Superstorm's Immense Cost; NAWAPA Can Recover It
November 28, 2012 • 1:40PM

The economic costs of Superstorm Sandy's devastation will be many times the investment costs of the flood-prevention infrastructure which would have prevented much of that devastation.

New York's and New Jersey's Congressional delegations this week are pressing President Obama to request some $62-70 billion dollars over a number of years from Congress, in emergency relief, recovery, and reconstruction, and preventive building against the next "superstorm." Five other states hit by Sandy have yet to make requests; but New York elected officials, both Federal and state, met with Gov. Andrew Cuomo Nov. 26 and went over damages and economic costs in detail.

Cuomo's intended New York request is reported to include $9 billion for "prevention and mitigation" of future flood disaters. That can include surge barriers/seagates infrastructure; it can also include building light rail lines, building and burying more power lines, hardening communications facilities, etc.

Otherwise, recovery costs for roads, water systems, schools, parks, individual assistance, and more total $15 billion in New York City; $7 billion for state agencies; $6.6 billion in Long Island's Nassau County and $1.7 billion in Suffolk County; and about $750 million for other areas.

The same North American Power and Water Authority needed to build the NAWAPA XXI projects can also build the protective new infrastructure for the East Coast.

As for FEMA, it has allocated $1.9 billion [that's all!] in the first month of recovery, and has a remaining national fund of $5.4 billion for the fiscal year which just began.

The electric power industry's Intelligent Utility magazine estimated, based on experience, that states and utilities will spend $3 in recovery and reconstruction expenses for every $1 dollar in protection, hardening, and modernization which would have prevented the damage — and made them more productive enterprises. The ratio for state economies as a whole, recovery costs vs. new infrastructure costs, is even greater.

Many economists are now rushing forward with analyses of great additions to economic growth in 2013 from post-Sandy reconstruction; but there is nothing automatic about this. For now the superstorm has given the economy a fourth-quarter 2012 whack, caused 125-150 layoffs, lowered tax revenues, and cut industrial production. New York State's revenues were well below estimates and producing a new $1 billion budget deficit before the storm hit. Just trying "clean-up and relief" will not even replace this lost economic activity.

Only if the storm recovery is centered on building new protective infrastructure of flood prevention, new and redundant transportation and electric power capacities, will the reconstruction contribute to real economic recovery and productivity growth.

As for the emergency budget request for NY/NJ and the other states, assuming Obama makes it: Will it be for 100% Federal coverage, or only 75%? Will be in the first and second years when it's urgently needed, or spread over 10 years? And will Obama encourage additional austerity elsewhere in budget (for example, in defense) as partial "offset" of this spending?