that vulnerable development has become a multi-trillion-dollar industry. Were it not so profitable, we would not have so much of it. This scale and wealth give it enormous political and marketing influence, with part of the profits used to protect the status quo. As a former industry insider, I witnessed firsthand how this system rewards the development of risky lands, the construction of vulnerable houses and creation of fragile communities. It thrives because it is:

a. Legal
b. Profitable, and
c. Consumers can’t easily tell the difference

Markets form the core of capitalist economies. Being a former business capitalist has helped me to see when they misfunction. For markets to work properly, consumers need knowledge, transparency and information, and producers should hold ‘skin-in-the-game’ for the risks they create.
They become distorted when consumers act in the dark with non-transparent, opaque and unbalanced information, and producers easily pass on to the public the risks they create. Eventually, such markets hurt society.

The role of government is not to step into the shoes of consumers and producers, but to create and maintain the rules for healthy markets. Financial exchanges achieved this a century ago. Publicly traded equities and commodities generally have sufficient transparency, information and risk accountability to reliably price and adjust value streams, assets and liabilities. Private-to-public risk transfer is limited, meaning that governments generally do not bail out market players when their investments or businesses turn sour.

The prices of publicly-traded financial instruments can oscillate between herd-driven surges and bearish selloffs, but these distortions are generally short-lived. Major tumbles triggered by so-called ‘black swans’, like epidemics, sudden terror or warfare, are generally not the result of systemically misguided pricing.

In contrast, property markets are opaque, with far less disclosure and transparency. Prices can bubble into large multi-year distortions and collapse dramatically. Leading to the 2007 crisis, housing prices were bid up because credit risk was not properly accounted for in mortgages. When the bubble imploded, it dominoed into a series of financial failures that brought economic and personal hardship to millions of households.

Today, what is not properly weighed into home prices is hazard risk. Vulnerable properties, which represent a large segment of the US residential sector have seen a price surge that contradicts their risk. The day of reckoning is coming, when a massive correction could shake the economy and distress millions.

This bubble should be slowed and defused. The longer it is propped and bigger it gets, the larger and more abrupt its correction will be, and the greater the harm it will inflict on society.
While deflating the bubble sounds sensible, those benefiting from it will deny its existence, oppose to slowing it and propose ‘bandages’ to mask its visible symptoms. Only when it erupts will they cease forcing air into it.

Unfortunately, most local governments have been lured into vulnerable development and find themselves married to the status quo, unable to apply the brakes and redirect development. They’re locked in a reactive inertia.

Hence, what ultimately happens to the bubble may depend more on what consumers do, rather than what producers and governments do. That’s when enough buyers awaken and act in their own self-interest to avoid the escalating personal costs of vulnerable development. The question is to what degree this will be an orderly transition, rather than a large-scale panic.

While not a prerequisite, my first book ‘Resilience – The Ultimate Sustainability’ provides helpful background. It uses the US as a case study to examine how and why we got here and introduces the concepts of Resilience Capacity and the 4 Laws of Disaster Risk. It looks at the history and limitations of insurance, the failure of building codes, the blind spot of ‘green’ initiatives and the root causes and amplifiers of systemic vulnerable development. The book concludes with 30 recommendations for societies that strive for greater resilience, sorted into strategies, tactics and applications.
The present writing does not intend to be a scholarly economics textbook, but a forward-thinking treatise. It aims to shed awareness and provoke critical examination in an easy-to-understand language, by presenting information, concepts and tools that others can build on, or refute in their research and analyses.

In 2023 I teamed up with producer and director George Siegal to create the documentary sequel Built to Last: Buyer Beware, filmed in Florida’s Gulf Coast. It aims to further awaken and educate millions of consumers.

My goal here is not to paint a doomsday picture, but to make the inevitable journey towards resilience less painful, by employing the principles of market economics and diligent public oversight. Since this book looks out to the future, its validation also lies there.

Thank you for the honor of your attention.

Aris Papadopoulos 

October 2024