Living with Water in a Climate-Changed World: Local Governments Must Lead on Flood Management

aerial-photo-of-habitat-restoration-water-drainageBy A. Dan Tarlock and Debbie M. Chizewer—September 18 at 3:54 p.m.

A. Dan Tarlock is Distinguished Professor of Law and Director of the Program in Environmental and Energy Law at ITT Chicago-Kent College of Law. Debbie M. Chizewer is the former Assistant Director of the Program.

Six innovative, local flood management projects for the New York-New Jersey area recently received funding under the Rebuild by Design competition, designed to reduce flood risk after Hurricane Sandy. The Obama Administration’s design competition is a positive development, but overall the United States’ federal flood management framework remains inadequate in the face of rising sea levels and more frequent extreme weather events associated with climate change. Local governments should lead flood risk-reduction efforts because they are on the frontlines of flooding and best able to shape land use, a key strategy for reducing flood damage.

People are drawn to live by water and tend to discount the risks inherent in this choice. Existing laws have not helped people understand the true risks, but rather have encouraged individuals to engage in moral hazard behavior. A moral hazard is a socially undesirable, often inefficient, behavior encouraged by the expectation that it will not be punished and often will be rewarded. Reducing moral hazard behavior makes economic sense for flood management program costs: Why should a person be rewarded for engaging in high-risk behavior because he or she will not bear the full costs when the risk materializes?

The problem starts with federal flood management programs, which encourage moral hazard behavior by creating a false sense of security. First, the federal government has created an illusory expectation that it can provide maximum flood protection through hard structural solutions, such as levees and dams. Second, Congress distributes flood protection funds under periodic water resource development acts (WRDAs), which reflect pork-barrel politics rather than a rational risk-reduction process.

Third, the collection of other federal statutes that address flood management–including the Coastal Zone Management Act, the Coastal Barrier Resources Act, and the National Flood Insurance Act—-have not reduced risky behavior. These programs offer incentives for states and local governments to develop flood-prone areas with flood protection in mind but provide enough flexibility for local governments to favor development over flood risk reduction. For instance, the National Flood Insurance Program ties federal flood insurance eligibility to local government land use changes designed to reduce flood risk. The reality is that the required land use changes are minimal, and the flood insurance rates are heavily subsidized.

The United States should follow the example of the European Union’s Flood Directive and officially adopt integrated flood plain and coastal management. Flood plains and coastal areas must be managed through a combination of structural defenses, upstream storage, design modifications, and land use controls including both retreat from vulnerable areas and integrated flood plain management. Enabled by state and federal government laws, American cities still engage in an increasingly futile arms race with nature. The ineffective practices of building sea walls, supporting the rebuilding of flooded properties multiple times, and undertaking beach renourishment after storms must be rationalized and curtailed.

A key strategy is the prohibition of development in high-risk areas and a shift of the true cost of the risk to those who choose to live in known high-risk areas. Because the ability to avoid risks varies among individuals, policymakers should carefully tailor efforts to curb moral hazard behavior. Generally, the wealthy live near water by choice, while the poor do so because floodplains offer low cost housing. It will not be easy to reorient flood management policy. No government likes to assume the paternal role and tell its citizens what they cannot do.

Local governments can and should take the lead to shift policy. First, with limited exceptions, only local governments can control floodplain development. Second, local governments are already experiencing the impacts of climate change and thus must adapt. Local communities have a large toolbox to discourage moral hazard behavior. Tools include (1) state mandated coastal planning; (2) rolling set backs, especially those based on expected erosion rates; (3) the purchase or condemnation of high-risk properties, especially repeat loss properties; (4) rebuilding requirements that minimize future storm or flood damage; and (5) the use of Transferrable Development Rights to compensate land owners forbidden to rebuild in high risk areas.

Development of climate-change-ready flood management must be iterative. Federal projects, like Rebuild by Design, motivate local risk reduction. In turn, local innovation should inform federal reforms to flood management.