Unexpectedly Intriguing!
August 25, 2016

With so much destructive flooding in Louisiana during the past week, we couldn't help but think back to this past June, when the region around Houston, Texas experienced a tremendous amount of rainfall that also led to significant flooding and lots of property damage.

But one resident in the town of Rosharon, Texas beat the flood, using some remarkable technology developed in Louisiana for the purpose of preventing property damage. The following video tells the tale.

At $8,300, the cost of the residential AquaDam may seem high, but for those who live in flood prone areas, where flooding can cause property damage that can exceed several hundred thousand dollars, it may be a pretty reasonable investment. And the best part is that with the right combination of pumps, homeowners could actually use the same water that might otherwise destroy the value of their homes to protect them.

The question of whether its worth the cost however comes down to a combination of how much risk there is of property damaging flooding and the impact of how costly it could be. To estimate if it is worth the cost, as a general rule of thumb, you can multiply the cost of potential property damage by the probability that flooding will damage the property over an extended period of time. If that number is greater than or equal to the cost of using technology like the Aqua Dam to mitigate against the potential for damage, then it makes sense to invest in the technological solution.

It's not quite that cut and dried however, because there is a lot to be said for peace of mind if that number only falls short by a relatively small percentage, where choosing to invest in technology to overcome such a risk would come down to a personal choice.

The same principles apply for adaptation to climate change, where one could argue that this kind of technology could be more cost-effectively applied to provide additional protection to a levee, which if overtopped by flood waters, could easily result in millions of dollars of damage to an entire community. That may be especially true when the alternative course of action may involve an even more costly project to build up the levee.

Then again, the cost of the kind of technology to deal with such hazards may be so prohibitive that property owners may simply choose to buy extra insurance protection to pay for what it costs to clean up and recover after the damage happens, if and when it does.

And that's the rub. It all comes down to placing a bet on the statistical likelihood of something bad happening, which may or may not when it matters most to you. How much are you willing to wager to win on a choice like that? And how much are you willing to risk losing if you fall on that other side of the bet?

Update: Matt Kahn applies a little more complex math than what we described above to identify what kinds of people would choose to live in areas prone to flooding in the absence of government subsidized insurance protection (and by extension, since the math would be similar, technological protection).

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