Monday, 28 December 2015
Flood defences are a classic example of what economics textbooks call a "public" good or service. These have two characteristics: non-excludability and non-rivalry. Non-excludablity means that, if the good or service were to be provided by the "market" - if for example a group of houses were to get together to subscribe to provide the facility privately, it would not be possible to prevent any non-subscriber from enjoying the benefit. Non-rivalry means that one person's or household's "consuming" the benefit does not prevent anyone else from doing so.
Hence "the market" cannot provide the facility: it must be provided collectively by national or local government, or a charity, as were, for example, lighthouses in their early days. .
Street lighting and national defence are further routine examples.
Clearly flood defences come under this category: only the government can provide them.
Yet after 2010 government expenditure on flood defences was slashed by almost 30%, and recovered only as a result of "exceptional expenditure" following the 2013/14 floods. Oxford Professor Simon Wren-Lewis estimates a shortfall of around £1bn compared with the trend inherited from the previous government.
The repeated misery foisted on families in, for example, Cockermouth, are poignant proof that the political choice of ruthlessly cutting government expenditure is not just getting rid of wasteful "fat" or unnecessary luxuries, but criminal neglect of the the duties of a government towards its citizens. It is also economically wasteful. I think it was in relation to Cockermouth that I read that a flood defence project costing £4m had been delayed or abandoned. The cost of the damage in the latest flood in that area was estimated to be in the region of £400m. The total cost of this season's floods in all areas is now estimated to be £1.3bn.
So rather than cheering on the government for promises of reduced taxes, we need to recognise a government's responsibility to provide these "public" goods and services, and have the sense to be prepared to pay for them.
We also need to recognise that yet more artificial flood defences are no long term answer to the problem. We must stop building on flood plains (if a river can't flood where it used to it will flood somewhere else), stop concreting over gardens to provide parking lots, and recognise the need for trees on high ground to increase the ability of the ground to absorb water. That could mean eating less mutton,as George Monbiot explains.