Tag Archives: Hurricane Sandy

Chief Resiliency Officers Versus Antifragility

At The Atlantic CitiesEmily Badger writes about a new program from the Rockefeller Foundation called 100 Resilient Cities, focused on equipping cities with a new employee called a Chief Resiliency Officer. The program states its goals as follows:

Building resilience is about making people, communities and systems better prepared to withstand catastrophic events – both natural and manmade – and able to bounce back more quickly and emerge stronger from these shocks and stresses.

[. . .]

There are some core characteristics that all resilient systems share and demonstrate, both in good times and in times of stress:

  • Spare capacity, which ensures that there is a back-up or alternative available when a vital component of a system fails.
  • Flexibility, the ability to change, evolve, and adapt in the face of disaster.
  • Limited or “safe” failure, which prevents failures from rippling across systems.
  • Rapid rebound, the capacity to re-establish function and avoid long-term disruptions.
  • Constant learning, with robust feedback loops that sense and allow new solutions as conditions change.

In his book Antifragile: Things that Gain from DisorderNassim Taleb defines antifragile as something that not only recovers from shocks, but becomes stronger after recovery, in line with the stated objectives of 100 Resilient Cities. Following its Great Fire of 1871, Chicago demonstrated antifragility. It rebounded rapidly from a disaster that killed 300 people and left one-third of city residents homeless, many without insurance after the fire bankrupted local insurers or the blaze destroyed their paperwork. Despite this great loss, residents of Chicago quickly rebuilt their city using private funding and private charity that was small relative to the amount of damage, but without any government funding. In rebuilding, Chicago developed safer building techniques both through entrepreneurship and with new insurance requirements and  new municipal building codes. The city invested in a better-equipped fire fighting force to lower the risk of fire damage in the future. Despite not having the telecommunications that seem critical to allowing fast disaster recovery today, Chicagoans began building new, safer buildings immediately, investing $50 million in the year after the fire, and tripling the real estate value of the burned blocks within 10 years. Its difficult to imagine a twenty-first century city allowing property owners to move so quickly through the approval process, and its difficult to imagine a Chief Resiliency Officer widening this bottleneck.

A bureaucrat like a Chief Resiliency Officer would not be able to learn the lessons from a natural disaster that the residents of Chicago did in their rebuilding efforts because this knowledge is dispersed, only to be discovered by individuals acting in what they believe to be their own best interest. Taleb describes bureaucrats as fragilistas because they do not suffer from downside risks and therefore cannot learn and grow stronger from shocks. If a disaster strikes a city equipped with a Chief Resiliency Officer and it turns out the city was ill-prepared, he or she will not be held accountable for failing to predict what may have been a very low-probability event. In fact, we often see government efforts toward making cities more resilient introducing fragility contrary to their stated intentions. For example, federal flood insurance minimizes the downside risk of owning flood-prone property. In turn, this encourages more people to live in the highest risk areas, putting them at greater risk when disaster strikes. Cities will not have an opportunity to learn from this to better prepare for future flooding because their rebuilding is subsidized; however, bureaucrats cite this insurance as a success because it facilitates rebuilding without adapting to risk.

The Transportation Security Administration offers a preview of what bureaucratic disaster prevention looks like; top down planning for low-probability events results in attempts to prevent the catastrophic events that we’ve seen in the past without realizing that we’re unlikely to see these same events in the future. As TSA critic Bruce Schneier explains:

Taking off your shoes is next to useless. “It’s like saying, ‘Last time the terrorists wore red shirts, so now we’re going to ban red shirts,’” Schneier says. If the T.S.A. focuses on shoes, terrorists will put their explosives elsewhere. “Focusing on specific threats like shoe bombs or snow-globe bombs simply induces the bad guys to do something else. You end up spending a lot on the screening and you haven’t reduced the total threat.”

Likewise, preparing for low-probability natural disasters, such as 100-year storms, is not something that can be done from the top down. To the extent an event is foreseeable, some individuals and firms will prepare for it, as we saw with Goldman Sachs’ generator and sand bagging efforts in the aftermath of Hurricane Sandy. The disaster revealed successful preparation methods, allowing more individuals and the city as a whole to learn and be better prepared for the next disaster. Chief Resiliency Officers are unlikely to accurately foresee low-probability shocks to their cities. To the extent that they protect cities from these shocks, they will likely take away the learning process that would make cities better able to withstand larger shocks, introducing fragility instead of greater resiliency.

More money for FEMA does not guarantee improved results

Before Congress passed $9.7 billion in Hurricane Sandy relief spending today, Governor Christie made headlines for his angry response to the House GOP’s delay in approving relief funds. The new spending will provide FEMA with money to pay out claims to those holding federal flood insurance. While the Hurricane Sandy relief effort gives political immediacy to FEMA funding, the Center for American Progress proposes a longer term strategy for dealing with natural disasters:

There must  be a dedicated source of revenue to fund predisaster mitigation programs that is not susceptible to budget cuts or political manipulation. Since the frequency and/or severity of extreme weather events will be exacerbated by climate change, it makes sense to raise revenue for resiliency from the fossil fuels whose combustion emits carbon pollution responsible for climate change.

The perspective that disaster recovery is a core responsibility of the federal government is widely shared, and voices as diverse as Governor Christie to the Center for American Progress express this opinion. However, the Mercatus Center’s Gulf Coast Recovery Project conducted in the wake of Hurricane Katrina demonstrates that funneling federal dollars toward disaster relief does not guarantee positive results for disaster victims. While the FEMA response to Hurricane Sandy went more smoothly than the Hurricane Katrina response, the federal government simply doesn’t have the capability to respond quickly and efficiently to individuals’ needs following a disaster, and channeling more resources to FEMA from any revenue source will not change the this fact.

As Pete Leeson and Russ Sobel write in a 2007 paper (pdf):

Following a natural disaster, on the one side there are “relief demanders”—individuals who desperately need disaster-relief supplies, including evacuation, food, shelter, medical attention, and so forth. On the other side, there are “relief suppliers”—individuals ready and willing to bring their supplies and expertise to bear in meeting the relief demanders’ needs. On both sides of this “market,” information is decentralized, local, and often inarticulate. Relief demanders know when relief is needed, what they need, and in what quantities, but they do not necessarily know who has the relief supplies they require or how to obtain them. Similarly, relief suppliers know what relief supplies they have and how they can help, but they may be largely unaware of whether relief is required and, if it is, what is needed, by whom, and in what locations and quantities.

[. . .]

Government’s informational deficit in the disaster-relief context is an unavoidable outcome of the centralization of disaster relief management when relief is provided by the state. Disaster-relief reforms that leave government as the primary manager of natural disasters are thus bound to fail. Correcting government’s information failure in the context of disaster relief requires eliminating its root cause: government involvement itself.

Researchers on the Gulf Coast Recovery Project found that non-profits, civic organizationsprivate firms, and individuals were more successful at providing the goods and services needed for recovery than the federal government.

Aside from the inherent challenges facing federal disaster response, funneling federal tax dollars to coastal areas prone to flooding leads to moral hazard. Because residents of flood-prone areas purchase federal insurance, taxpayers subsidize those who choose to live in these high-risk areas. Eli Lehrer of the R Street Institute explains this aspect of the Hurricane Sandy Relief Bill to Climate Wire:

“The mitigation piece of it is problematic,” said Eli Lehrer, president of the R Street Institute, a conservative organization that works with environmentalists and insurers to reduce subsidies in public insurance programs. “I think the bill should be drastically scaled back overall.”

He suggests that the disaster supplemental package could be cut in half. That would save taxpayer money, he says, now and in the future — by reducing incentives to develop coastlines. Lehrer also proposes cutting the federal share of post-disaster rebuilding costs to 50 percent. Currently, the government pays for 75 percent of recovery efforts, and Obama is asking Congress to increase that to 90 percent for Sandy survivors.

Politicians and activists who support a large role for the federal government in responding to disasters may have the best of intentions, but these intentions cannot circumvent the knowledge problems that government faces in disaster relief. By reducing the cost of developing in flood plains, greater reliance on the federal government for disaster mitigation and relief will be a costly effort unlikely to provide an adequate response when the next disaster strikes.