The Economic Impact of Coastal Restoration and Hurricane Protection by Timmothy Ryan, PHD
- It is clear to most observers that the number one economic and social issue facing south Louisiana (in fact, the entire State) is the continuing loss of our coast.
- According to the Louisiana’s Comprehensive Master Plan for a Sustainable Coast of 2012, which the State Legislature approved unanimously in 2012, the State has lost 1,880 square miles of land over the past 80 years (a rate of 24 square miles per year). More significantly, the land loss is accelerating. The Master Plan projects additional loss of 1,750 square miles over the next 50 years if nothing is done (a rate of 35 square miles per year).
- The Master Plan calls for an investment of a minimum of $50.00 billion on coastal restoration and hurricane protection over the next 50 years. This level of expenditure slows but does not stop or reverse land loss. The Master Plan recommends $100.00 billion as the optimal level, which will yield a net gain of land.
- A major problem confronts us since even the $50.00 billion level suggested in the Master Plan is not funded at this time. The Master Plan states, “The budget we used for the plan, $50 billion, reflects existing and potential funding sources.” [Source: Master Plan, p. 36. Emphasis added] Secure long-term funding for the Master Plan comes chiefly from the GOMESA program, which is estimated at $100.00 million to $200.00 million per year beginning in 2017. At the same time, the State must begin paying back $73.00 million per year for 30 years to the federal government for the State’s cost-share for the new flood protection system protecting metro New Orleans.
- In order to achieve just the minimum level of funding, substantial additional funding will be required. The source of that funding is perhaps the most significant issue the State will face. In order to devise a solution to the funding problem, the stakeholders must engage in a public policy debate about the benefits and costs of costal restoration.
- The purpose of this report is to address the benefits of coastal restoration – specifically to document the economic impact of investing significant funds ($50.00 Billion to $100.00 billion) to help restore the coast of Louisiana and provide additional hurricane protection for residents of Louisiana.
- There are four areas of potential economic impacts of the spending of $50.00 billion to $100.000 billion on coastal restoration and hurricane protection:
- The hard construction activities that would result from the spending. This would involve the actual levee building projects, sediment diversion projects, and the like.
- The impact that the new funds would have on developing a new industry in the State. That new industry would focus on coastal science and could be on the forefront of science and engineering studies of coastal restoration and development, not only in Louisiana but also throughout the world.
Coastal Economic Impact iii
Timothy P. Ryan, Ph.D. March 2014
- The Master Plan predicts a substantial increase in the storm damage that Louisiana can expect over the next 50 years if nothing is done. If investments in coastal restoration and hurricane protection outlined in the Master Plan are made, we can expect a reduction in storm damages in the future. Those savings will first manifest themselves in lower insurance costs for residents and businesses. Lower insurance costs will impact existing businesses in the area and will attract new businesses to the area that will have greater confidence that hurricanes will not cripple their business as Katrina did.
- A fraction of the damages that result from storms are not insured and thus borne by local residents and businesses. The economic savings that would result from reducing uninsured hurricane damage to the State of Louisiana would make up a part of the economic benefits of investing in the Master Plan.