Integrating Market Solutions into Government Flood Control Policies

Potentially useful market solutions to minimize flood damageinclude purchase of space in existing reservoirs, purchase offlooding rights from farmers and other land owners, and privately produced levees to protect housing and commercialdevelopment. These private solutions are often limited by risk considerations, free riders, and the transactions costsassociated with large groups, necessitating public sector provision of flood control measures. Thus, most market participants will be public entities.