The Spillover Effects of Flood Control

While waiting for the first stack of ungraded final exams to hit my desk this week, I’ve been following developments in a dispute between Illinois and Missouri over flooding along the Mississippi River.  Rising floodwaters in the region presented federal government officials with a difficult choice.  If they took no action, severe flooding would likely destroy the small town of Cairo, Illinois.  If they intentionally broke a downstream levee, they would save Cairo from ruin but would allow floodwaters to devastate 90 homes and 200 square miles of farmland in Missouri.  I plan on discussing this simple dilemma to introduce the concept of cost-benefit analysis to my Land Use students this Fall. 

The conflict has centered on whether to activate the Birds Point-New Madrid Floodway, a 130,000-acre area in southeast Missouri.  In the 1920s and 1930s, the federal government paid private landowners an average of $17 per acre to acquire “flowage rights” throughout the floodway.  The acquisition of these rights, authorized under the 1928 Flood Control Act, entitles the federal government to purposely divert water from the main channel of the Mississippi River onto the burdened properties when necessary to prevent flooding elsewhere.

For the past week, Illinois and Missouri have been battling in court over whether the federal government should fill the floodway with water for the first time since 1937 to prevent flooding in Cairo.  Missouri’s attorney general filed a complaint in U.S. District Court last week seeking a court order to prevent intentional flooding of the floodway, arguing that it was unjustified and would cause water pollution in violation of the Clean Water Act.  The District Court denied Missouri’s request, and Missouri’s appeals to the Eight Circuit Court of Appeals and U.S. Supreme Court also failed.  With the legal obstacles cleared, the U.S. Army Corps of Engineers used explosives to blast a two-mile-wide hole in a river levee last night and began floodwaters pouring into the floodway.    

According to Bloomberg, the U.S. Government believes that flooding the floodway will cause about $314 million in damage and contamination but will avoid more than $1.7 billion in damage in Cairo and other communities along the river.  Based on those figures, landowners within the floodway were the least-cost avoiders in this context and sacrificing their land uses to protect more valuable uses upstream probably maximizes social welfare.  Not surprisingly, many of the private individuals residing or working within the 200-square-mile floodway were more focused on their own losses.  A local newspaper article suggests that some landowners intend to file a takings claim against the federal government for breaking the levee. 

Ironically, the concept of externalities or “spillover” effects takes on a double meaning in this case.  The question of whether or not to flood the floodway required government decision makers to consider both the literal and figurative spillover effects of each option!

Troy Rule