The Economics of Flooding

A famed philosophical problem has an out-of-control trolley barreling down a track about to kill five people. You can throw a switch to divert the trolley to a different track, where a single person will be killed. Should you throw the switch and kill one person to save five? Earlier this spring, the U.S. Army Corps of Engineers diverted the path of the swollen Mississippi River. It opened spillways, flooding thousands of square miles of Missouri and Louisiana farmlands, including some small towns, to reduce the risk that the levees protecting urban areas such as Baton Rouge and New Orleans would burst. If these river cities were flooded, it would produce losses orders of magnitude greater. Was the corps' action appropriate? Those whose farms, homes or businesses got inundated are howling in protest: "Responsible governments do not impose massive costs on their citizens." And the political outcry and lawsuits are just beginning to mount. We have done research on situations in which the government takes private property in emergencies to reduce expected economic costs, as the corps did. There is a better way.