Moreover, Puerto Rico’s power outage was, by far, the most severe in U.S. history, in terms of total customer-hours lost, and it will still likely take many more months to fully restore electricity and other critical infrastructure to all of the Island’s residents. As a result, a sizable number of residents went to the U.S. mainland in the weeks following Maria, and it still is unclear how many will return once circumstances improve. Even before the storms hit, Puerto Rico was struggling with severe fiscal difficulties and a long period of poor economic performance. For over a decade, the Island has been experiencing a shrinking economy, contracting employment, low and declining labor force participation, and persistent out-migration of residents to the mainland. Furthermore, public debt reached a problematic level, and the Commonwealth and its instrumentalities—including the power and water authorities—lost their ability to borrow in the public markets. Defaults and ongoing debt restructuring efforts followed. In the U.S. Virgin Islands, the situation is similar in many ways. St. Thomas and St. John were ravaged by Irma, and St. Croix was devastated by Maria just two weeks later. Their economy, which is much more dependent on tourism than that of Puerto Rico, has also been contracting for the better part of a decade. However, the population of the U.S. Virgin Islands has not fallen nearly as sharply as Puerto Rico’s, and its economy had stabilized in the past two years following the closure of a major refinery in 2012.
Still, while by some measures the U.S. Virgin Islands are not as fiscally stressed as Puerto Rico, they, too, do not have access to the debt markets. Recovery and rebuilding The combined impact of complex preexisting economic problems and the hurricanes has made recovery much more challenging. The loss of market access has severely hampered the ability of the governments to mobilize resources to respond to the damage and rebuild and upgrade infrastructures. One example is Puerto Rico’s electrical grid, which is a major obstacle to recovery. Even before Maria, Puerto Rico suffered frequent blackouts, and the high cost and unreliability of electricity 1/3  BIS central bankers' speeches  had reduced business competitiveness. Puerto Rico’s power plants are largely outdated and inefficient, and the electrical distribution system is poorly maintained and extremely fragile. In my mind, given this poor starting point, now is a perfect opportunity for Puerto Rico to essentially start from scratch and build a resilient power generation and distribution network. I would assume that an emphasis on renewable energy would be part of this effort, especially given the dramatic fall in costs for this form of electricity generation. The challenge, of course, will be how to finance this investment, when the Commonwealth is already mired in debt. Despite these woes, there are signs of resilience in Puerto Rico. As we will show, job losses following the storm were very substantial, totaling around 4 percent in Puerto Rico and 8 percent in the U.S. Virgin Islands.