Federal flood infrastructure: its costs, its benefits, its costs

The federal government has deployed significant flood infrastructure on behalf of the American people, largely using a cost-benefit framework which fails to account for material value such as intangible and non-market assets. This post explores the consequences of such a framework, and the methods by which more accurate valuations might be achieved. It owes a significant debt of gratitude to "Mississippi River Tragedies: A Century of Unnatural Disaster" by Christine A. Klein and Sandra B. Zelmer.



“It is hereby recognized that destructive floods upon the rivers of the United States, upsetting orderly processes and causing loss of life and property, including the erosion of lands, constitute a menace to national welfare… flood control is a proper activity of the Federal Government …the Federal Government should improve or participate in the improvements of streams for flood-control purposes if the benefits to whomsoever they may accrue are in excess of the estimated costs”


Since 1936, the federal government has overseen the vast majority of flood control infrastructure in the United States, particularly when calculated by dollar value. This spend has been deployed through a relatively utilitarian cost benefit framework. As a result, it is highly effective when the values of cost and benefit are well represented and probabilities, well estimated. It is less effective when they are not.

Communities have endured significant consequences as a result of federal flood mitigation, both when it works as it is designed, destroying underappreciated value, as well as when it fails in unpredicted ways. Climate change may take many different forms, but one of the most likely is increasingly frequent and increasingly volatile flood conditions. It is worth exploring the ways that value and probability may be better assessed within the federal apparatus and beyond.


The Mississippi River floods of 1927 created a groundswell for federal action on public works. Combined with New Deal politics less than a decade later, this produced substantial legislation. In the Flood Control Act of 1936, the federal government and the Army Corps of Engineers achieved a stunningly broad mandate to design, finance, and construct flood protection in the forms of spillways, levees, and dams. 

Since 1928, the Corps has spent more than $120B on Mississippi River flood control structures alone. Federal funding is matched by cash or in-kind contributions from state and local entities. Coastal communities (particularly those near major metro areas) have received similar levels of funding. New York City, for example, received $15B in federal appropriations for flood resilience post-Hurricane Sandy.

Nationalization of infrastructure markets is, in some ways, the thing we ask the federal government to do, regardless of political party. Risks from natural disaster are existential, and a mitigation of those risks should be proportionally sized. The effectiveness and equality of this national investment should be a focus of corresponding size and importance, ensuring that costs and benefits are fully recognized and well matched. 

To date, the federal government has sought to achieve effectiveness and equality through formal cost-benefit assessments. These assessments are incredibly difficult tasks, conducted in adaptive environments with the tools available to our institutions. They seek to establish the impact of a project, which requires an accurate projection of flood risk, infrastructure durability, and infrastructural impact on an ecosystem. This is set against the cost of a project. 

The task of cost-benefit assessment and execution at scale is nearly impossible and often thankless. There is no question it can be done better, and the struggle to accurately map risk in a complex adaptive ecosystem is an asymptotic pursuit that we will explore together in weeks to come. Unforeseen consequences and model errors are, in many ways, inherent problems of modeling at scale. We will not fault the system for the fact they exist, even though they could be substantially diminished over time.

More immediately solvable is the fact that infrastructure planning is failing to account for known consequences and costs. Some of these consequences are explicitly financial. Some of them are not. When we do not quantify the cultural value of land, we are more likely to flood it. When we refuse to connect levee policy to coastal erosion, we are less likely to allocate to resilience projects in other communities. In doing so, we are heaping concentrated consequences on certain communities.

In 2005, the Army Corps of engineers stated that they would not have implemented solutions which would have stopped levee failure during Hurricane Katrina because their cost model, “did not take into account such non-economic assets as human life.” 

This seems like a good place to start.


A short list of foreseen consequences that have been approved under federal cost-benefit rubrics.

  • The removal of Native Americans from reservation grounds during the reservoir projects of the 1960’s. More than 23 reservations were affected by reservoir placements, causing what one historian termed “more damage to Indian land than any other public works project in America.” The reservoirs were necessary to control naturally occurring floods, but were required to be far larger than normal by the pervasion of levees throughout the Missouri and Mississippi River basins. Native American tribes received minimal compensation for their forfeiture, often in the form of relocation to lower quality lands. Their losses included land productivity, stability, and cultural significance. For the next decades, high water would exhume buried ancestors. This value was not accounted for in formal calculations, nor have communities received real recompense for their losses.
  • The failure to map much of the Midwest for flood risk before the 1993 floods. The Federal Flood Insurance program is a keystone in the federal government’s approach to flood management and response. In many ways, the program is meant to incentivize local action through land-use policies, and is meant to share some of the costs of flood risk with landowners. Pricing and availability is dependent on federal flood risk maps. In 1993, the Mississippi and its tributaries flooded 17,000 square miles of the Midwest due to unpredicted rains and levee failures. Of the flooded region, 108 counties had never been mapped for flood insurance. The perceived flood risk and the value of the assets was not worth the cost of accelerating mapping efforts. Other areas were excluded from coverage requirements because cost benefit analysis assumed that levees would hold.
  • During Hurricane Katrina, several levees failed around the city of New Orleans. In the years to come, the Corps would accept significant blame for negligence in the maintenance of levees, and a failure to account for the impact of navigational canals (such as the Mississippi River-Gulf Outlet) in bringing storm surge directly in contact with infrastructure. 


Leaving probability assessments aside for the moment, federal infrastructure deployment rubrics need to change in two critical and related ways. First, the cost-benefit analysis needs to include a broader spectrum of costs, ranging from cultural value to ecosystem services (such as the value of wetlands) in reducing storm surge to the value of reliance on federal competence. 

Secondly, these costs need to be accurately valued. The Corps was wrong to term life a “non-economic asset”. If economics doesn’t proceed from life, then I don’t know what does. They would be more accurate to term it “a non-market asset”. There are not too many liquid markets in human lives. I have not come across any transacting in the value of tribal burial grounds or the value of a promise.

These are bespoke assets with context-specific value. It takes a great deal of effort and deliberation to price them. One of the few institutions that has undertaken this work with regularity is the court system. Wrongful death cases, for example, have set clear precedent for the value of a life, but always consider mitigating factors. Pain and suffering, negligence, and cultural loss are all priced in court rooms every day.

This pricing method has been uniquely absent from the flood infrastructure space. In many instances, the federal government has invoked sovereign immunity to prevent its citizen from filing suit over its actions. When it comes to climate infrastructure, that right is enshrined specifically in law.

According to A COMPARATIVE LOOK AT PUBLIC LIABILITY FOR FLOOD HAZARD MITIGATION, “The Federal Flood Control Act of 1936 (Section 402(c)) exempts the federal government from liability for negligence in constructing and operating flood control works. This is an extremely important exemption and has substantially limited flood-related suits against the federal government.”


In some sense, federal amnesty is good. 67% of Americans believe that the federal government should play a major role in building and maintaining infrastructure. 87% believe a major role is appropriate in responding to natural disasters. We should place few barriers in the way of things we want. The federal government might be less likely to fund infrastructure projects if it knew that action might result in significant legal liability.

As a corollary, litigation has destroyed local government’s appetite for development restrictions in flood prone areas. Municipalities can be sued when their land-use policies – such as limitations on building in floodplains – impose loss on private land rights. Individuals and corporations have pursued litigation aggressively, and until recently, the courts have deemed much of local regulation to be "regulatory taking", which requires market compensation for lost value. As a result, local development restrictions (on which things like Federal flood insurance actuaries rely) have been slow to take root over the past 50 years.

Federal hazard mitigation has enabled staggering growth. Real estate values in coastal and riverine areas have increased by more then $100B. Commerce on managed waterways drives significant portions of the agricultural and energy economies. This growth relies on the promise of “floodlessness” though. The assets built in the shadows of federal infrastructure are rarely suited to handle flooding that would result from structural failure. Our infrastructure, predicated on the ability to push water from one place and into another, will continue to impose costs on some communities for the betterment of others.

The current placement of infrastructure undervalues damage to the intangible assets that make places worth inhabiting. Until we begin accurately valuing those assets, citizens have little, if any ability to reflect their preferences. For communities with high market values, there exists the ability to build their own infrastructure (through municipal bond issuance, for example). Those communities are also far more likely to receive federal protection, given the cost benefit outcomes. 

In order to mitigate some of the consequences of its policy, the federal government will need to recognize value it has not perceived before, or communities will have to create funding structures that reflect their perspective on value. 


At dinner to celebrate my 32nd year of life, someone said, “it’s your birthday, we’ll talk about whatever you want.” Apparently, “whatever” did not extend to the phrase, “we should be able to sue the federal government.” I don’t consider myself a libertarian. I don’t believe in an adversarial relationship to government, which many people assume when they envision a courtroom. Perhaps naively, I believe litigation would improve citizens' relationship to government, bringing the resources to the level of society at which citizens' critical problems might be solved.

Even if the government were to begin valuing assets appropriately without aid from the courts, the classic definition of insanity would still apply to any federally controlled efforts to address externalities of existing policy. There are some tasks the federal government is not suited to perform, or which its citizens would prefer it didn’t perform. The correct of negligent harm seems particularly relevant. Few citizens trust an entity that harmed them to undo the impact. Model optimization and data collection are also tasks we will explore in the coming months.      


Litigation takes responsibility and funds from one level of society and delivers them to another, allowing communities to solve problems as they see fit. The Louisiana Coastal Master Plan, which seeks to coastal damage incurred from federal infrastructure up-river and natural resource exploitation in the Delta, is funded in large part by the Deepwater Horizon Settlement. The CMP is not the poster child of subsidiarity, but it’s a major step in the right direction, and one wonders what might be possible if more directly-harmed parties had standing to sue for resources.

It's also possible to imagine a less adversarial future, one in which the market appreciates intangible asset values and communities are able to lever those asset values to improve climate resilience. If stable, thriving communities are the goal we seek, a market for resilience, similar to the emerging market for carbon might be a more cooperative step towards a more durable future.


It’s entirely possible that we allow these communities to disappear in the coming years, slowly eroded by increasing naturally-occurring and human-caused events. We tend to think that when the people disappear, however, the land will remain and the negative consequences will cease with a single sacrificed generation. This is never true, and even if it is, the nation will have to compensate this managed retreat. We might as well start getting the costs right now, and let communities do what they wish with the proceeds. Some of them may find compelling ways to stay put, and contribute to our shared climate resilience in the process.

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