You are an analyst at FEMA and are in charge of developing a recommendation for both the state and the local government on whether or not to redevelop New Orleans. In preparation for your report, read the article by Stephane Hallegatte (2005) (listed below) and consider the following information:
- Stéphane Hallegatte, an environmentalist, assigns a probability (p) of a Katrina-like hurricane of 1/130 in his cost benefit analysis for flood protection. However the levees that protect New Orleans also put other regions at greater risk (see the Washington Post article – you may assume the frequency of other floods is greater than Katrina-like events).
- The new levees that were built in response to Katrina cost approximately 14 billion dollars (in 2010). This is in addition to the direct costs of Katrina ($81B in 2005).
- 50% of the New Orleans is at or below sea level.
- A “100 year” event means that there is a 63% chance that such an event will occur within a 100-year period.
- These are the interested (anchored and/or biased!) constituencies:
- The residents of New Orleans (both those that can move and those who can not move).
- The residents of the surrounding floodplains at risk from New Orleans levees.
- The Mayor of New Orleans.
- The federal government (and taxpayers).
- Assume the availability heuristic makes people more risk averse (populations, at least in the short-term, drop – consider how this would affect the local economy).
Using the information from the article and from the course material, write an 8 – 10 page report in which you address the following.
- Analyze the economics of New Orleans in light of the above and develop your own Cost Benefit Analysis (CBA) for rebuilding.
- Evaluate the value of that CBA for each constituency and integrate these estimates into a scenario model and/or decision tree. Analyze the results.
- Clearly each of these constituencies may both overlap and be prey to a variety of group dynamics internally. For ONE of these options, discuss the decision pit falls to which they may be susceptible and make a recommendation on how to alleviate those pressures.
- Starting with your CBA, estimate the relevant expected utility for these parties. (You need not have absolute amounts but your relevant utilities should be proportional to one another). Hint: If you assume your “total” CBA for New Orleans is fixed each constituency (don’t forget the overlaps) then each constituency will have a piece of the utility pie.
- Make a case for or against rebuilding the City of New Orleans. This should be an executive summary – be concise and brief. Include exhibits.
- Whether you are for or against, discuss how social heuristics could be used to your advantage, both ethically and unethically, in making your case (you may choose to fill the role of one of the constituents if you prefer).
Use proper spelling and grammar through; keep the text legible and balanced with visuals; and remember to properly attribute any outside research you reference. Please read through the rubric to better guide your report.
Hallegatte, S. (2006). A cost-benefit analysis of the New Orleans flood protection system. Center for Environmental Sciences and Policy. Stanford, University. Retrieved from: http://hal.cirad.fr/docs/00/16/46/28/PDF/Hallegatte_NewOrleans_CBA9.pdf
Vastag, R., and Rein, L. (2011). In Louisiana, a choice between two floods. Washington Post. Retrieved from: http://www.washingtonpost.com/national/in-louisiana-a-choice-between-two-floods/2011/05/11/AFrjFotG_story.html