Counties with Levees Are Some of the Nation’s Most Economically Sound, Report Says

Hundreds of levees around the United States protect vulnerable areas and tens of millions of people from potentially devastating floods. Yet hardly anyone gives them a second thought until one is breached. The most glaring example is the wreckage that occurred in the New Orleans area when flooding from 2005’s 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?

One researcher from Louisiana State University who studied the economic impact of flood control systems says the answer is yes. Ezra Boyd, a graduate student and geographer, describes how he came to the conclusion that the economic gains from development near bodies of water are 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 a nonprofit group with an interest in the nation’s levees, Levees.org.

Data provided by the Federal Emergency Management Agency indicates there are 881 counties — or 28 percent of all counties in the United States — that contain levees, or other flood control and protection systems. They account for only 37 percent of the total land area of the United States. But as of 2004, 55 percent of the U.S. population, or more than 156 million people, resided in those 881 counties.

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

“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 well-being. Such services include maritime trade, municipal and industrial water supply, irrigation for farming, sustainable seafood harvests, and recreation,” according to Boyd.

“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, which reflects 1999 employment and income, Boyd compared two groups of communities — those with levees and those without — in regard to total productivity levels, personal income and poverty rates. The study recognized that while a county may contain a levee, its entire population may not necessarily reside in a levee-protected area. However, the entire county generally benefits from the direct and secondary advantages of being located near a body of water, such as access to jobs and sources of water for the communities within the county. The report analyzed data from entire counties, not just areas that are protected by levees.

The report also recognized that the 2000 Census information is the most complete source of employment and income data, until the 2010 Census is completed.

Using a statistical procedure that compared and assessed observed levels of productivity levels, personal income and poverty rates, Boyd found that counties with levees fared better economically than those without.

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.

The levees report noted that 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. Of note, the estimate includes just revenue from personal income taxes. It does not include corporate taxes, port fees or other sources of government revenue,” the report states.

The estimated $75 billion excess federal tax contribution of counties with levees exceeds the cost of losses associated with floods, the report asserts. In 1999, the researcher said, flood losses in the United States 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’s report.

Boyd also conducted a case study of Southeast Louisiana, examining the population and economy of the state as well as “the costs associated with levee failures and storm surge flooding during Hurricane Katrina in the context of the economic benefits provided by the affected people and industries.”

According to Boyd, while in Louisiana as a whole income levels are generally low, Southeast Louisiana enjoys personal income levels close to the national average. The study also found that even with the “unprecedented flooding” that occurred in 2005 as a result of Hurricane Katrina and caused an estimated $100 billion in losses, “the public’s cost associated with this disaster is greatly outweighed by the benefits provided by the area’s numerous large and small ports, access to offshore oil and gas, and bountiful seafood harvests.” It cited the $149 billion in royalties from Federal OCS oil and gas leases in the area as just one example of how the nation benefits economically from the Mississippi Delta region.

“Assessing the Benefits of Levees: An Economic Assessment of U.S. Counties with Levees,” is available at www.levees.org.

Topics USA Profit Loss Flood Louisiana