...fix 'em, dammit!

Katrina has made an impact on our country that will not soon be forgotten. The cost estimates for the repair of New Orleans, as well as for various approaches to the repair and improvement of the levees are staggering.

But in the aftermath, a couple of things are clear. First, the blathering eco-freaks who successfully prevented the Army Corps of Engineers from doing the work approved by Congress some years ago should have been lined up and shot. The effect of their good intentions verges on treason. Second, the repair and restoration of the city of New Orleans cannot and should not be effected without first ensuring that the new investment will be protected.

So the question we face is, against what level of storm must the levees be effective? For those who may have spent the last two months on another planet, the answer is clear: the levees must be capable of protecting against a category 5 hurricane. We've just seen proof of that, and nearly had that proof emphasized by hurricane Rita, which instead, luckily, dropped only a good deal of rain on New Orleans.


I have said before that this blog will address issues of economics, and this is surely one. But rather than develop an analysis myself, I prefer, in this case, to link to an excellent analysis by Jonathan Rauch on the Reason.com site. The following quote is compelling:

In any given year, then, figure that the expected economic cost of the swamping of New Orleans is $1 billion (divide the $200 billion cost over 200 years). A $2 billion levee project could be expected to pay for itself, probabilistically speaking, in two years; a $14 billion Delta restoration project, in 14 years.

But wait. New Orleans's 200-year flood might take place a century from now instead of right away (remember, this analysis is from a pre-Katrina standpoint), and money lost in the future matters less to us than money lost today. At an interest rate of 3 percent, Viscusi says, the present value of averting $1 billion in expected annual damage forever is $33 billion; at 5 percent, $20 billion; at 10 percent, $10 billion. Any of those numbers is higher than the estimated cost of hurricane-proofing the levees, and all but the smallest are higher than restoring the Delta.

Bravo, Mr. Rauch!