Bayou Corne: the Louisiana town that's being swallowed by a sinkhole

The sinkhole in September 2012. Image: US National Nuclear Security Administration.

For those of us who can watch them from behind the protective barrier of a computer screen, sinkholes seem pretty cool. Yes, they cause destruction, but in a world where large objects normally stay where we put them, there's a certain fairytale quality to the way they can just suck away enormous chunks of the earth. They can swallow parked cars:

They can swallow trees with cartoon-like efficiency:

But for the residents and ex-residents of a tiny town in Louisiana, sinkholes are pretty much the worst things ever.

Let's start at the beginning. On 3 August 2012, the residents of Bayou Rouge, Louisiana, noticed a funny, petrol-like smell in the air. Later that day, someone stumbled on a giant hole filled with sludgy water on the western edge of the town, not far from the fork of the Bayou Corne waterway. 

The hole, it was soon established, was caused by the collapse of an underground salt cavern, mined by a company called Texas Brine. On that first day, the hole covered around an acre of land. Here's helicopter footage over Bayou Corne taken another ten days after the hole opened (they reach it around 35 seconds in): 

As sinkholes go, it's not particularly glamorous. If we're completely honest, it looks like a giant pond. But as time went on, it became clear that this sinkhole's work was far from done.

When the walls of the mine collapsed, it turned out, they let natural gas and oil filter up to the surface, to escape into the town's air. As a result, Louisiana Governor Bobby Jindal issued an evacuation order on the day of the hole's discovery. Many left the town; some stayed in defiance of the order. Texas Brine was tasked with investigating the collapse.

Yet things kept getting worse. Texas Brine have burned off millions of cubic feet of escaping gas and oil in an attempt to keep it out of the atmosphere. There are fears that the sinkhole might explode if the escaping gas ignites. Oh, and it's grown to cover around 31 acres. This is the latest satellite image of the town from Google Earth:

Spot the sinkhole! Clue: it's the giant black pit visible from space. Image: Google Earth.


The sinkhole has been swallowing up Texas Brine's revenues, too. From the beginning of the evacuation, the company sent each resident a weekly cheque for $875. In August 2014, a federal judge approved a $48.1m settlement, which Texas Brine will spend on buying up the town's properties and paying residents' damages. It's also paid out to some families as restitution for the "mental anguish" they've experienced since 2012. 

But, three years from the sinkhole's first appearance, the town's residents and ex-residents are still stuck in limbo. As of January, according to the Louisiana Advocate, 12 families of the original 150 remain, though they, too, will leave once they've reached a deal with Texas Brine. And the empty houses? The company has shut off utilities and is stripping out appliances, leaving them as empty shells. It remains to be seen whether they'll be demolished, or whether Bayou Corne will become a ghost town.

Scientists say the sinkhole's growth has slowed (though it's been belching out mini-earthquakes since mid-December), so it seems unlikely it will finish off the town completely. This probably isn't much consolation for Bayou Corne's once close-knit community, though: as ex-resident Nick Romero told the Advocate, the worst thing isn't the sinkhole's destruction – it's "losing all your friends" as they're forced to scatter around the state.  

 
 
 
 

High streets and shopping malls face a ‘domino effect’ from major store closures

Another one bites the dust: House of Fraser plans to close the majority of its stores. Image: Getty.

Traditional retail is in the centre of a storm – and British department store chain House of Fraser is the latest to succumb to the tempest. The company plans to close 31 of its 59 shops – including its flagship store in Oxford Street, London – by the beginning of 2019. The closures come as part of a company voluntary arrangement, which is an insolvency deal designed to keep the chain running while it renegotiates terms with landlords. The deal will be voted on by creditors within the month.

Meanwhile in the US, the world’s largest retail market, Sears has just announced that it will be closing more than 70 of its stores in the near future.

This trend of major retailers closing multiple outlets exists in several Western countries – and its magnitude seems to be unrelated to the fundamentals of the economy. The US, for example, has recently experienced a clear decoupling of store closures from overall economic growth. While the US economy grew a healthy 2.3 per cent in 2017, the year ended with a record number of store closings, nearly 9,000 while 50 major chains filed for bankruptcy.

Most analysts and industry experts agree that this is largely due to the growth of e-commerce – and this is not expected to diminish anytime soon. A further 12,000 stores are expected to close in the US before the end of 2018. Similar trends are being seen in markets such as the UK and Canada.

Pushing down profits

Perhaps the most obvious impact of store closures is on the revenues and profitability of established brick-and-mortar retailers, with bankruptcies in the US up by nearly a third in 2017. The cost to investors in the retail sector has been severe – stocks of firms such as Sears have lost upwards of 90 per cent of their market value in the last ten years. By contrast, Amazon’s stock price is up over 2,000 per cent in the same period – more than 49,000 per cent when considering the last 20 years. This is a trend that the market does not expect to change, as the ratio of price to earnings for Amazon stands at ten times that of the best brick-and-mortar retailers.

Although unemployment levels reached a 17-year low in 2017, the retail sector in the US shed a net 66,500 jobs. Landlords are losing longstanding tenants. The expectation is that roughly 25 per cent of shopping malls in the US are at high risk of closing one of their anchor tenants such as a Macy’s, which could set off a series of store closures and challenge the very viability of the mall. One out of every five malls is expected to close by 2022 – a prospect which has put downward pressure on retail real estate prices and on the finances of the firms that own and manage these venues.

In the UK, high streets are struggling through similar issues. And given that high streets have historically been the heart of any UK town or city, there appears to be a fundamental need for businesses and local councils to adapt to the radical changes affecting the retail sector to preserve their high streets’ vitality and financial viability.


The costs to society

While attention is focused on the direct impacts on company finances, employment and landlord rents, store closures can set off a “domino effect” on local governments and businesses, which come at a significant cost to society. For instance, closures can have a knock-on effect for nearby businesses – when large stores close, the foot traffic to neighbouring establishments is also reduced, which endangers the viability of other local businesses. For instance, Starbucks has recently announced plans to close all its 379 Teavana stores. Primarily located inside shopping malls, they have harshly suffered from declining mall traffic in recent years.

Store closures can also spell trouble for local authorities. When retailers and neighbouring businesses close, they reduce the taxable revenue base that many municipalities depend on in order to fund local services. Add to this the reduction in property taxes stemming from bankrupt landlords and the effect on municipal funding can be substantial. Unfortunately, until e-commerce tax laws are adapted, municipalities will continue to face financial challenges as more and more stores close.

It’s not just local councils, but local development which suffers when stores close. For decades, many cities in the US and the UK, for exmaple Detroit and Liverpool, have heavily invested in efforts to rejuvenate their urban cores after years of decay in the 1970s and 1980s. Bringing shops, bars and other businesses back to once derelict areas has been key to this redevelopment. But today, with businesses closing, cities could once again face the prospect of seeing their efforts unravel as their key urban areas become less attractive and populations move elsewhere.

Commercial ecosystems featuring everything from large chain stores to small independent businesses are fragile and sensitive to change. When a store closes it doesn’t just affect employees or shareholders – it can have widespread and lasting impacts on the local community, and beyond. Controlling this “domino effect” is going to be a major challenge for local governments and businesses for years to come.

Omar Toulan, Professor in Strategy and International Management, IMD Business School and Niccolò Pisani, Assistant Professor of International Management, University of Amsterdam.

This article was originally published on The Conversation. Read the original article.