The unfolding events in New Orleans this week are truly a tragedy. The months following Hurricane Katrina will be a living nightmare for many. It is, quite possibly, the end of New Orleans as we have known it - the birthplace of jazz and home to some of the best food in the world - and this in tandem with other significant destruction and loss of life in Louisiana and Mississippi.
It should, however, be realized that this hurricane and the damage it caused was a statistical inevitability. Last year’s Hurricane Ivan, originally predicted to hit New Orleans, swerved east and missed the city. This study, done in November of last year, outlines what would have happened to New Orleans had Ivan not turned off. Reading the study now is like reading the newspaper today. It essentially details all of the major issues facing the city now: breaks in the levees and subsequent flooding, evacuation to the Super Dome, corruption of the city’s infrastructure, looting, and the coming outbreak of disease from unsanitary conditions throughout the city. In other words, everyone knew this would happen sooner or later.
Flooding is the main cause of New Orleans’ problems right now. The storm surge from Katrina was certainly devastating but until levee breaks occurred, many areas of the city had survived the hurricance with little damage. However, since the levee breaks, it has been reported that over 80% of the city is “underwater.” The only reason that New Orleans is having this problem is because much of the city is situated below sea level. New Orleans is a below-sea level city surrounded by huge bodies of water. Given the frequency and verocity of hurricanes in the region, it was inevitable that an event like this would occur.
So what will happen now? Everyone is talking about “rebuilding” and getting to a functional city once again. I think, however, that the environment has changed now and that the rebuilding effort will take place very gradually and, in many cases, not at all. The main reason for this is insurability. Insurance companies are going to take a $28 billion dollar loss on Katrina. This is a preliminary figure which could, and probably will, rise as the city remains underwater. Even now, the insurance giants are trying to deflect some of this cost by arguing that the damage is “water damage” as opposed to “storm damage” with water damage coverage yielding less benefit to policyholders. Once all is said and done, insurance companies will be loathe to provide coverage in New Orleans, Mississippi, and Louisiana. They will learn a painful lesson from this - do not insure property that is built on below-sea level land and surrounded by water.
New Orleans is very different from coastal cities in Florida in this aspect. Where there tends to be a post-hurricane real estate boom in Florida, there will be no such boom in New Orleans. For one, New Orleans is not a big retirement destination like many cities in Florida. It tends to be a working city with ports and refineries, shipping and industry. But more importantly, most of Florida is at least a couple of feet above sea level. When the storm surge from a hurricane is over, the water flows back out to sea. New Orleans is different. When the storm surge is over, the water just sits there in the streets and houses until it is pumped back out. And as we have recently seen, the pumps are not reliable, nor is the electricity supply on which they depend. It is a vicious cycle - pumps need electricity to work, utilities need to be dry and above water to safely provide power, but utilities cannot be dry and above water without functional pumps.
Very little new investment will be coming into the city. Consider mortgages, for instance. Mortgages require insurability. If homeowner insurance policies continue to be available - doubtful at best - they will be unobtainably expensive for most. Few will be able to build new homes and, really, why would anyone want to? The underlying problem - sea level - is still there. Perhaps a family could live there for 20 years with no incident and then, in one day, everything is underwater and destroyed. There are countless other places to live without such risk and without onerous insurance costs.
A large robust city like New Orleans can weather one disaster. However, few cities can overcome two. New Orleans survived Katrina but it was beaten by the ensuing flood. During the coming months and years, the city must rebuild stronger and safer than before. That means finding a way to eliminate the flood risk. Obviously pumps are not a viable flood solution. They may keep the city dry during a passing thunderstorm but would never be adequate in a flood. New Orleans is just like a boat with bilge pumps. If the boat is in a storm and water comes onboard, blige pumps push the water back out. But the captain of the boat cannot allow the boat to become flooded because the bilge pumps would never keep up and the boat would sink. New Orleans has been sunk. To rebuild the city safer than before, it must be elevated. Homes and other buildings cannot continue to be built below sea level. Insurance companies will not again insure structures which will inevitably be flooded. The engineering challenge for this generation is to raise New Orleans to a tenable elevation.
On the news, officials in New Orleans have been calling the city a new “Atlantis” presumably because the city was lost underwater. Atlantis, if it existed, sank and never rose back up from the oceans. It was a civilization of rich culture and history, like New Orleans. Will New Orleans rise again? Only time will tell.
It should be noted, however, that New Orleans is not the only city in the country where a natural disaster of this magnitude could easily occur. The San Andreas fault in California will, inevitably, cause a massive earthquake in the region. The 1906 earthquake remains, so far, the cause of the second largest loss of life in the United States from a natual disaster with almost 6,000 victims. Ironically, the largest loss of life from a natural disaster occurred in 1900 - 12,000 lives lost from another hurricane.