Levees Protect Some of Nation’s Key Economic Areas

Flooding Control Costs Are Outweighed by Regional Economic Benefits, Study Finds

There are hundreds of levees across the U.S. — from Miami to Los Angeles and Detroit to New Orleans- that protect vulnerable areas and tens of millions of people from potentially devastating floods each year. New data released by Levees.org shows that a majority of the U.S. population lives in counties protected by levees, and that those counties are wealthier than typical communities.

Yet hardly anyone gives levees a second thought until one is breached. The most glaring example, obviously, is the wreckage that occurred in the New Orleans area in 2005 when flooding from Hurricane Katrina wiped out entire neighborhoods.

The preponderance of levees throughout the country raises the question: The high cost to human lives notwithstanding, do the economic benefits provided to communities protected by flood protection systems outweigh the costs of potential flood losses in those areas?

A researcher from Louisiana State University who undertook to study the economic impact of flood control systems found the answer to be: yes. Ezra Boyd, a graduate student and geographer, describes how he came to the conclusion that the economic gains that come from development near bodies of water are ultimately greater than the losses associated with flood risks in “Assessing the Benefits of Levees: An Economic Assessment of U.S. Counties with Levees,” a report commissioned by the nonprofit group, Levees.org.

The Federal Emergency Management Agency reports there are there are 881 counties – or 28 percent of all counties in the United States – that contain levees or other kinds of flood control systems. They account for only 37 percent of the total land area but as of 2004, 55 percent of the U.S. population, or more than 156 million people, resided in those 881 counties.

It’s not the levees themselves that make protected areas attractive for development. Instead, it’s the bodies of water and the flood plains they create – and that require flood protection measures – that provide the economic and geographic incentives for development, according to Boyd.

“Rivers, lakes, and seas – along with their associated flood plains have long been an engine of economic development. These diverse and productive ecosystems provide a number of services crucial to maintaining populations and improving their wellbeing,” Boyd wrote, citing maritime trade, municipal and industrial water supply, irrigation for farming, sustainable seafood harvests, and recreation as among the services.

“While flood losses are unfortunate and should be minimized, the economic benefits – including increased income and decreased poverty – of direct access to the most productive types of ecosystem may still outweigh the risk of flood losses,” the report states.

Relying 2000 Census data, Boyd compared communities with levees and those without levees with regard to total productivity levels, personal income and poverty rates. The findings revealed that: (1) The average county with levees produces nearly 3.3 times (or $2.6 billion) more in annual goods and services. (2) The average resident in a county with levees earns $1,500 more per year. (3) The poverty rate averages 2 percent less in counties with levees.

Total personal income for all U.S. counties was $6.1 trillion in 1999. Personal income in counties with levees amounted to $3.4 trillion, or 55 percent of the total. In counties without levees, personal income was $2.7 trillion, or 45 percent.

“So, total productivity for counties with levees is $700 billion greater than for counties without levees. Based on the simple formula that 10 percent is paid as personal income taxes, it is estimated that counties with levees contributed $70 billion more to the Federal treasury than counties without levees,” the report states.

The estimated $70 billion excess federal tax contribution of counties with levees far exceeds the cost of losses associated with floods in the U.S., according to the report. In 1999, flood losses totaled $5.3 billion, and $191 million in U.S. government aid was paid to flood victims.

From its inception in 1978 until 2008, the National Flood Insurance Program paid nearly $36 billion in total claims, “less than half of the one year excess tax revenue contributed by counties with levees. In other words, the public costs associated with flood disasters are considerably less than the excess tax contributions of flood prone counties,” according to Boyd.

The study also found that even with the “unprecedented flooding” that occurred as a result of Hurricane Katrina and caused an estimated $100 billion in losses, the public’s cost is greatly outweighed by the benefits provided by the area’s ports, access to offshore oil and gas, and seafood harvests. The $149 billion in royalties from Federal OCS oil and gas leases in the area as just one example.

The full report is available online at www.levees.org.