An article in today’s Times reports on substantial housing development in the flood plain of the the Mississippi River following the floods of 1993.
Building is happening on flood plains across Missouri, but most of the development is in the St. Louis area, and it is estimated to be worth more than $2.2 billion. Though scientists warn about the danger of such building, the Missouri government has subsidized some of it through tax financing for builders.
“No one has really looked at the cumulative effect,” said Timothy M. Kusky, a professor of natural sciences at St. Louis University, who calculates that there has been more development on the Missouri River flood plain in the years since 1993 than at any other time in the history of the region.
These developments raise again a series of problems relating catastrophe, risk, and insurance that first emerged after the United States passed its first disaster relief act in 1950, formalizing federal aid to flood victims. Immediately, it was recognized that these policies created a problem of moral hazard: individual homeowners would not purchase insurance against what they perceived to be unlikely events, particularly since they counted on the federal dollars to bail them out (often, or so libertarian and economist critics argues, leaving them in better shape than when they started).
In 1968 a program of federal flood insurance was created, which relied on the government to construct hazard models that would serve as the basis for determining premiums, and counted on private insurers to provide policies. But this program — which has been revised many times since — did not entirely solve the problem. On the one hand, individuals purchased policies at much lower rates than was expected, leaving much of the damage from floods still to be covered by federal relief (and the government often stepped in to offer even more relief after major events). On the other hand, these policies did not always do enough to prevent development in flood-prone areas. Of note in the article is the line drawn around the “100 year flood.” This threshold was key to the original program of federal flood insurance, which mandated insurance policies for homeowners living in the damage area of a 100 year event. The question, of course, is how accurate the models are, and whether that threshold is the right one.
One resident who had purchased a house outside the 100 year flood plain (and was thus not required to purchase insurance), said that “It’s not going to flood here for another 100 years, and I won’t be around by then.” A touch unclear on the concept, one might say. In the long run the dynamic is familiar. Bigger levies mean more housing in the flood plain. Which may contain small events, but open the gates for ever bigger, if rarer, events. “If history tells us anything, it’s that levees once built eventually fail,” Professor Pinter said. “But instead of being farmland there, now it’s a strip mall or residential area, or a whole city.” As Aaron Wildavsky might say, “safety” is being purchased at the price of resilience.