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KAI RYSSDAL: Baton Rouge sits about an hour up Interstate 10 from New Orleans. It's only 80 miles. But the two cities have always seemed farther apart. The Big Easy's easiness never sat too well with its conservative neighbor up the road. The cities competed economically, too. New Orleans won comfortably. But Katrina changed all that. And suddenly, the relationship is a lot closer. From the Marketplace Sustainability Desk, Sam Eaton reports.

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[SOUND: Galatoire's kitchen.]

SAM EATON: The chop and sizzle of chefs preparing world famous dishes like Shrimp Remoulade and Oysters Rockefeller. It's been a familiar sound at New Orleans' Galatoire's Restaurant for more than a century. But to hear it in Baton Rouge? Well, Justin Galatoire Fry says Hurricane Katrina changed everything.

JUSTIN GALATOIRE FRY: We had all our eggs in one basket for a hundred years and we figured it was time to branch out.

Fry, a New Orleans native, recently opened Galatoire's Bistro in Baton Rouge and plans on staying there. It's a familiar story in post-Katrina Louisiana. New Orleans not only lost people, it lost businesses and jobs, some 200,000 of them.

The city went from having about a third of the state's total employment to less than a quarter, putting it on equal footing with Baton Rouge for the first time in history. And that's giving New Orleans businesses a reason to cast fresh eyes on their straight-laced western neighbor.

Jim Richardson is an economist at Louisiana State University:

JIM RICHARDSON: Suddenly the equation has changed. Before Katrina that would never occur to them. They didn't see the success up here that they could have. Now they say. "Hey, our survival may depend on having a more diversified geographic base."

Richardson says Katrina forced many businesses to recalculate the risks of having, as Justin Fry puts it, all of their eggs in one basket. Especially if that basket is surrounded by levees of questionable reliability.

Richardson says Katrina has leveled the economic playing field between New Orleans and Baton Rouge. And if both cities are to prosper, they have to recognize that they need each other.

RICHARDSON: Disasters, natural disasters, have two major elements to them. One is the misery they cause and number two is opportunities they offer. Once the misery's by, you might as well get over that. The next step is the opportunity. You better take it.

In this case he says the opportunity is to rethink how Baton Rouge and New Orleans create the foundations of a more hurricane-proof economy. On the ground that may already be happening.

[SOUND: Laying fiber optic cable, man talking into radio . . .]

On a sticky Louisiana morning six workmen lay fiber optic cable in Ascension Parish, between Baton Rouge and New Orleans. They're going as fast as they can to keep up with increasing demand.

Robert Burgess heads the local phone company, Etel. He says professionals are moving here in droves to capitalize on the equal distance to both metropolitan areas. For Burgess this is a harbinger of what's to come. . . .

ROBERT BURGESS: Because there's going to be an unbelievable amount of construction dollars and business flowing into New Orleans for the recovery. It makes a lot of sense to be the jump-off point or the central point between the two economic engines of the state.

Burgess says for all to benefit from a newly minted economic corridor, politicians, planners and businesses have to share the commitment. The Baton Rouge Area Chamber of Commerce is developing an 11-parish regional plan.

New Orleans for its part may be less keen on sharing its piece of the economic pie. At a press conference shortly after his reelection, Mayor Ray Nagin gave this message to businesses thinking about leaving the city.

MAYOR RAY NAGIN: God bless 'em. I hope they stay. But if they don't, I'll send them a postcard.

He may not have to send it very far. Baton Rouge, like New Orleans, is part of the economic incentive area, known as the "Go Zone." So anyone investing in new construction projects over the next few years can write off 50 percent of their initial costs. They just have to decide which city merits the investment.

In New Orleans, I'm Sam Eaton for Marketplace.