Legislation meant to stabilize the finances of the federal government’s flood-insurance program has put a big dent in the Berry family budget.
The federal governments's flood insurance program is the National Flood Insurance Program (NFIP). John and I have both railed against NFIP before (That cover picture still cracks me up). The legislation being referred to is the Biggie-SmallsBiggert-Waters Flood Insurance Reform Act.
Debi Berry, 57, and her husband, Rick, 64, live in the village of LaRue, a flood-prone area in Marion County. They used his first Social Security check to pay their flood-insurance premium, which has nearly doubled this year to $1,089, from $622 in 2013.
Flood insurance premia doubled in the past year due to the removal of many NFIP subsidies for flood insurance by the Notorious B.I.G. Biggert-Waters Flood Insurance Reform Act.
“I could have thought of better uses for that money,” Mrs. Berry said.
Like Ohio State Buckeye Football season tickets! Or a bunch of scratch-offs!
But the couple needs the coverage. Floodwater from the Scioto River crept into their basement in 2011 and came close in December, and their home lender requires them to carry flood insurance.
The Scioto (pronounced Sigh-OH-ta) River is best described as a murky stream of brownish muck--sometimes a torrent after a lot of rain, or snow melt, that meanders through central Ohio, eventually merging with the Olentangy (pronounced OH-lin-tan-jee) River in downtown Columbus.
“I’m not sure I’d want to chance it without it,” she said. “We’ve been on the edge too often. I’m not sure I’d want to play that lottery game.”
But I could've used that extra money to play the Ohio lottery.
Dean Colby, 66, and his wife, Jan, 56, also of LaRue, weren’t as lucky as the Berrys. They have no basement, so in December the water rose 16 inches in their one-story home — for the second time since 2011.
"Fool me once, shame on — shame on you. Fool me — you can't get fooled again."
They can’t use the $37,000 government check they just got for repairs until they learn if they're eligible for a second fund to raise the structure. They haven’t checked their escrow, but if their premium went up, they have no choice but to pay. They still have a mortgage, and houses in the village do not sell, Mrs. Colby said.
Maybe that's because they keep getting filled with water?
But now, the couples might be in line for a break on their premiums. Last week, Congress sent to President Barack Obama legislation meant to roll back some of the increases that homeowners across the country have experienced since Congress passed a flood-insurance-reform act in 2012.
Ummm...the new legislation did not roll back any price increases, because the Big Daddy Kane Biggert-Waters Flood Insurance Reform Act (BWFIRA) didn't RAISE prices. The BWFIRA removed subsidies in the NFIP that were responsible for establishing prices LOWER than were efficient. The BWFIRA simply took a step towards eliminating inefficient subsidies and returning prices to their efficient, unsibsidied, socially more deisrable levels.
Now back to the snark.
The 2012 act aimed to shore up a program that is $24 billion in the hole.
...because he remembers as a kid how much fun it was to build a sand castle on the Hawaiian beaches and then watch the tide roll in to wash the sand castle away, only to start anew anew tomorrow.
That's the childhood equivalent of the incentives built into the NFIP subsidies.
One aim of the 2012 law was to roll back some of the federal subsidies that critics say have spurred private insurers to largely avoid the flood-insurance market.
Because private insurers know that the low premia the government charges are NOT FISCALLY VIABLE.
But the law resulted in huge increases in flood-insurance costs at a time when prices of regular homeowner policies were on the rise anyway because of extraordinary losses caused by tornadoes and other powerful storms in recent years.
This is an old one (March 3). Forgive my lack of chronological consistency while I try to clean up my inbox:
North Carolina regulators said Monday that five power plants owned by Duke Energy have been cited for violating water pollution laws, three days after announcing a similar action against Duke’s plant in Eden, N.C., where 39,000 tons of coal ash fouled the Dan River last month.
The citations, which charge Duke with failing to obtain storm-water permits under federal law, could lead to fines of $25,000 per day for each of the six plants.
The enforcement actions by the state’s Department of Environment and Natural Resources came after weeks of public outrage about the spill. But according to documents in recent court proceedings, regulators within the agency have tried for several years to force Duke to bring its plants into compliance, only to be frustrated time and again.
“Over the last year and a half, we repeatedly asked for a status and direction on these, and we have been given none,” an environmental engineer in the department wrote to colleagues in September, referring to efforts to require storm-water permits.
Current and former employees of the environmental agency have said that under the administration of Gov. Pat McCrory, a Republican, and the Republican-controlled legislature, regulators were told to play down enforcement of pollution laws in favor of spurring economic activity and jobs.
$25,000 per day for 6 plants? That is $150,000 per day and $4.5 million per month. That is real money.
Of course, it will be paid through rate increases. Isn't there something weird about a public utility fighting back against environmental regulations that are designed to protect the public (like a private business firm would)? It seems like a public utility would recognize a potential environmental problem, figure out how to clean it up and ask for the rate increase ex-ante, because that is part of the true cost of energy.
Gov. Pat McCrory took questions at a Raleigh private school for an hour Monday and ended the session with his own: “How do you pay for it?”
The remark came in reference to the recent Duke Energy coal ash spill into the Dan River. The Republican said his priority is cleaning up the spill and then finding a long-term solution for the 30-plus coal ash ponds in North Carolina.
But, he said, cost is “the big issue.” Duke Energy’s CEO Lynn Good said Friday Duke would hike customers’ rates to pay for the cleanup.
In an interview after the discussion, McCrory declined to comment directly on Duke’s proposal, saying the state’s utilities commission will play a role in Duke’s request and that he doesn’t want to impact the discussion. “We ought to let the utilities commission do their work in making those very complex decisions,” he said. ...
The governor also fielded a poignant question from a student on why the state ranked No. 46 in the nation in teacher pay. McCrory reiterated his plan to increase base pay. The next goal, he said, is to increase pay for all teachers based on performance.
Speaking after the forum to reporters, McCrory said the teacher tenure law needs to be changed. Drafted by Republican lawmakers, the law offers pay raises to top teachers in return for them relinquishing tenure rights.
Read more here: http://www.newsobserver.com/2014/03/10/3690306/mccrory-says-duke-energy-didnt.html#emlnl=Today_at_a_Glance#storylink=cpy
I think there are two big issues instead of just one: the benefits and costs of environmental regulation. The net benefits of regulation should be maximized. The current state government seems to view cost minimization as the goal.
And it is a little weird when even the private school kids think that public school teachers are underpaid.
The hand-wringing over what to do to help Ukraine has had a very positive impact on the U.S. oil and gas industry. Politicians like Sen. Lisa Murkowski (R-AK) are seizing on the crisis to call for a lifting of the ban on U.S. oil exports — the better to counterbalance Russia’s petro-influence. While the Wall Street Journal this morning wrote that western politicians are working on a variety of options to help “loosen Russia’s energy stranglehold on Ukraine” including “larger exports of U.S.-made natural gas.”
Nevermind that the U.S. currently exports no natural gas in the form of LNG because new liquefaction plants won’t be completed until late 2015. The bigger point was made by economist Ed Yardeni in his morning note today: “By invading Crimea, Russian President Vladimir Putin may have succeeded in resolving the debate in the U.S. about whether or not we should export natural gas and crude oil.”
From an efficiency perspective, any ban on exports is a bad thing. While domestic consumers of natural gas benefit from lower domestic prices, those lower prices come at a costs--the hiogher prices domestic producers could receive on the world market. A basic result in the economics of markets is that any restriction on price or quantity will come at a net cost to society. I am not saying that we should remove the export restriction just becaues it benefits domestic producers, but rather, the export restriction causes a loss to domestic producers (and world consumers) that outweighs the benefit to domestic consumers. In other words, the net benefits from natural gas production are lower with the export restriction than without--regardless of who gains and who loses.
If we (in the collective) are happy with accepting a smaller pie because we like the way the pie is divided, then by all means, keep the export restriction. But we need to recognize that it comes at a cost. And by leaving the export restriction in place, we are making a subjective judgement. Personally, I don't like making that judgement for others.
Just call me the Darren Rovell of environmental economics. I received this comment via twitter:
neither confuse big government with more efficient government, which is an even more frequent bias
The problem with that, and twitter in general, is there is little explanation for the comment. Is the tweeter saying that a benefit-cost analysis should be conducted to determine the most efficient amount of monitoring and enforcement? With only the tweet I must uncharitably assume that the tweeter is a knee jerk reactor who always prefers smaller government.
Why do you call that a "bias"? If you follow the link you'll notice that I'm suggested a benefit-cost analysis be used to determine the optimal size. Also, what evidence do you have that big government / more efficient is "even more frequent."
I wouldn't have posted this one unless "efficiency," that most precious of words (to an economist), was used incorrectly:
There are fewer people protecting the state’s waters than there were a month ago.
Last week, the Department of Environment and Natural Resources eliminated 13 percent of the staff positions in the Division of Water Resources. The cuts were only the latest step in years of winnowing the state agency. Legislators have erased jobs there every year since the recession in 2008.
The juxtaposition of regulators losing their jobs so soon after the environmental disaster at Dan River that spilled coal ash into the state’s waterways is jarring. But the cuts were planned last summer as part of the agency’s reorganization and are just a piece of a much more far-reaching scenario that has escalated since Republicans took control in 2011. Since then the state has imposed heavier budget cuts, reduced restrictions on private industry and required DENR’s staff to justify the agency’s regulations in an extensive review process that is just beginning.
Lawmakers say they are making government more efficient without endangering the environment or public health and emphasize that their changes have nothing to do with the Dan River spill. But environmentalists say the politicians are gambling with the state’s future, which inevitably will harm North Carolinians.
There are two types of efficiency. Allocative efficiency is when resources flow to their most highly valued used. Technological efficiency is when the cost per unit of output is minimized. Technological efficiency is a necessary, but not sufficient, condition for allocative efficiency.
The NC legislature is arguing that reductions in monitoring and enforcement will not reduce environmental quality. There is little (if any) empirical evidence to support this argument. Gray and Shimshack (2011) put in this way in their REEP abstract:
The consistent findings from this literature review are as follows: (1) environmental monitoring and enforcement activities generate substantial specific deterrence, reducing future violations at the targeted firm; (2) environmental monitoring and enforcement activities generate substantial general deterrence, reducing future violations at facilities other than the targeted one; and (3) environmental monitoring and enforcement activities generate not only reductions in violations but also significant reductions in emissions.
The empirical evidence shows that when environmental quality monitoring and enforcement staff is cut a less than effective job of environmental monitoring and enforcement is made even less effective. In terms of technological efficiency, the state of NC is cutting costs while also cutting units of environmental quality produced. We need more evidence to support the legislature's technological efficiency assertion.
On the other hand, cutting monitoring and enforcement staff might be allocatively efficient. The most recent statewide election that turned the NC legislature Republican signaled that NC voters prefer lower environmental quality than they have been getting. A benefit-cost analysis would provide more explicit evidence.
But less charitably, since the shrinking of DENR has come before the benefit-cost analysis ("extensive review process that is just beginning"), I don't think that the NC legislature has either type of economicy efficiency in mind when they are cutting environmental quality enforcement staff. It seems that they are simply trying to reduce the size of government, cut income taxes and increase private sector profitability.
By: Tobias Börger, Nicola J. Beaumont, Linwood Pendleton, Kevin J. Boyle, Philip Cooper, Stephen Fletcher, Tim Haab, Michael Hanemann, Tara L. Hooper, S. Salman Hussain, Rosimeiry Portela, Mavra Stithou, Joanna Stockill, Tim Taylor, Melanie C. Austen
In: Marine Policy, Volume 46, May 2014, Pages 161-170.
Abstract: This paper scrutinises the use of ecosystem service valuation for marine planning. Lessons are drawn from the development and use of environmental valuation and cost-benefit analysis for policy-making in the US and the UK. Current approaches to marine planning in both countries are presented and the role that ecosystem service valuation could play in this context is outlined. This includes highlighting the steps in the marine planning process where valuation can inform marine planning and policy-making as well as a discussion of methodological challenges to ecosystem service valuation techniques in the context of marine planning. Recommendations to overcome existing barriers are offered based on the synergies and the thinking in the two countries regarding the application of ecosystem service valuation to marine planning.
I have recently read Senator Vitter's letter to the National Park Service dismissive of the use of survey methods (the contingent valuation method in particular) in benefit-cost analysis. In dismissing the method, Senator Vitter cites an article by economics Professor Jerry Hausman published in the Journal of Economic Perspectives in 2012. In choosing to selectively use Professor Hausman's critique of the contingent valuation method, Senator Vitter fails to mention that Professor Hausman's critique is one of three articles in a symposium in that issue of the journal, of which the other two articles provide much more positive assessments of the method.
The selective use of a single publication from a vast peer-reviewed literature to defend a stance critical of the use of a method flies in the face of responsible use of academic research and will ultimately lead to bad public policy.
I received the following reply this morning:
Thank you for contacting me regarding your concerns about funding for national parks. I understand your concerns with this matter and share your love of the outdoors. Ohio's lakes, rivers and wildlife are truly a treasure and protecting and preserving them is a top priority for me. During my tenure as the Director of the Office of Management and Budget, I launched the National Parks Centennial Initiative in an effort to preserve our national parks.
Unfortunately, as American families have tightened their belts over the past couple of years and businesses have had to do more with less, the federal government has taken the opposite path, spending more, growing bigger, and becoming more involved in our economy and our lives. Getting our deficit and debt under control is the single most important step we can take to get our economy going, create the jobs we need so badly, and have federal funding available for priorities like national parks.
I am committed to working in a bipartisan manner to meet our economic and fiscal challenges by putting in place pro-growth measures and spending restraint. We need to promote new tax policies that take away the uncertainty and encourage innovation and investment and make us more competitive in a global economy. We must revisit health care reform to truly reduce costs, allowing working families and small businesses to afford access to care. We need sensible regulatory reform that reverses the growing burdens on employers that drive jobs overseas. Finally, we have to develop a national energy strategy that uses our own resources to stop our dangerous dependence on foreign oil.
Once again, thank you for taking the time to write. I am honored to represent you and the great state of Ohio in the United States Senate. For more information, please visit my website at portman.senate.gov. Please keep in touch.
Rob Portman U.S. Senator
Call me skeptical, but I don't get the feeling he really wants me to keep in touch...or really read my letter for that matter.
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