Taxes, subsidies, and insurance as drivers of United States coastal development
Section snippets
The general role of taxes, subsidies, and insurance in coastal development
Government intervention in the market, particularly through taxes, subsidies, and insurance, plays a major role in influencing development patterns worldwide, and especially in the United States. When used inappropriately, these measures can distort true costs and incentives for particular economic sectors while degrading economic, social, and environmental well-being; however, they can also be designed in a manner that enhances economic, social, and environmental quality.
Land and property tax
Insurance, disaster relief, and mitigation
A broad spectrum of federal programs, along with state and local ordinances, provide tax and subsidy incentives that may encourage or discourage different development patterns. While a full evaluation of these programs is beyond the scope of this paper, we briefly describe relevant programs in 2 Insurance, disaster relief, and mitigation, 3 Effects of other taxes and subsidies on coastal development. We first consider the National Flood Insurance Program, a particularly important component of
State-level subsidies to industry
Although most subsidy literature focuses on federal programs, which are generally easier to quantify than state or local subsidies, Louisiana does subsidize its industrial and energy sectors at an extraordinarily high rate. Templet (1995) found Louisiana to have the highest per capita rate of perverse subsidies of all 50 states, at a level almost twice as high as the next state (Fig. 2). His subsidy calculation included a composite of tax, energy, and pollution subsidies that provided economic
Initial planning for post-Katrina reconstruction
Tax, subsidy, and insurance reform issues have all been part of the proposed reconstruction plans discussed following Katrina. Initial proposals by the Bush administration included a “Gulf opportunity zone”, providing tax incentives to businesses relocating in storm-damaged areas and “Urban homesteading” to provide low-income residents with federally-owned land to rebuild housing. These proposals made some provision to address the income distribution gaps that Katrina revealed (providing
Conclusion
Inconsistencies in data reporting make it impossible to obtain a total dollar value for the various subsidies to coastal development, especially for coastal Louisiana. Put in light of the estimated $200 billion reconstruction bill for Hurricane Katrina, there is clear value in reconsidering the current system of taxes, subsidies, and insurance in high-risk coastal zones. Katrina highlighted problems with current U.S. coastal policy–one that encourages an unending cycle of risky development and
Acknowledgements
We thank Melissa Bailey, Joshua Farley, Brian Miles, Brian Voigt, and one anonymous referee for valuable review comments on earlier versions of this manuscript.
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