Costs and Risks Are Escalating

By Carolyn Kousky
St. Louis Post-Dispatch
June 30, 2008

If it seems to you that there has been more damage from environmental catastrophes recently — from hurricanes to wildfires to the current flooding — you’re right. Direct costs from natural disasters (adjusted for inflation) have been increasing in this country for the last several decades.

Of all natural disasters, though, floods account for more lives lost and more property damage than any other. In the St. Louis region, the risks of flooding have been increasing, and they may get worse.

One reason is that as more land is developed, more soil is covered with pavement and buildings, leaving less ground to absorb rain water. Instead, it runs off into creeks and rivers, increasing flood heights. Also, as researchers in the region have shown, flood stages on the Missouri and Mississippi Rivers are higher than they have been in the past because of physical alterations to the river, such as channelization and the construction of engineering works, including levees. Finally, it is possible that climate change, too, will increase flood events in the Midwest.

Given the increasing risk, we must look seriously at how we respond to flood hazards.
Right now, most property owners and mortgage lenders get their information on flood risk from the maps produced by the National Flood Insurance Program of the Federal Emergency Management Agency. But these maps may undererstimate true flood risks because they are not updated often enough to incorporate changes in land use, new information or new methodologies for measuring risk. A map modernization process is underway, which will provide more accurate information on risks to communities.

In the St. Louis region, maps for counties on the Illinois side of the Mississippi River already are in the process of being updated. Preliminary versions, as expected, show much more land designated at the highest risk level and, thus, requiring the purchase of federal flood insurance. Adding to the risk are assessments by the U.S. Army Corps of Engineers that five levees on the east side of the Mississippi River have deteriorated and no longer meet the protection standards to which they were built.

Many people assume that levees are structurally sound, well-maintained and will provide protection in the event of a flood. This assumption encourages extensive development behind levees: the so-called “levee effect.”

But as we know all too well from Chesterfield Valley flooding in 1993, New Orleans in 2005, and Gulfport, Ill., just last week, levees fail — even when they are certified to protect against a flood.

In the Metro East, FEMA’s new flood maps and the downgrading of the levees would add a substantial financial burden to homeowners and businesses in East St. Louis. To avoid that problem, Illinois counties in the Metro East are planning to ask voters to approve a sales tax increase to pay for upgrading the levees, which would negate the flood insurance requirement.

A different approach has been proposed by Howard Kunreuther, co-director of the Risk Management and Decision Processes Center at the University of Pennsylvania’s Wharton School of Business. He suggests offering vouchers to low-income families that cannot afford to purchase flood insurance. They also could receive grants to cover some costs of floodproofing and other activities that would lower insurance premiums. This would be preferable to reducing premiums or doing away with the flood insurance requirement, which not only masks the true risks but also increases the burden on taxpayers when flood damage does occur.

It is important to note that most homeowners who live in floodplans fail to purchase flood insurance — even when they’re in high-risk areas and even when the insurance is mandatory for homeowners with mortgages from a federally regulated lender. First, homeowners with loans from unregulated lenders don’t have to buy insurance. Second, it turns out that many regulated lenders fail to follow up to make sure flood insurance is maintained over the life of the loan.

Meanwhile, investment in floodplains in the region has been booming. A 2005 study found that of all the states affected by the 1993 flood, the St. Louis region has been the leader in floodplain development, with half of it occurring on floodplains that were under water in 1993.

The best way to reduce damage from floods is to keep people out of harm’s way. Some municipalities — such as Napa, Calif., and Reno, Nev. — have restored wetlands in their floodplains. This keeps people and property out of the riskiest areas and increases flood protection because wetlands act like a sponge in storing floodwaters. The restored wetlands in these cities also have increased property values and provided recreational opportunities.

Maybe we should take a lesson from the Dutch, the masters of engineering works to hold back floodwaters. They have adopted a “Room for the River” policy and are returning some land along rivers to open space. It grew out of a realization that climate change could mean even more flood water — water that needs somewhere to go that that is not into homes and businesses.

It is time for the St. Louis region to realize that it needs to make way for the Missouri and Mississippi rivers, instead of trying to force the rivers to make way for us.

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Carolyn Kousky will become a fellow at RFF in September. She recently completed work on her Ph.D. in public policy at Harvard University, where her focus was natural disaster policy.