How Cities Are Preparing For Future


How Are Cities Preparing For And Rebuilding After Storms?

2017 has the distinction of two Category 4 hurricanes - Harvey and Irma - to have made landfall in a single season. It  has brought renewed attention to how cities, governments and industry should respond and adapt to massive storms, and natural disasters in general; whether it’s when rebuilding cities like New York or Houston after the storm passes, or preparing ahead of time to lessen the impact of any future storms. Americans have repeatedly shown that they are capable of lowering the risk of loss of life and responding to crisis and post crisis recovery,  rather than prevention, which is less capital intensive in comaprison to the economic losses incurred, and urarguably more impactful from the safety view point. 

The Insurance Industry Push

Only 10% of earthquake and flood-prone households in US have adopted mitigation strategies. With such a low uptake, the insurance industry is providing a big push for cities to become more resilient, since higher frequency of storms is having a direct impact on insurers’ core business. A coalition of nearly 30 of the world’s major insurance companies and convened by the University of CambridgeClimateWise, has underscored the need for the industry to fund more projects that mitigate the effects of storms, floods and heat waves.

ClimateWise supports the insurance industry to better communicate disclose and respond to the risks and opportunities associated with the climate-risk protection gap. 

Efforts from the Insurance Industry could be on the following lines. 

  • Catastrophe Bonds:
    Insurers can encourage local governments to invest in climate-resilient projects. Catastrophe (Cat) bonds are growing in popularity because they fill a gap in the market -  insurers tend to think short-term when assessing property risk while cities often plan for years or decades when it comes to large capital projects. Cat bonds can help provide cities with long-term protection that they struggle to find from insurance companies. Such bonds have been used to help fund flood walls in Hoboken, NJ and Norfolk, Virginia.
  • Rate Reductions:
    Another effort, albeit small scale, is cutting premiums of policyholders who reduce their risk by investing in self-protection measures. USAA, for instance, offers premium discounts to homeowners in fire-prone states who take certain measures to protect their houses from wildfires. Another example would be offering premium discounts for hurricane-resistant doors. 

Cities at the Forefront

Flood Walls, New OrleansLearning from past experiences, cities are taking numerous approaches to try to deflect damage from future storms. For example:

  • New York City has developed two flood risk maps – one for current sea levels, one for projected future levels – to help the planning process.
  • Norfolk, Virginia’s flood walls are part of a long-term vision to look at the city’s entire infrastructure.
  • Green Roofs Washington, D.C. is installing permeable pavements, green roofs and rain gardens to help reduce the polluting effects of storm water runoff. 
  • Stormwater Retention Credit Market: In 2016, Prudential Financial invested $1.7 million towards a a new pilot collaboration between The Nature Conservancy, NatureVest and Encourage Capital called District Stormwater LLC (DS) that will develop green infrastructure projects and generate Stormwater Retention Credits (SRCs) under the Washington D.C's new Stormwater Credit Trading Program.
  • MetroCat Re Catastrophe Bond: New York’s transit agency, the MTA, issued a $200 million catastrophe bond in 2013 and another $125 million cat bond earlier this year, in part to protect against storm surges like the one that crippled the city’s subway network during Superstorm Sandy in 2012.
  • D C Water Environmental Impact Bond: In 2016, Goldman Sachs helped develop DC Water and Sewer Authority’s first Environmental Impact Bond (EIB) to fund its DC Clean Rivers Project, a $2.6 billion program to control stormwater runoff and improve the district’s water quality. The $25 million, tax-exempt bond was sold in a private placement to the Goldman Sachs Urban Investment Group and Calvert Foundation in September of that year.
  • Green Century Bond: In 2014, DC Water worked with Goldman Sachs to issues $350 million in taxable green bonds, the first 100-year maturity ‘green century bond, to finance new infrastructure to address combined sewer overflow issues, helping to improve water quality, reduce flood, and restore the District of Columbia’s waterways.


The Netherlands and New Orleans

With much of the country lying below sea level, the Netherlands has managed to avoid a major flood in decades. Amsterdam, the capital city sits almost seven feet below sea level. The wake-up call came in 1953, when a massive storm killed more than 1,800 people, flooding much of the country. Immediately after, the government launched a major engineering project at great cost ($ 5 billion), building the now-famous Delta Works, a system of locks and flood protection systems that was completed in 1997. The system includes walling off water, while at the same time, letting it into canals and other bodies of water, where technicians can regulate levels.

Something similar happened in Louisiana in 2005. Hurricane Katrina killed more than 1,800 people and caused an estimated $75 billion in damage. During the storm, several of the levees (embankments) shielding New Orleans broke, flooding nearly 80 percent of the city in up to 15 feet of water.

Much of post-Katrina planning in New Orleans has been  built on lessons learned in the Netherlands. Through a series of conferences called the Dutch Dialogues, American engineers and Dutch water experts have created a comprehensive water plan for the city’s future.  In addition, a  $14 billion Hurricane & Storm Damage Risk Reduction System has been created that includes the construction or improvement of 133 miles of perimeter risk reduction features, such as levees, flood walls, floodgates and pump stations. The system besides managing storm surge and rain drainage, also has the function of controlling shipping traffic. 

Delta Works, the Netherlands Hurricane & Storm Damage Risk Reduction System , New Orleans

Way Forward for Texas and Florida 

As Texas and Florida dry out and start to rebuild,experts say the cities should take numerous steps to help ward off massive flooding in the future. This could be something as straightforward as eliminating minimum parking requirements for new developments — a rule that forces the construction of large surface parking lots, which prevent drainage and enhance flooding — or buying up development rights to help preserve wetlands that can also mitigate floods. Essentially, cities, while rebuilding should closely look at two major aspects, besides the obvious ones like strict development  regulations in coastal areas.   

  • Replacing aging Grey Infrastructure: A lot of the bridges, pumps, canals, and dams were built before WW II and hence are at the end of their life cycles. Urban plans must include a phased approach of repair and renewal of the existing drainage system.  
  • Conserve more open, non paved spaces: Flood walls, dykes and dunes can prevent storm surges, but can do nothing to prevent flooding as a result of rainfall. With a tendency to pave every available land surface, absorption rate has been seriously affected. Impermeable surfaces leads to greater run off that besides flooding, leads to contamination of fresh water supplies with sewage during storms. The unchecked runoff also prevents recharge of natural ​aquifers, resulting in droughts in the very places that flood.  Urban designs should make the most of surrounding watersheds, which are able to resist flooding. 

Devising and executing such resilient urban plans will require time and money, but more importantly political will. Last month, President Trump rolled back rules regarding environmental reviews and restrictions on government-funded building projects in flood-prone areas as part of his proposal to spend $1 trillion to fix aging U.S. infrastructure. This executive order revokes an Obama-era executive order to reduce exposure to flooding, sea level rise and other consequences of an increase in storms. With Federal Government taking little responsibility on this front, the onus is shifted largely on local governments to push this agenda forward.