Blowing the Sandy Out of Our Environment

Superstorm Sandy may be a bit of an afterthought now that both J-Term and winter in Vermont are well under way, but remnants of the catastrophic storm are still very much visible back home in New Jersey. Thankfully, my home and neighborhood managed to remain reasonably unscathed in the wake of the storm surge, as did much of northern New Jersey. However, coastal areas of the Jersey Shore and Long Island (Brooklyn and Queens included) along with Manhattan are still far from back to normal, and as NPR’s Pam Fessler reports, the relief aid flowing into the region teeters along the line between comprehensive and overwhelming. Donations of clothing and financial resources abound, but the reality brought before our eyes concerning the prospect of storms the magnitude of Sandy potentially becoming the norm begs the question of how long we can afford to continue putting bandages on the situation.

Though the lauded efforts brought forward provide welcome reminder that people are capable of being decent human beings every once in a while — see Governor Chris Christie’s uncharacteristic civility immediately following the storm — maybe the costs and damages faced by those affected by Sandy along with help of all who came to their aid may not have been necessary. While many argue that it was only a matter of time before Manhattan faced a disaster of this variety, evidence repetitively quoted by groups like 350.org points to the fact that in earlier decades storms like Sandy would have been an utter impossibility. Paired with our continued neglect to address issues of climate change, the present levels of long-lived greenhouse gases in the atmosphere are only going to increase the likelihood of more storms like Sandy and Irene before it, as well as necessitating Irene- and Sandy-scale relief efforts — more costs.

Economics refers to an externality as a cost or benefit not transmitted through price — in other terms, a failure of the market to accurately represent the cost of an action or choice. An externality, represented as marginal external cost, is the difference between the private and social prices associated with something; working within our Sandy example, let’s call it storm relief. Slate reports that the federal government is currently working out a proposal to bring roughly $50 billion in aid to New York and New Jersey. The New York Times last November estimated the cumulative damages faced by New York and New Jersey to be somewhere around $70 billion. So while Washington has thankfully committed to help mitigate some of the costs of storm relief, it still goes to show that, working on the assumption that Sandy’s magnitude was something affected by our own choices and behaviors — say, the consumption of fossil fuels — that $70 billion is a cost of that action that wasn’t included in the price of the choice that led to it. It was a price that occurred outside of the market.

Now I can’t say for sure that if people 20 years ago knew that disasters like Sandy would be the consequences of them filling up their tank of gas to get to work, they’d stop using gasoline. People will always need to get to work, but maybe someone who would eventually lose their house to a freak storm would rethink the cost of a gallon of gasoline; whether they’d still knowingly purchase it is another story. The crux of the matter is that the way we approach economic questions like these brings in the matter of how we value things — not just in the present, but in the future. If the cost of an action in the present won’t be returned or payed off in the future in terms of benefits, then the action won’t be carried out. Put another way, if the benefits of pollution abatement don’t exceed the cost of abatement in the present, then we’ll just keep polluting. The fact that it’s simple human tendency to value things in the present more highly than things in the future makes the situation exponentially more complicated.

How long can we ethically continue to neglect these issues of value? I can’t say. What I can say is that a disturbingly high number of families’ lives will probably never be the same, and that in itself may suggest that it’s time we consider just how many more storms we can realistically deal with. Sandy was an externality. Sandy was a market failure. Luckily, economics also tells us that we can fix externalities, and we still have the opportunity to reconsider where our ethics and values lie.