Matt Kahn:
When you spend "other people's money", do you have the right incentives to rebuild in a smart way? … What if New Jersey's residents knew that there would never be another FEMA $ for rebuilding their state's residential and commercial structures and any new structures that would be built post-Hurricane Sandy would have to withstand future natural disasters or the people of New Jersey would be on the hook for such damage? …
Given the reliance on FEMA $, how will coastal areas such as Atlantic City be rebuilt? Will a higher quality capital stock that is more flood resilient be built? Will FEMA $ be used to rebuild in the same places using the same materials as before?
During a time of tragedy, we seek to make the victims whole but is an unintended consequence of such well meaning aid to create a "moral hazard" effect such that the next natural disaster causes equal pain? Could "tough love" (i.e no FEMA bailout) actually aid climate change adaptation efforts?
… Will liability laws need to be strengthened to hold home owners liable for their trees? How do we incentivize such owners to invest in costly precautions such as tree trimming? … How do we use the legal code to encourage more ex-ante self precautions to reduce the damage caused by natural disasters?
How do natural disasters affect population migration patterns? …
via greeneconomics.blogspot.com
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