* Flood defense plan could cost up to $29 billion
* May include barriers, levees and dikes
* Federal funding key, private financing unlikely
NEW YORK, Nov 4 (Reuters) - When Jeroen Aerts, a Dutchman
tasked with crafting a plan to defend New York City from
flooding, first looked at its coastline seven years ago, he was
taken aback by how vulnerable it was.
Unlike some of the other large cities around the world, such
as London and Amsterdam, that have comprehensive flood defense
systems with levees and storm surge barriers, New York was
completely at the mercy of the elements.
"I was looking at the water and wondering - where are the
levees?" said Aerts, a professor of environmental risk
management at the VU University in Amsterdam and an adviser to
New York City. "Nobody was doing anything on flood risk."
As the devastation after super storm Sandy this week made
all too clear, little progress has been made since Aerts first
looked at the Atlantic Ocean from New York's shores. The storm
caused widespread flooding, power outages, travel chaos and left
more than 40 people dead in New York City. Early estimates
predict it also caused up to $18 billion in economic losses in
New York state alone.
New York state and city officials have started talking about
the need for a comprehensive flood defense system, but many
obstacles remain. According to Aerts' top estimate, it could
cost as much as $29 billion to build and implement. The question
of who will pay for it remains unresolved.
Most comprehensive proposals for storm surge defenses
involve a system of two to four barriers, each spanning from a
third of a mile (.5 km) to six miles (9.6 km) and towering about
30 feet (9 metres) above sea level. This is to be supplemented
by levees, dikes, bulkheads and beach strengthening.
One of the most prominent plans calls for a 0.84-mile East
River storm surge barrier from Whitestone in Queens to Throgs
Neck Bridge in the Bronx, and a much longer 5.92-mile Outer
Harbor barrier linking Sandy Hook in New Jersey to the Rockaway
Peninsula in Long Island.
Aerts estimates storm surge barriers could cost between $10
billion to $17 billion, while additional defenses such as levees
and adding sand to eroding beaches could cost another $10
billion to $12 billion.
Even if the city were to find that kind of money, an
infrastructure project o n such a scale can take more than eight
years to build, which means New Yorkers would be exposed to the
fury of any such storm in the meantime.
As shown in the past week, the city's current strategy is to
take precautions - such as evacuations from areas that flood
easily - then take the hit and try to recover as best as it can.
"The city's approach is something that they call
'resilience'. If they are hit by a storm and they have flooding
there will be damage but after the storm they can clean up...
kind of repairing the damage after it's happening, bouncing
back," said Malcolm Bowman, an oceanography professor at Long
Island's Stony Brook University. "Obviously it is not enough."
New York City and state officials did not respond to a
request for comment on the question of flood barriers. A city
spokesperson also did not respond to a request to comment on the
significance of Aerts's role. The city will occasionally tap
advisers to carry out research.
To many New Yorkers, Sandy's destruction came as a shock.
But to scientists, engineers, environmentalists and public
officials, this was a tragedy waiting to happen. A 2007 study by
the Organization for Economic Co-operation and Development
ranked greater New York second among the world's large port
cities most exposed to coastal flooding based on the value of
"People have said for many years - specifically since
Hurricane Katrina hit New Orleans - that New York City was prone
to such a super storm," New York City Comptroller John Liu said
Still it took Hurricane Irene in August last year for the
city to seriously start exploring a flood plan, according to
Aerts, who said the city asked him to develop a comprehensive
cost-benefit analysis for a flood strategy.
After Sandy, the momentum behind such a plan is set to
build. Andrew Cuomo, governor of New York state, said this week
that infrastructure will need to be re-examined and reinforced.
But it is not clear how New York will pay for it, and it may
well take an act of Congress to prevent the next act of God from
bringing the world's financial center to its knees again.
"We have to weigh our damages against the cost of building
such a levee system," said Liu.
On paper, New York City has the capacity to borrow more to
spend on infrastructure. The latest relevant report from
Comptroller Liu's office projects the city to be $18.28 billion
below its general debt limit by July 2013 and $18.74 billion by
"I don't see tight debt capacity as a hurdle down the road,"
said George Friedlander, chief municipal strategist at Citigroup
But the city's government is likely to be loath to
jeopardize its strong credit in the municipal bond markets. It
will have to clinch a deal with the s t ate, the federal
government, as well as other states vested in this, particularly
New Jersey, at a time when relations between Democrats and
Republicans are highly polarized.
"When we saved New York City from bankruptcy thirty years
ago, Governor (Hugh) Carey got people together and made them
understand they were better off talking to each other," said
Wall Street veteran Felix Rohatyn, currently a special adviser
to Kenneth M. Jacobs, CEO at the Lazard investment bank.
"I'm worried this is something we cannot do today."
Federal money may prove key to any major flood protection
program. This would mean negotiating funds with Congress rather
than relying on the Federal Emergency Management Agency, which
reimburses states and cities for recovery projects. And getting
that kind of money is going to be increasingly difficult given
the lack of consensus in Washington on how to handle the U.S.
government's large budget deficit and soaring debt.
"We have to get a long-term commitment from the federal
government to put money up, which can be contingent on the state
and local governments producing a significant match," said
former Pennsylvania Governor Ed Rendell.
Rendell, a major advocate of private sector involvement in
infrastructure finance, argued that public-private partnerships
could be part of the funding mix for such projects.
Even though something like levees would be not be
revenue-generating, private ownership or management was still an
option, said Raj Agrawal, head of infrastructure for North
America at investment firm KKR & Co LP.
"If you get this under private ownership or private
operation, you can certainly raise more capital than you could
in the bond market by getting a capital infusion of funds from a
private party," he said.
In Europe, the Delta Works in the Netherlands, as well as
the Thames Barrier in Britain, were both kicked off after the
North Sea Flood of 1953 and are early examples of how major
storms can result in significant infrastructure investments.
The United States has not always been quick off the mark in
erecting such defenses. Storm surge barriers off Rhode Island,
Connecticut and Massachusetts were constructed in the 1960s as a
result of a hurricane in 1938, said Graeme Forsyth, a technical
director at engineering consultancy Halcrow.
"The design may take two years, the construction might take
six, and the rest of it is more to do with getting the ball
rolling politically, getting the funding in place and all that
kind of thing," said Forsyth, whose firm is behind a storm surge
barrier for St. Petersburg, Russia, that cost $6.9 billion.
Still, construction of the storm surge barrier in New
Orleans was completed in 2011 - just six years after Hurricane
Katrina devastated the city.
"My experience in other countries with this kind of project
is that these are political decisions. If the population is in
favor of it, then a politician will say we'll go for it. ... Now
we have momentum," said Aerts.
Some skeptics argue that barriers and other large-scale
infrastructure projects are not cost-effective because they
protect only specific areas.
"There is too much coastline. In a funny kind of way you can
protect one area at the expense of another. I don't think huge
capital infrastructure like that is going to be constructive,"
said Steven Cohen, a professor at Columbia University's School
of International and Public Affairs.
Aerts, though, says he is producing an estimate for the cost
of barriers to give to the city's government.
"In the short-term you can look at existing building codes
to make sure that they are maintained. In the longer term, the
barriers come into play," Aerts said.