Hurricanes and the preponderance of chemical and oil company facilities on the Texas coast: How to mitigate the risk?

Hurricane Katrina and the devastation of New Orleans.  This is the 15th anniversary of Hurricane Katrina and I've been thinking about how the failure of the levees in New Orleans and the subsequent inadequacies of the disaster management response are some of the first major catastrophic failures of the US federal government in the neoliberal age.

Federal government failure becomes more routinized.  It's not been until the chaos presidency of Donald Trump that catastrophic failure of federal government operation has become an almost daily occurrence, with the denouement in the over 180,000 deaths associated with the coronavirus.

But it's also the logical result of underfunding government activity for the past 40 years as a result of a market (neoliberal) approach to the philosophy of government, and the press to continually lower taxes.

-- "We Are Living in a Failed State," The Atlantic

Photo: Robert Sullivan/Agence France-Presse — Getty Images. There are hundreds of chemical plants and 7 major oil refineries in the Galveston Bay and along the Houston Ship Channel.

The disaster risk presented by Galveston Bay and the Texas coast.  So an op-ed in the New York Times, "Texas Is Running Out of Near Misses," by Professor Jim Buchanan of the Rice University Severe Storm Prediction, Education and Evacuation from Disaster Center, about the risk from presented by the conglomeration of oil and chemical production facilities on the Texas coast, is particularly prescient.

Note that last year, a fire at a petrochemical plant, which led to the closure of part of the Houston Ship Channel for three days was said to cost petrochemical firms $1 billion in lost economic activity--that's three days, for part of the channel ("Houston Ship Channel closure could cost energy industry $1 billion," Houston Chronicle).

High water and heavy industry on Lake Charles on Thursday. Credit: William Widmer for The New York Times

Both in terms of the anniversary of Katrina but also the current Hurricane season, where as an example, Hurricane Laura caused major damage in Louisiana just last week.

-- "Laura Hits Petrochemical Region, and a Factory Goes Up in Smoke," New York Times

Besides taller barriers (perhaps using the Thames River barrier in London as a model), the Rice Center proposes a system called the Galveston Bay Park Plan, of newly constructed islands, parks and open space as "soft" responses as a way to mitigate flooding.

According to Professor Buchanan, there are at least three problems with how the Army Corps of Engineers is dealing with the problem.

1.  Failure to plan for extremes.  They aren't planning for more extreme storm surges ("Texas, Corps Outline $31 B Plan to Protect State's Coast," Engineering News-Record), even though storms in the present and future are likely to be worse than the storms from the past 100+ years ("Climate change didn't cause Hurricane Laura but it did make the storm worse," CNN), and existing models tend to be based on past storms ("risk of 1 in 100 year flood, etc.).

From the op-ed:

In its continuing studies to design protection for these facilities, the methodology used by the Army Corps of Engineers substantially restricts the size of storm to be used in the design of protection structures. This methodology is outdated, does not adequately address the environmental and economic risks associated with such storms and does not factor in climate change and its impact on storm intensity.

Houston Ship Channel.  Photo: Brett Coomer, Associated Press

By contrast, the Nuclear Regulatory Commission accounts for extreme surges in its safety guidance for nuclear plants. The commission has been doing this since 2012, after the Fukushima disaster, when it issued a letter recommending that an estimation of low-risk surges be incorporated into the design and permitting of nuclear power plants.

The comparison of these policies with those currently used by the Army Corps of Engineers is revealing. The nuclear agency evaluates the hurricane surge for a plant near Bay City, Texas, and concludes that it would have to design for a surge of more than 30 feet above sea level.

By contrast, the coastal spine, a set of 14-foot-high barriers and a two-mile-wide gate structure designed by the Army Corps of Engineers to protect the Galveston Bay system (an area comparable to Bay City) is meant to protect against a 17-foot surge at the coast — insufficient for the surge generated by either a Category 4 or Category 5 storm. Indeed, with a category 5 storm, over 100 separate chemical plants or refining facilities would be flooded, assuming the construction of the $20 billion coastal spine federal project.

Given what happened in Fukushima and how going forward it's more reasonable to expect more virulent storms compared to the past, this severe disconnect between the agencies illustrates the need for more robust and resilient planning schemes across the federal government and between federal agencies. 

During Hurricane Katrina, the floodwall and levee on the 17th Street Canal in New Orleans collapsed without being overtopped. It was one of about 50 breaches in the flood protection system that was supposed to repel "the most severe storm" that could be expected in the area.

When given the choice, the standard practice should be to adopt stronger, rather than weaker, protections

2.  Inadequate cost-benefit analytical frameworks.  Because of the failure to acknowledge the likelihood of higher storm surges, based more on future predictions rather than past experience, the ACE cost-benefit analytical calculations don't support building a more robust system of barriers.

3.  How to pay for it?  Given Republican opposition to funding infrastructure, it will be difficult to get federal funding.  A more robust storm surge protection project for the Texas coast could cost upeards of $60 billion.

I took issue with one of the suggestions in the op-ed, identifying "social impact bonds" as a way to help finance the system.

Social impact financing involves monetizable revenue streams with the potential for extranormal returns and for financial savings compared to current program expenditures. While the use of social impact bond financing is still very new, it doesn’t lend itself to funding the arts which very rarely has the ability to generate extra-normally positive cash flow or cost reductions in programs.

The examples I am familiar with, such as Salt Lake County’s funding of early childhood education, tend to involve social programs expected to reduce government expenditures over time if successful, but the government lacks the money and/or appetite for risk necessary to finance the program through on its own.

Unless insurance companies are going to be willing to pay social impact investors a return on disaster effects foregone, I can't see how a social impact bond investor can see how there will be returns on using SIBs to fund flooding defense systems.

It's not like the Thames River barrier in London was funded by the private sector.


But thinking about it more, some kind of program for paying into a fund to mitigate the potential risk is in order.

Do insurance companies, reinsurers and capital markets help finance it ("Insurers Are Going High-Tech to Mitigate Risk This Hurricane Season," Fortune Magazine, Insuring hurricanes: Perspectives, gaps, and opportunities after 2017," McKinsey) since they'd be saving so much money by avoiding disaster?

Levees are paid for in part by the creation of special service districts which assess an add on property tax.  How about a special tax on the major property owners likely to be catastrophically affected by storm surges?

Given the environmental and economic disaster that would result from storm surges and catastrophic rains, it seems clear that a much taller barrier system needs to be created.

And that it should be considered a high priority given the risk.