A World With More Water: Three Essays on Flood Damage and Climate Change Adaptation by U.S. Local Governments

Unmanaged stormwater flows can threaten life, property, and the natural environment. Already damaging and deadly, flooding will only worsen as seas rise. Local governments are critical players in the inter-governmental effort to manage flooding and sea level rise. To adapt, local governments must invest in their infrastructure systems based on the complex risks and uncertainties underlying both flooding and sea level rise. This dissertation studies local governments’ budgetary decision-making at the macro and micro scales through three empirical studies. The first study assesses local governments macro-budgeting decisions by modeling flood control investment based on the demand of the median voter. The first study tests if local governments invest in flood control infrastructure systems in response to either experienced damages, new information on their flood risks, or if they fail to invest in response to their risk at all. Results indicate that local governments decide to pursue flood control infrastructure in response to damages which they develop in response to new scientific information. The second study turns to the micro-level and investigates how local governments’ public works directors would prioritize assets at risk of failure if seas were to rise through a decision-making experiment. Applying cumulative prospect theory, the second study argued that public works directors should be decreasingly sensitive to increases in assets’ criticality and to changes in assets’ probability of failure as the probability of failure departs from impossibility or certainty. However, the results show that works directors tended to exhibit risk aversion because they were decreasingly sensitive to both increases in assets’ importance and probability of failure across the full range of failure probabilities. Finally, turning back to the macro-level, the third study developed cost-functions to test if systematic capital budgeting practices could improve local governments’ cost-efficiency by improving the decisions surrounding stormwater investments. However, the third study indicates that while environmental and scale factors drive costs, neither master plans nor asset inventories improve cost-efficiency. Overall, investing in flood control, stormwater management, and sea level rise resiliency can improve public safety and water quality but requires the commitment of public and elected officials.