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"Carry Fire Insurance" -- That raises the fundamental economic issue, which surprisingly the Economist was silent; a policy of fire suppression is a subsidy for
by ghouse 11y ago
"Carry Fire Insurance" -- That raises the fundamental economic issue, which surprisingly the Economist was silent; a policy of fire suppression is a subsidy for the people who choose to live int he forest. If there wasn't a policy of fire suppression, a home owner wouldn't be able to get fire insurance, and without it, they wouldn't be able to get a mortgage so fewer homes would be built in the forest.
- kjs3 11y agoSee also: flood insurance
- eastbayjake 11y agoYes! The far bigger cost is subsidizing people who live near hurricane-prone coasts rather than sparsely-populated Western forests.
- learnstats2 11y agoWhere are people supposed to live? All of the premium non-hurricane, non-forest land, is taken already by rich people. Isn't it subsidising rich people if we allow them to live on the best land, while others contributing to society elsewhere observe no benefit?
- unprepare 11y ago>All of the premium non-hurricane, non-forest land, is taken already by rich people. I guess if you ignore the entire midwest?
- slg 11y agoWhich is tornado prone ;) Almost every region comes with its own set of possible natural disasters. Maybe we are better off pooling everything and just have natural disaster insurance that covers fire, flood, tornado, hurricane, earthquake, blizzard, and so on.
- kbenson 11y agoYes, almost every area has it's own disasters to worry about, but it's a mistake to assume that the frequency and average damage for each type of disaster and each area normalizes out to a similar value.
- slg 11y agoThat is obviously true, but that doesn't stop other insurance industries. A healthy 40 year old women and a 70 year old man with heart disease are going to have different prices for a $1m life insurance policy, but both policies will pay out equally regardless of when they die. I'm not saying home insurance needs to be the same cost for everyone, but the current situation of specialized policies that vary house to house in each region is overly complex. Plus climate change is changing the risk profile for everyone and the results of which are not yet clearly understood by climate scientists let alone random homeowners.
- kbenson 11y ago> but the current situation of specialized policies that vary house to house in each region is overly complex I actually think it's not complex enough. How else do you accurately price natural disasters into existing homes, whose ownership is often measured in decades? I think any area with a chance over a certain percent of a natural disaster that could cause catastrophic loss of property should require insurance, and the insurance cost should be as accurate as possible to the reality of living in that location.
- jellicle 11y agoThat's what FEMA is and does. It's insurance of last resort for a wide variety of major disasters.
- unprepare 11y agohttp://www.cbsnews.com/media/top-10-safest-us-cities-from-natural-disasters http://www.cbsnews.com/media/top-10-safest-us-cities-from-na... - warning, its a slideshow 10. southeast michigan* 9. denver colorado 8. chicago illinois* 7. allentown pennsylvania* (actually east, not midwest) 6. dayton ohio* 5. bethesda maryland 4. buffalo new york 3. akron ohio* 2. cleveland ohio* 1. syracuse new york Hmm, maybe you're thinking of the central US? also known as 'tornado alley'? The definition of various 'areas' of the US are ill defined, but its clear, at least from my experience living in the midwest and having never experienced a single disaster in the 25 years I've been here, that the midwest is definitely the safest from natural disasters.
- logfromblammo 11y agoIndiana farmland costs $4400/acre to buy, costs $160/acre-year to rent, and produces 150 corn bushels/acre-year or 50 soy bushels/acre-year. That sells for $3.50/corn bushel, and $9.00/soy bushel. Doing the math, it's pretty easy to guess that all that midwestern land is probably owned by "rich people", too. I put that in scare quotes because there is some element of circularity involved. If you own 120 acres of cornfields, you have over $500k worth of property. So do you own the land because you're rich, or are you rich because you own the land?
- unprepare 11y ago>Doing the math, it's pretty easy to guess that all that midwestern land is probably owned by "rich people", too. Now do that math with land values in Detroit. I think its well accepted that land values are generally quite higher on both coasts than the midwest. Agricultural land values are not very useful for estimating the cost of residential land Edit:removed some snark
- logfromblammo 11y agoBut there is a lot more agricultural/forestry land out there in America than residential. There are more people living in Cook, DuPage, and Lake counties than the entire rest of the state of Illinois. 53% of the population on 3% the land area. Ted Turner didn't get to own 2M acres of land by buying in Atlanta. Much of that is bison ranches. There are a lot of people out there that own no more than 0.25 acre, which is pledged as security for a mortgage. If you own land outright, free of liens and mortgages, whether rural or urban or in between, you're already way ahead of most people. You may not be actual rich, but "rich" by comparison with your neighbors. Peering under the covers of agribusiness in the U.S. was somewhat enlightening. It would appear that one should not attempt a farming start-up without at least $1M in the bank, and you will only get about an 8% return on it per year, on average. Small farms simply do not make money; you cannot run a small farm as your sole source of income and expect to earn the equivalent of minimum wage. So the natural conclusion I reached from my cursory research is that the vast majority of raw acreage in the U.S. is probably owned by investment trusts, who lease it for farming, mining, ranching, and logging, to people who barely earn a profit, and mostly just immediately spend 70% of everything they earn on expenses. There's a good reason why YCombinator invests in tech start-ups instead of plows and cows.
- icebraining 11y agoThe US states least affected by natural disasters are Alaska, Main, Michigan and Vermont; based on your post, I assume they're filled with rich people?
- douche 11y agoI'm surprised New Hampshire isn't on that list... It is interesting that some of the poorest, white-trash areas of the country are the safest. At least in Maine, the only natural disaster I can remember is the ice storm of 98, which, aside from knocking out power for a week, mostly amounted to an extra week of school vacation that winter.
- ghettoCoder 11y agoWow! Way to stereotype there. I guess the name fits.
- douche 11y agoI'm a card-carrying backwoods yankee redneck, so I get to talk about my people that way.
- ghettoCoder 11y agoOh yeah, what's the secret handshake?
- douche 11y agoCan't let the folks from away in on the secret. But it involves Moxie, red hotdogs, and the one true recipe for a real ham hoagie.
- eric_the_read 11y agoIn the West(-ern US), a great deal of it is actually owned by the federal government[0]. Should it be sold to provide homes for people that otherwise would live in hurricane areas? [0] http://bigthink.com/strange-maps/291-federal-lands-in-the-us http://bigthink.com/strange-maps/291-federal-lands-in-the-us
- bmj 11y agoI'd argue that flood insurance isn't necessarily the same thing, at least in some cases. I live in an area with three rivers and lots of creeks and runs that feed those rivers. It isn't always "natural" for the sections of the river, or those creeks to flood. It takes a lot of rain, in some cases "act of God" levels. Flood insurance seems pretty reasonable in those cases, particularly since in many cases, there isn't a ton of flood preventation infrastructure that has been built with tax money.
- electricblue 11y agoin most cases we're talking about people who build their houses in category 1 storm surge / 10 year flood zones and then expect a subsidy when inevitably natures does what it does.
- cma 11y agoHe's talking about federal flood insurance subsidies. Which do things like subsidize multi-million-dollar-beach-front-house flood insurance.
- ajross 11y ago> It isn't always "natural" for the [...] the river [...] to flood. It takes a lot of rain, in some cases "act of God" levels. That's a weird definition for "natural" you're using. I think you mean something more like "typical". Unless you're making a theological point, an "act of God" is quite literally as natural (in the sense of un-artificial) as you can get. But the grandparent's point was economic. Disaster insurance can't work: the whole idea behind insurance is that "bad stuff" happens rarely to some people, so everyone pools money together to pay for the few who actually needed. Disasters happen broadly, and to everyone who needs it in the affected area. A "correct" insurance scheme there would be tantamount to everyone having to just save money on their own, there's no efficiency. And of course in practice the insurance companies cheat and don't save enough, so people don't actually get paid.
- kbenson 11y ago> And of course in practice the insurance companies cheat and don't save enough, so people don't actually get paid. Or changing conditions throw off their actuarial tables, making the company insolvent when reality intercedes. Those changes could be as obvious (at this stage) as climate change, or as subtle as a long-standing practice of preventing forest fires, which while seemingly preventing property loss to fire is actually creating an unstable system which has the capability for much larger destruction than the typical fire.
- bilbo0s 11y agoTo be fair... (and pragmatic) Societies subsidize people who live in flood plains because of agriculture, infrastructure and logistics. Essentially, we get far more OUT of people living in MOST flood plains than we put in with respect to subsidies. Consider MOST of the coastal cities. We, obviously, get WAY more OUT of Houston, Galveston and New Orleans, for example, than we put in. Those three ports are enormously important to us. If they disappeared tomorrow, you would discover why they were important the hard way. Similarly for people living in midwestern flood plains. We will typically get far more out of them than we put in. Try feeding the world, with currently known agricultural technology, while not using any land in flood plains and you'll see what I mean. Even if you could somehow manage to do it... and I don't think you could.... but even if you could, you would cause enormous damage to the ecological tapestry of the continent. You would have to move MATERIAL amounts of water and soil at a minimum. It's best to subsidize the farmers to do what they do and make sure they're not disturbed in their endeavors. And, yes, many of those farmers and agribusinesses will be in flood plains. Now I'm not saying ALL flood plains in the midwest or on the coast are critical infrastructure. New York, Houston and New Orleans are far more critical to our survival than... say... Miami, Myrtle Beach or Malibu. So obviously, I'm not saying that ALL port cities or ALL midwestern flood plains are critical. But there are definitely some places in this nation that merit sizable subsidies to keep people living and working there. It's the nature of the beast when you're talking about engineering an empire.
- jvm 11y agoFor any activities that really are that valuable, there is no need for a subsidy. The revenue from the activity in those cases exceeds the costs of dealing with the disaster. The efficient thing to do is end the subsidy, and have all the less valuable activities whose benefits don't exceed the costs relocate or cease.
- muraiki 11y agoEfficiency must be balanced, though. Say that we end the subsidy on agricultural flood plains, which drives up the cost to farmers, who become less competitive vs imported food. They decide to close up shop and do something more profitable, since they can't complete with imports. The end result is an increase in efficiency but a loss of food security. I'm sure other people have thought this through much better than what I just said. But it seems to me to be a reasonable argument.
- WalterBright 11y agoHouses can also be made much more fire resistant than they are. Use metal and masonry for the exterior surfaces rather than wood and asphalt, for example. Keep the fuel and vegetation away from the walls. Build a masonry fence as a fire break. It's all just common sense.
- btbuildem 11y agoHave you seen what these fires do?! Your metal exterior surface will become a puddle of metal, and your masonry fence will be a pile of rubble.
- WalterBright 11y agoA house built this way famously survived a fire in California a few years back. http://www.concretethinker.com/solutions/Disaster-Resistance.aspx http://www.concretethinker.com/solutions/Disaster-Resistance... Some friends of mine built a house this way in Montana, and the firefighters told them that if all Montanans built their wilderness homes that way, their job would be a lot easier. You can find a lot of information on this by googling for "fire resistant home".
- deleted 11y ago[deleted]
- briandear 11y agoFires will jump over that masonry. Unless you live in a concrete dome, the fire will get across. These are infernos not unlike the fires of hell. Fire is almost raining down on you. Fire resistant doesn't work in the middle of a serious wildfire.
- Retric 11y agoDefense in depth works just fine for wild fires. Step 1 is zero trees or flammable brush near structure, step to is active misters to keep place damp. Quick and dirty approach is to use a controlled burn to clear brush near property and then just use a sprinkler system. Granted these are far from 100% effective, but even a 50/50 shot at saving a property is worth a fair amount of effort.