Moral hazard: Should taxpayers have to bail out disaster-prone regions?

Elaine Hague looks over her flooded back yard on Nov. 1, 2012 in the Ocean Breeze area of the Staten Island borough of New York City.

This is going to be a different kind of Thanksgiving for a lot of people in the Northeast. People who're thankful they survived Sandy and thankful for the government help they're getting to rebuild.

Rebuilding in the wake of Sandy will likely cost taxpayers tens of billions of dollars. And that cost is raising questions about whether it makes sense to keep building in places where nature just knocks it right back down again.

Tornadoes don't destroy the same town eight or nine times in 25 or 30 years, but we do have coastal communities that've received federal disaster declarations seven, eight, nine times in the last three decades," says Robert Young, who directs the Center for the Study of Developed Shorelines at Western Carolina University.

Young is of the opinion that coastal residents, who live in areas prone to natural disasters, should do so without a federal bailout waiting in the wings. He feels that the government's mandate to protect communities in dangerous regions -- think fishermen in Gulf Louisiana or farmers in the Mississippi River flood plain -- is an over-reach. And that taxpayer dollars are being wasted rescuing people who should know better.

"If the coastal economy is so vibrant, they ought to be able pay their own way," reasons Young.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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