Those Mississippi floods and public policy:

[hedgehog]

If memory serves, the current flood insurance program was a response to the Mississippi floods of 1993. The general consensus was that it was foolish to keep re-building on sites that flooded. Some people were bought out, several entire towns were relocated. In theory, all areas prone to flooding were identified. People who wished to live there were given the opportunity to purchase flood insurance with the understanding that no additional federal subsidy would be forth coming in the event of a flood. We've now seen several defects in this solution.

1. In New Orleans and on the Gulf Coast, people with home owner's insurance mistakenly believed that they were covered for the flood damage caused by hurricanes. That is, they had paid for insurance but they had the wrong policy and/or an inadequate policy.

2. In the upper Midwest, people mistakenly believed that their property was safe from flooding and/or that flood insurance was not available.

3. The chief observed effect of global climate change is that weather has become more extreme; hotter temperature, more violent hurricanes, heavier rainfalls, etc. This makes it difficult to predict future events based on past observations. For example, the map showing a hundred year flood event is out-of-date if water rises past that point three years in a row.


So, we face several problems:

1, How do we ensure that people understand their physical risk and financial risk and their options? As a corollary, how do we determine when insurance companies have willfully lied to their customers about their coverage?

2. How do we protect the Innocent while at least not rewarding the guilty? I have no problem rebuilding the house of a 9th ward resident who faithfully paid their insurance premium thinking he had "hurricane coverage". His house was built years ago. I have problems replacing the newly built beach front mansion of the wealthy person who knew of the hazard but built there anyways and bough insurance subsidized with my taxes.

3. How do we determine when to re-build and when to tell people to move on? New Orleans is a great American City that was devastated by Katrina. Believe it or not, Detroit, Buffalo, Cleveland, Youngstown are also cities important to the people that lived there that have been devastated by economic changes. How do we justify pouring money into a region that will face devastating hurricanes in the future while continuing to abandon Rust Belt cities that are coming through global climate change relatively unscathed? How do we even discuss this without setting off regional feuds?