Want A Beach House? You Pay.
I've posted about this before, how we subsidize other people's seaside living with Federal flood insurance, but they delivered a USA Today to our hotel room this morning, and I was all irate all over again reading their editorial. They talk about the assumption that those who lost their seaside homes should up and rebuild where they were:
At least one leading New Jersey politician is already talking about moving people out of some of the most flood-prone areas, those drowned last year by Tropical Storm Irene and again by Sandy. "Get appraisals for their homes, write them a check, knock the homes down and just let it go back to its natural state," said Steven Sweeney, a Democrat and president of the New Jersey Senate.Good luck with that. A huge federal apparatus and powerful special interests are intent on doing just the opposite. The best illustration of this misguided policy is the National Flood Insurance Program, created in 1968 to provide insurance to homeowners on coasts and near rivers who had trouble getting private coverage.
The creators meant well, but here's the flaw: The program's premiums don't reflect the actual risks, especially in an era of rising sea levels and extreme weather. As a result, federal insurance has encouraged developers to overbuild in risky areas, buyers to purchase there and residents to rebuild even after repeated flooding.
A USA TODAY analysis in 2010 found 19,600 properties where multiple insurance claims resulted in payouts greater than the property's value. One Mississippi home valued at $69,000 had been flooded 34 times since 1978, prompting insurance payouts of nearly 10 times its worth!
...Step one is to carefully decide what should, and shouldn't, be rebuilt. Encourage residents to leave the most vulnerable places. In the areas that are rebuilt, require homes to be raised on pilings, and restore dunes and other natural buffers.
Longer term, eliminate taxpayer subsidies of the insurance market. Premiums would surely rise, some drastically, reflecting the true risk of living so close to the water. And that's the whole point.
Those of us who live in earthquake zones should speak humbly...
crid at November 16, 2012 12:29 AM
It's really quite simple: let them rebuild. However, they should - indeed, must - buy private insurance. Or else build without insurance. Either way, it's entirely up to them. If they do rebuild, their insurance company is likely to take an interest in just how they build - buildings can be made very resistant to flooding and storms: solid concrete construction, proper drainage, integrated pumps with emergency power. If you can't afford these measures, you should probably live somewhere else...
@Crid: Sorry, but it's the same for earthquakes. If you're in an earthquake zone, and want insurance, why should it be subsidized? Actually, earthquakes should be less of a problem than floods, since the appropriate building techniques are pretty well known.
Anyway, even if the government does subsidize insurance, just why is this a federal job? Ought to be something for the local governments...
a_random_guy at November 16, 2012 1:20 AM
Why am I subsidizing insurance on beachfront property that I am not allowed to use?
MarkD at November 16, 2012 5:23 AM
Part of the problem is defining "risky." (Which is why we should let private insurance take this on, as they pay actuaries to do that work and are motivated to get it right.)
I mean, we all think we've conquered mother nature, but who doesn't live in a risky area? Between floods, earthquakes, fires, tornadoes, hurricanes, and blizzards, it's a tough world out there.
The law of unintended consequences is hard at work in the National Flood Insurance Program, but I'm also not sympathetic to some lawmaker deciding that certain areas must revert "to their natural state." Here in Boulder, this tends to translate to the rich folks who want to preserve their views spending their money for environmental studies that, surprise, surprise, support their NIMBY agenda.
Astra at November 16, 2012 5:47 AM
I am certainly not sure of what the right answer is.
Growing up in LA, the hills are filled with fire, and we thought it crazy that people would live in the hills and face the fire threat every year and then rebuild.
But then there was the Sylmar earthquake and the Northridge earthquake and one day the San Andreas and Hayward will go and then what?
Then there are the people that live in Tornado Alley, so I guess that makes a huge swath between the Rocky Mountains and the Appalachian Mountains a no go.
At the moment I don't know how to differentiate between people that live in floodzones, tornado alleys, forest fires, or earthquake territory.
jerry at November 16, 2012 5:48 AM
Amy Alkon
http://www.advicegoddess.com/archives/2012/11/16/want_a_beach_ho.html#comment-3455588">comment from jerryInteresting piece from 1994 on the "Disaster of Federal Disaster Relief," by Sheldon Richman, who writes for reason magazine sometimes these days.
http://www.fff.org/freedom/0594e.asp
Amy Alkon at November 16, 2012 6:31 AM
The odds of a tornado taking the same house out twice in ten years are very low, and is insured by a private carrier. The same with earthquake and fire insurance. And many times the private carrier will pay to rebuild the house, but will tell them "These will be the new premiums" at three times the cost or "We'll rebuild it but we're go drop your coverage afterward."
But some idiot built a house down by the Mississippi that will probably be flooded minorly every spring and will probably be half-submerged at least twice in ten years. They continue to receive coverage and the U.S. taxpayer is paying for it.
Jim P. at November 16, 2012 6:34 AM
It's simple, for federal money. If you live in a place that has ever flooded, you get no government money if it floods again. You were forwarned. If a private company wants to insure you, or you want to risk it, that's your right as an adult, but don't come cry to us. I think the same should go for places known to burn or mudslide just about yearly (hills in CA, I'm looking at you).
If your house floods as part of a natural disaster and was not previously IN a flood zone, I am ok with the gov't helping you get out. Not rebuild. But no one can see the future 100% and I do think helping with catastrophies can be something government does in a limited, strict way.
Tornados are common in a large swath of the country, and aren't predictable as to location. And generally it's private insurance companies paying out on those.
momof4 at November 16, 2012 7:14 AM
With the increasingly severe weather of late, it's hard to tell where the flood zones are now. There are people in high-rises in the financial district of Manhattan who won't be able to get back into their homes for months. Not exactly what pops into your head when you think "beach house."
clinky at November 16, 2012 7:23 AM
A town in Florida was sued by property owners, for classifying their land as floodplain, and zoning it such that single-family homes weren't allowed. (IIRC, Farms and farmhouses were.)
In the face of the suit, the city rezoned the property.
4 years later, the subdivisions built on the land were flooded.
The homeowners (including original plantiffs) then sued the city, for failing to zone the land such that they couldn't build on the properties they'd sued to build on.
Unix-Jedi at November 16, 2012 8:36 AM
"the increasingly severe weather of late"
There is no upward trend in severe weather. Take hurricanes as an example.
What we have are short memories, combined with a media that makes every disaster sound like the end of the world.
a_random_guy at November 16, 2012 8:54 AM
Random, that's a good point. Plus, with many of these types of events, we don't have good records going back very far. Prior to the advent of weather satellites in the 1960s, most hurricanes formed and died at sea and were never detected. Prior to Doppler weather radar becoming widespread in the 1980s, many torandoes and funnel clouds were not observed. And California almost certainly had earthquakes and wildfires prior to 1830 that we'll never know about.
Cousin Dave at November 16, 2012 9:57 AM
This is just another case of government distorting the market.
If it were not for the availability of federal flood insurance, banks would not make loans to build houses on the shore or in flood zones. If the government would get out, the market would correct the situation. Not immediately, but over the next fifty to 100 years.
The problem is that most people can't see that a long term solution is better than an immediate short term solution, that does nothing but make the problem worse.
Isab at November 16, 2012 11:36 AM
I don't own a house and never lived near a river, but I can see a difference between the 100 year flood and the 10 year flood.
But it seems similar to the folks that live in the hills around LA in the fire zones.
All that said, I currently live in a place built on something like 800 feet of salt, no earthquake faults, no tornadoes, no water, no floods, no tsunamis, no hurricanes, no natural disasters at all, which is one reason why so many server farms are here.
It is not a fun place to live, except real estate is cheap here. It is a godawful, terribly ugly, terribly boring, terribly the same day after day place of no mountains, few hills, all brown, no rivers, no oceans, no snow, no forests, what a fucking dump.
But real estate is cheap so the place is a land of 10,000 malls.
Bleh.
jerry at November 16, 2012 6:50 PM
Where is the absolute outrage over this form of government handout?
Or is that only for 'handouts' that help the less fortunate?
DrCos at November 17, 2012 5:36 AM
Amy Alkon
http://www.advicegoddess.com/archives/2012/11/16/want_a_beach_ho.html#comment-3458425">comment from DrCosWhere is the absolute outrage over this form of government handout? Or is that only for 'handouts' that help the less fortunate?
Um, do you understand that I posted this because I think it's awful, not because I think, "Yay! Let's pay for rich people to live at the beach!"?
Amy Alkon at November 17, 2012 6:33 AM
No, I konw that you think it's awful/disgusting and I share your outrage at this.
I just want to know why there is less outrage from the usual suspects than what they have for other posts about government handouts. It seems to me that this kind of thing should raise just as many hackles here as other welfare stories.
DrCos at November 17, 2012 10:06 AM
Amy Alkon
http://www.advicegoddess.com/archives/2012/11/16/want_a_beach_ho.html#comment-3458645">comment from DrCosWe've discussed it before, a number of times, related to paying for David Geffen's beach house, etc.
Amy Alkon at November 17, 2012 10:13 AM
"I just want to know why there is less outrage from the usual suspects than what they have for other posts about government handouts. "
Plenty of outrage here. I just didn't have anything to say that other commenters hadn't already said.
Cousin Dave at November 18, 2012 2:10 PM
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