In Houston we are witnessing a once in 500-year flood event, again. In the ten years from 2000 to 2010 the US experienced 15 significant flooding events. In this decade we’ve already seen 23. Both major and minor flooding events have increased steadily over the last several decades. Even if we stopped emitting carbon pollution today, the severity of the flooding will continue to increase. So it’s obvious that they way we managed flooding in the past will no longer work.
There is no private market for residential flood insurance; those living in floodplains get coverage through the National Flood Insurance Program. As of today, this program is $25 billion dollars in debt and Hurricane Harvey might cost the program another $20 billion. Since many of the homes damaged were outside the designated floodplain, the total cost of the federal relief effort might run billions more (unless we follow the example of the Texans who voted against federal assistance after Hurricane Sandy).
How do we solve this problem?
We could raise insurance rates
We could raise the rates of flood insurance sufficiently to cover the cost of the program. But if you raise the rates too high, then the insurance becomes unaffordable. The value of land at risk to flooding would drop in price, possibly becoming worthless. People would probably stay in homes that they can’t afford to insure and no one wants to buy. When the next flood comes, their home and belongings would be washed away and they’d be left with nothing. This would move people out of the floodplains, but the cost would be borne entirely on those who live in areas they were told were safe when they bought their homes.
Just transfer money from the general fund
This is what’s usually done, which either results in increased deficits or takes money from other critical needs. This is what will probably happen, but it’s a terrible way to solve the problem.
Fund climate mitigation efforts with a carbon tax
This approach has several positive aspects:
- The problem is in part (probably large part) due to climate change, so the cost should be borne by all who are burning fossil fuels, not just those living in what weren’t designated as floodplains when they bought the land.
- In addition to propping up the Flood Insurance Program, the money could also go to prevention efforts that reduce the costs in the long term.
- By increasing the costs of fossil fuel, this would decrease emissions and slow the increase in flooding events.
- Some of the money could go to increasing the Earned Income Tax Credit and the Standard Deduction, reducing the regressive nature of a carbon tax.
This alone won’t solve the problem. We also need to update risk maps based on the best available science, so we don’t see “500-year floods” every year. Localities also need to update zoning laws to create managed floodplains that give the water a place. This might include buying people out. Both of these efforts could be funded by the carbon tax.
Climate change is a reality that we need to live with as we reduce our carbon emissions. The sooner we realize we are living in a changed world, the fewer people will die in what are becoming routine catastrophes.