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Katrina: Economics of Prevention

As the gulf coast braces for a second storm and a new article in Science Magazine, via shows clear links between global warming and the intensity of tropical storms, its clear that we need to take a longer term perspective on these storms. We can’t afford a $200B bill every time one of these hits.

But is that really the case? Of the $200B in damage, a huge portion was caused by the flooding that rocked the city in the days after the hurricane. The costs the fix the levees are a powerful demonstration of prevention economics:

Project Status Cost ROI if successful
2004-5 Levee Maintenance Funding Cut, Projects not completed in several parishes $35 M 571,429%
Thorough Re-Work of Levees Never Implemented $2.5B 8000%
Gulf Coast 2050 (Thorough Wetlands Restoration) Under Investigation $14 B 1429%

Any business person would blush at those ROIs. Compare even the most outlandishly over-run levee project with todays situation: a budget of $400K for each of the 500,000 displaced victims of Katrina.

Global warming exhibits the same dynamic on a much more massive scale. The only question is whether the world be a little smarter with how we deploy our resources.

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