Around Paradise, Calif., construction employment has increased about 30% since the Camp Fire in 2018. Construction wages are still up about 30% in Butte County. This suggests how big and lasting the effect can be even from a moderate ramp-up in the construction sector, especially when people leave the areas in large numbers after the disaster.

The other major factor is building materials, which make up 57% of construction costs. High demand and limited port capacity on islands can drive up prices and slow delivery. Six years after Hurricane Maria, material prices are about 3% higher in Puerto Rico compared with the national average.

The port in San Juan also has 15 piers and is much closer to the mainland and other international sources of materials, like South America. By comparison, in Maui, the main port at Kahului has three piers and is considerably smaller.

Our research also noted that there are two thresholds for how expensive postdisaster rebuilding can get. Once per-capita damages are above $10,000, additional costs are to be anticipated due to pressures on supply chains and labor costs. Wages in particular can shoot up in areas that aren't otherwise growing; they don't have the economic vitality to attract more workers. There is another step up on costs when per capita damages go beyond $55,000. In Maui, the damage estimates are already $33,000 per capita.

Indeed, Maui's small construction labor market might react like that of the U.S. Virgin Islands. And its remote location and smaller port could drive materials prices much higher than in Puerto Rico. After the 2017 hurricanes, FEMA wound up paying 20% to 40% more than initially anticipated for reconstruction, depending on the project and timing. We'd expect excess rebuilding costs on Maui to be similar—and likely on the high end of that range.

There is already concern that property developers are trying to buy lots from Hawaiians displaced by the wildfire. The governor and attorney general are trying to prevent predatory purchases. But one of the best ways to make sure local residents aren't permanently displaced is to ensure that insurers, as well as FEMA, the Department of Housing and Urban Development, and other federal agencies, give them enough money to rebuild.

Read the full article about disaster recovery by Aaron Strong at RAND Corporation.