RiskProf

What Florida Really Wants -- Other Peoples' Money

This IJ article points out that Mr. McCain and some governors (two of which are mentioned as possible running mates) are at odds over a national disaster fund.  If we just focus on one principle that is supposedly an important part of the flood insurance program and apply it to the potential federal disaster plan -- that we do not have subsidies between high risk and low risk consumers -- the benefit of a national disaster plan evaporates.

If there is no subsidization from low risk to high risks, then there is no need for a federal backstop. The private market behaves this way currently. So what Florida really wants is to be subsidized.  It is that simple as a subsidy will keep economic development going as it it makes commercial and residential development in the state more attractive. Realistically, there is no way that the relatively low risk states will want to be part of subsidizing Florida's residents.  However, because of Florida's electoral college votes we may end up subsidizing Florida anyway.

Iowa and Katrina Floods

One of the co-bloggers here at RP is confined to his house out (on a hill luckily for him) in Iowa City.  He spent the weekend making sandbags to protect the University.  I asked Ty why there isn't the Katrina-like hue and cry about this flood.  He said maybe it is because they had one in 93 that was pretty bad and people understood the risk.  Ty, being a professor of risk management,  chose to buy his house on the hill for that reason too.

However, at TigerHawk they are talking about differences between the GF08 (Great Flood of aught 8) and Katrina in the comments to this post.  The conversation ranges from Bush did it, to discussions of class and race, to self dependence v. government dependence, and to the differences between a levy burst and a river flood. It is pretty interesting.

N.B. Is is likely that there will be a strong need for private help as well as help for the University of Iowa if one is so inclined.