Hurricane Irene: big storm, but its economic punch?

As hurricane Irene bears down on the East Coast, tourists are fleeing beaches and coastal communities. Residents are hoping that the approaching storm won’t scare them away for long.

Absent major damage, it probably won't.

On the Outer Banks of North Carolina, for example, where hurricane Irene is scheduled to make landfall first, most of the tourists and residents have already cleared out. Tourism is such a driving force of the local economy that the potential loss of many beach homes could wreak havoc on commerce for some time to come.

But residents have been through this before. Hurricanes have threatened and then veered off. The last hurricane to cause significant damage in the region was Isabel in 2003, which hit the southern portion of the island hard, damaging thousands of homes, causing $450 million in losses, and creating a new inlet that cut off the coastal community of Hatteras for two months.

By contrast, rental beach homes in the northern part of the island remained relatively unscathed. “We were checking in people days later,” recalls Gray Berryman, a real estate agent in Duck, N.C.

Besides worrying about their homes and businesses, residents in the coastal town of Nags Head have an extra concern: their beach.

For the first time in its history, the town decided this year to pump new sand onto a 10-mile stretch of its eroding beach. The $36 million beach nourishment project began in May and the majority of the work was done when the first hurricane Irene warnings began to trickle in.

Town fathers had hoped the new sand, provided at local taxpayer expense, would protect exposed local properties there for the next 10 years. Irene could sweep it out to sea in a matter of hours. Destruction of the new beach could be one of the single biggest economic losses that the area sees from hurricane Irene.

“It’s the first large-scale beach nourishment project in the northern Outer Banks,” says Mr. Berryman.

Local officials have called for mandatory evacuations of both Ocracoke Island and the rest of the Outer Banks, as well as communities farther north, including portions of Virginia Beach and Norfolk, Va., Ocean City, Md., and Long Beach Island in New Jersey.

Given North Carolina’s extremely diversified economy, an interruption to the tourism season won’t have a huge impact. The summer season, which brings in half of the state’s coastal visitors, is already mostly over. And typically, beach rental companies don’t reimburse visitors for days or weeks lost to a hurricane. Instead, the companies recommend that visitors buy travel insurance to protect themselves from loss.

Last year, visitor spending reached a record statewide. In Dare County, which represents the largest share of the Outer Banks and is No. 4 among North Carolina in terms of tourism dollars, tourism accounted for $834 million in economic impact. Still, that's only about 5 percent of the state’s tourism activity.

If the storm does wreak widespread damage on the island, it could take some time to rebuild.

“It’s an unfortunate time for this to happen, because it’s a busy week at the beach,” says Margo Metzger, spokeswoman for the North Carolina Division of Tourism. But “it’s just part of life here.”