Matt Kahn:
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? ...
via greeneconomics.blogspot.com
