Monday, September 27, 2021

Real-World Economics: Naturally, we will pay the price, and we will all pay the price

Extreme wildfires, droughts and rainfall, record high temperatures in places such as British Columbia, and other weather-related events are increasingly common in the news. The climate is changing.

Edward Lotman

Societies and economies, including ours, will adapt in one way or another, although not necessarily in a way that can successfully maintain the lifestyle and consumption levels that some people have now. However, in an era where we are more politically divided and public discourse is more extreme than in decades, this adaptation involves complex economic issues that involve collective decision-making.

In the introductory economics course, students are told that adapting to change is one of the basic challenges faced by all economies. However, unless students continue their studies, they will know little about the complex challenges of collective decision-making inherent in natural forces such as climate. The reason is that this social choice is essentially a mess.

As a concrete example, consider the dilemma in New Orleans.

This is a short-term success story. Although Hurricane Ida last week was very strong and caused huge damage to a large area, the city itself did not suffer the devastating floods and many deaths of Hurricane Katrina 16 years ago. This is mainly due to the federal spending of US$17 billion on improving dams and storm surge barriers.

For per capita in a metropolitan area, this kind of expenditure is unprecedented. This is the largest such flood prevention effort since the main dam of the Missouri River stretched from South Dakota to Montana. These buildings lasted 30 years and were designed to protect the entire Missouri-Mississippi Valley, not just a metropolitan area.

However, even so, in the long run, New Orleans still faces a bleak future.

First, it depends on whether Mississippi stays in its current location. However, with the passage of geological time, the water discharged from central North America has found an outlet in many places, usually between the Mississippi River as we know it, and its current Louisiana competitor, the Achafalaya River and the Red River.

Over time, natural geological forces have promoted this change. Human activities including three centuries of embankment construction and wetland drainage have highlighted it. This is explained well in John McPhee’s little book “Natural Control”. As a result, the water level of the Mississippi is now 10 to 22 feet higher than the Achafalaya River a few miles away. The engineer lock allows ships to pass from one to the other. If left unchecked, Atchafalaya will “capture” the Mississippi water. Most of the water now flowing through New Orleans will enter the bay that is now located near Morgantown in Los Angeles. Salt water will invade the northernmost Baton Rouge.

Just after the end of World War II, Congress decided that this would not happen. It ordered a 30/70 diversion between the Achafalaya and Mississippi in the north. We spent tens of billions of dollars on control structures to regulate these flows and support emergency spillways and flood channels. But these have almost been washed away in past floods, including 2011, and they will definitely be washed away at some point in the future. The question is whether it will be a year, 10 years, or 50 years from now.

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This is not the only problem in this city. The ground below the city center sinks about 6 inches every ten years. This has nothing to do with the Mississippi-Achafalaya issue. The greater the sinking, the more difficult it is to maintain the dikes and huge pumping systems to remove the water that has accumulated on the land. The pump needs its own backup power source because, as Ida proved, hurricanes can cause huge damage to the power distribution system.

This type of settlement is not unique to New Orleans, it is also common on the Miami coast and surrounding areas.

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In addition, the Mississippi Delta and the coastal barrier island that protects the mainland from storms continue to shrink

Again, this problem is not just a Louisiana problem. In fact, from north of Miami to Carolina, Virginia, Delaware, Maryland, and New Jersey, the east coast has always been an extreme and direct challenge. The removal and disappearance of these barriers will affect millions of people, including the entire New York City metropolitan area.

When such geological changes occur, the question is whether to try to stop them through engineering structures or measures, or to facilitate the migration of threatened populations to safer areas.

Talk to a geologist, the second option is the only reliable option. The threat to New Orleans or the Gulf Coast and East Coast is a matter of decades, not centuries. However, politically, even considering shutting down the plug on the islands of the Jersey coast, let alone the Bund or Big Easy in North Carolina.

The problem is that people are not rational. Rejection is a very common response to threats. I made it myself and there is a swollen lymph node on my neck. All of us heard the slight tapping under the hood and told ourselves it was a trivial matter. But sometimes the broken connecting rod does pass through the engine block, and we will spend thousands of dollars. For all mankind, climate change has astronomically magnified this avoidance cost.

So when scientists say that some islands will disappear or rivers will change direction, we hope they are wrong. The “logic of collective action” of economist Mancur Olson played a role in spades.

A small number of people, everyone has a big stake, for example, a family that owns a house on a beautiful island or a company that operates an oil refinery or a grain export elevator on a doomed river has a great motivation to demand government spending. Doom disappeared. No one in the rest of the population will lose too much, so it is not worthwhile for them to oppose spending or call for better alternatives in the long run. So we rebuilt towns in the floodplains and injected millions of tons of sand on the disappearing beaches. But in the ever-changing climate, we are going upstream and we will face exhaustion.

Real-World Economics: Naturally, we will pay the price, and we will all pay the price
Nation World News Desk
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