Houston, We Have a Problem

Published August 30, 2017

Houston / Harris County has two enormous “dry reservoirs,” along with several hundred (regular) reservoirs, bayous, stream beds and other infrastructure designed to collect the water of torrential rainfalls to prevent flooding. The two dry reservoirs, being dry, do not help the city survive periods of drought, as the rest of the system does. They are only to temporarily hold the waters of massive rainfalls.

One of these two dry reservoirs is Addicks Reservoir, within which is Harris County Bear Creek Park. Normally, the land of this reservoir is used for recreation. For example, park land. Also, athletic fields.

The other dry reservoir is Barker Reservoir. Within this reservoir is George Bush Park. This park offers a mix of amenities similar to that offered by Bear Creek Park.

The two dry reservoirs and the rest of the water control system were put into place following the floods of 1935. The system was supposed to contain the rush of water associated with massive downpours perhaps even the size of Hurricane Harvey.

But, over time, the city sold pieces of land constituting its reservoir system, reducing the capacity of the system and, of course, the city failed to maintain its (mere earthen) dams. So, over time, the capacity of the system to absorb torrential rainfall was severely diminished. And, the flood gates of the dams had to be opened to prevent catastrophic failure.

With private insurance, premiums rise when the margin of safety is reduced. By reason of this, “savings” from reducing the margin of safety are not savings at all. Not even in the short run. The “savings” is immediately off-set by increases in insurance premiums. This system doesn’t rely on the public-spiritedness, far-sightedness or even the intelligence of those managing risk. It relies on the hard-nosed calculations of insurance companies, the expertise of their engineers and actuaries, and the interests of the insurance companies in competing for business while protecting their own bottom lines.

But, with our federal insurance system, things are different. Cities like Houston do not bear the cost of safety versus the benefit of risk abatement. Instead, of the city bearing the cost of reducing its margin of safety, the federal government is expected to bail the city out when natural disasters occur, in terms of rebuilding roads, highways, bridges and other public infrastructure. 

Given the incessant demands facing cities, in terms of providing municipal services while keeping tax rates competitive, it is not surprising that so many of them err on the side of risk in the system that we have. Costs that are in the future, are not costs at all to many politicians. You can always say that the critical decisions were due to the politicians who preceded, or else due to climate change.

The federal government should reconsider its approach to natural disaster relief so as to stop subsidizing the risk-taking of local governments. Politically, it is not practical to do this following a natural disaster. Prospectively, given the incentives built-into disaster relief, we know that more and worse disasters will be coming.