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.
Subscribe to: Post Comments (Atom)
Yes, losing the ship for a ha'porth of tar comes to mind. A related point that came to mind is this: surely the original impulse behind insurance is to pool risk among all the contributors, ie for a small amount of money paid in (premium), anyone contributing can be sure of receiving a larger amount in case of need. But if premiums are tailored according to risk, that is surely against the spirit of the original idea?ReplyDelete
Thanks for your comment, Bradford Q. There was some flooding in Bradford (especially Shipley) so perhaps you have been affected. I believe that we should all, as taxpayers, be prepared to pay extra to help protect our fellow citizens, especially those settled in traditional urban areas such as York. I'm not so sympathetic towards those who have moved into new developments on flood plains.Delete
However, with regard to insurance, I think it is standard that those at the greater risk pay the higher premiums, as, for example, do young people when they buy car insurance, because, statistically they have more accidents.
For that reason I don;'t agree with the EU's ruling hat insurance companies should not discriminate between men and women with respect to car insurance. If we blokes have more accidents we should pay higher premiums.
Nowadays, looking on what is happening to our world, you can expect anything. In present days, floods became a normal practice. This is so bad. If you want to read more about this theme, you can go on customcollegeessays.com/blog/interesting-research-paper-topics .ReplyDelete