From the inbox--AccuWeather.com has set the 2013 Over/Under on U.S. landfalls from Atlantic Basin Hurricanes at 3. OK, they don't call it an Over/Under, but aren't most things more fun if gambling is involved? No? Is that just me?
When you spend "other people's money", do you have the right incentives to rebuild in a smart way? ... What if New Jersey's residents knew that there would never be another FEMA $ for rebuilding their state's residential and commercial structures and any new structures that would be built post-Hurricane Sandy would have to withstand future natural disasters or the people of New Jersey would be on the hook for such damage? ...
Given the reliance on FEMA $, how will coastal areas such as Atlantic City be rebuilt? Will a higher quality capital stock that is more flood resilient be built? Will FEMA $ be used to rebuild in the same places using the same materials as before?
During a time of tragedy, we seek to make the victims whole but is an unintended consequence of such well meaning aid to create a "moral hazard" effect such that the next natural disaster causes equal pain? Could "tough love" (i.e no FEMA bailout) actually aid climate change adaptation efforts?
... Will liability laws need to be strengthened to hold home owners liable for their trees? How do we incentivize such owners to invest in costly precautions such as tree trimming? ... How do we use the legal code to encourage more ex-ante self precautions to reduce the damage caused by natural disasters?
How do natural disasters affect population migration patterns? ...
Economic damages inflicted by Hurricane Sandy could reach $50 billion, according to new estimates that are more than double a previous forecast. Some economists warned on Thursday that the storm could shave a half percentage point off the nation’s economic growth in the current quarter.
Losses from the storm could total $30 billion to $50 billion, according to Eqecat, which tracks hurricanes and analyzes the damage they cause. On Monday, before the storm hit the East Coast, the firm estimated $10 billion to $20 billion in total economic damages.
The flooding of New York’s subways and roadway tunnels and the extensive loss of business as a result of utility failures across the region were behind the sharp increase in the estimate, the firm said. ...
Eqecat predicted that New York would bear 34 percent of the total economic losses, with New Jersey suffering 30 percent, Pennsylvania 20 percent and other states 16 percent. That includes all estimated losses, whether covered by insurance or not. The estimates and the share that will be covered by insurers are far from certain at this point, as government officials, property owners and insurance adjusters struggle to assess the destruction. ...
Hurricane Sandy will rank high among disasters in terms of economic impact but will not be at the top of the list, said Mark Zandi of Moody’s Analytics. He estimated that the losses would be less than half of those suffered because of the 9/11 terrorist attacks and from Hurricane Katrina.
Moody’s Analytics also put the impact in the $50 billion range, with about $12 billion in losses falling in the New York City metropolitan area.
About $20 billion of that total is from lost economic activity like meals not served in restaurants, canceled plane flights and bets not placed in casinos, Mr. Zandi estimated. The rest, about $30 billion, will be from property destruction, including damage to homes, cars and businesses, Mr. Zandi said.
*Dang, first rule of blogging: one cup of coffee before the first morning post.
Some environmentalists say New Jersey should consider not rebuilding everything lost to Superstorm Sandy.
U.S. Geological Survey scientist Jeffress Willliams says that rising sea levels and changing weather patterns make it likely that the coast will be hit by more frequent destructive storms.
He and other shoreline advocates say officials should consider restricting development to reduce the harm storms can do. They suggest relocating homes and businesses farther from the ocean, building more seawalls and keeping sand dunes high.
Gov. Chris Christie says the shore is too important not to rebuild. But he leaves the decision whether to build again to individual property owners.
OK, I'm about to step in it. One of the reasons the cost of coastal disaster mitigation is so high is the inefficiencies created today by perhaps efficient development patterns from years past. What I mean is that development patterns are at least currently efficient if they are based on the best and most current information about potential current and future contingencies. So let's suppose that the pre-Sandy Mid-Atlantic coast was efficiently developed over the past 300 years (a leap, I know, but go with me). Even if that were the case, doesn't a storm of historic proportions that rearranges many of the past development afford loclas the opportunity to develop newly efficient development patterns based on the supposedly better current knowledge of the potential and future contingencies (like erosion patterns and hurricane evacuations and yes, even climate change contingencies)?
And doesn't letting individuals decide whether to rebuild leave us with the same type of insurance market failure that we get when we continue to allow residents to rebuild in flood plains after flood events? The systemic risk overwhelms the insurance system during catastrophic events and it forces the government to once again become the insurer of last resort. I'm not opposed to individuals rebuilding. But the efficient decision will only be made if any insurance on the rebuild is priced at market rates (and not subsidized or backed by local, state or federal government).
*I don't really know what that means, but it seems like it might be appropriate. Besides, I just like the song.
All classes on main campus are canceled for Tuesday, Oct. 30. Current weather patterns predict heavy snowfall associated with the remnants of Hurricane Sandy to occur through 1 p.m.
Staff should follow the university's adverse weather policy.
I'll be working at home today since I am neither a critical nor essential employee. I came home last night with everything I needed to get my benefit cost analysis class going on their projects (I have 5+ brand new, but small, revealed and stated preference data sets that need cleaning). But, ooops, I found that I needed the SAS license updated on my laptop. I went through the registration procedure at the Appstate website. Unfortunately, the email that I received did not contain the license file and instructions for using the file. It is a very good thing that I have a thousand other things to work on (e.g., at least three more surveys to work on).
The worst U.S. drought in more than five decades is forecast to raise farm profits to a record $122.2 billion this year as higher prices and insurance payments outweigh crop losses from the dry conditions.
Income will rise 3.7 percent from a revised $117.9 billion in 2011, the U.S. Department of Agriculture said Tuesday in a report on its website. The forecast is up from $91.7 billion in February.
In related news, I cancelled more classes this year due to bad weather (i.e., I don't like to walk around campus in the rain) and my income has gone up 3.7% as a result. I love the NC state university system!
This summer, corn prices are high. Drought, extreme weather, and other factors combine to increase corn prices, and one of those factors is the federal ethanol mandate/renewable fuels requirement implemented over 20 years ago (as an oxygenate requirement) and extended in 2005. Roger Pielke Jr. points to a Purdue research paper that suggests that a waiver or partial removal of the renewable fuel standard could reduce corn prices by 20% or more. ...
This year’s drought has been painful and costly, but if in the process it leads to the demise of ethanol subsidies, boutique fuels, and the renewable fuels standard, that’s what I call a silver lining.
... the Environmental Economics blog ... is now the default homepage on my browser (but then again, I guess I am a wonk -- a word I learned on the E.E. blog). That is a very nice service to the profession. -- Anonymous
"... I try and read the blog everyday and have pointed it out to other faculty who have their students read it for class. It is truly one of the best things in the blogosphere." -- Anonymous