Dutch Ambassador Renée Jones-Bos: 'The Cost Comes Before the Benefit'

Ladies and Gentlemen

Two years ago, at APA’s New Orleans Conference, I was privileged to join Paul Farmer and US Secretary of Housing and Urban Development Sean Donovan for the “middle-keynote.”   That was a wonderful experience.  When Paul invited me to give this year’s Closing Keynote, I didn’t know what to think.  I wondered:  What did I do to warrant a second invitation?  Did I need to redeem myself?   Is Paul getting forgetful in his old age?

The Dutch are good at planning, design, and climate adaptation.  But we are taught that “the tallest blade of grass gets mowed down first.”  So, I guess Paul invited me back to show me how good Americans are at planning and at design.  At adaptation.  At new urban and green strategies.   Paul, and Mitch, it worked -- I am impressed by what I have seen here.  An amazing Conference – thanks for inviting us to your party.

During my time in the US, I have seen seeds grow into large trees.  One of the best things we, as an Embassy, have done has been to nourish and support the blossoming APA  - Dutch partnership.  This partnership had an odd beginning, with Paul traipsing around the Netherlands on cold, damp, December days, seeing our water, planning and landscape practices. 

But out of that cold visit grew warm things between the Dutch and the APA, including the Delta Urbanism Symposium in New Orleans, Boston and L.A.  Delta Urbanism was funded primarily by the Lincoln Land Institute.  And it was the sweat and dedication of APA’s staff that made it happen.  John Reinhardt, if you’re in the room, Thank You!  Jen Graeff, Carolyn Torma – amazing work!

Intro

Why are we here today? My Dutch colleagues and I want to use this week to share, learn, make new friends and partnerships.  This is important, because coastal and delta cities have a challenging future, and new adaptation practices are needed. 

This afternoon, in the next 40 minutes or so, I wanted to talk to you about a few things.  First, about how our floods shaped our history. Second, about how cost-benefit analysis underpins our policies and have produced a paradigm-shift.  Third, about some projects demonstrating that new paradigm.  And last, about our partnership with the APA and how the new paradigm has found its way to American shores, in particular in New Orleans. 

1.Floods Shaped History

Two years ago, I left the APA audience with a clear message about my country:

         Sophisticated, integrated water management is the sine qua non of keeping Dutch feet dry.

         To be Dutch means that you must Live with Water. 

         Water management is part of Dutch DNA.

Let me expand a little.

In the Netherlands we have had our share of civil wars, uprisings against foreign occupiers, a Golden Age, a “Wind Trade” in tulip bulbs, Napoleon, a brutal occupation during World War 2. And my American friends are quick to remind me of a “high point” in Dutch history: trading ‘New Amsterdam’  on today’s Manhattan for Surinam.

But it should surprise no one that the true cadence of Dutch history is best defined by floods, and our response to them. 

We can go back more than a thousand years. The All Saints Flood of 1170.  The St Elizabeth flood in 1421.  The Harlem Lake flood in 1836.  The ZuyderZee flood of 1916.  The Zeeland floods of 1953.  And the major river floods in the early 1990s.

We have, in fact, averaged two major floods each century over the last millennium.  Geography is Destiny, as they say…

These floods claimed hundreds of thousands of lives.  They forever changed our landscape.  And they left a potent legacy in Dutch DNA: strengthen the dikes, “fight” the water, manipulate the landscape.  The saying that “while God created the earth, the Dutch created the Netherlands” has more than a kernel of truth to it.

(The Costs Come Before the Benefits)

Another part of Dutch DNA is found at the entrance to the old port of Amsterdam – close to the Amsterdam Stock Exchange:  “De cost gaet voor de baet uyt.”  That means “The cost comes before the benefit.”  The cost comes before the benefit…

That Golden Age motto and our modern approach to water management are - oddly enough - in alignment, whether in planning, in economic, in environmental, and resiliency perspectives.

Let me explain. Our geographical destiny has made the Dutch known for many things.  We have an entrepreneurial spirit. We’re penny-pinchers. World traders. Calvinist preachers, with at the same time an open-mind.  Someone described our collective personality as one of “sober optimism.”  We find ways “to make lemonade out of lemons,” to adapt, and even stand those disasters on their heads.   

It was this mentality that enabled us to rebuild, and see new opportunities, after every major flood. 

Even after the All Saints Flood swept away our peaty northern coast, Amsterdam was able to grow into the commercial hub between St Petersburg and London, between the Mediterranean and the Baltic.

When river floods swept through our delta and major rivers, we placed our rivers between dikes and created productive farmland - and the Gateway to Europe’s northern kingdoms now went through Holland.

In 1836, the huge, inland Harlem Lake jumped its banks, killing thousands.  We drained that lake, and then built houses on it and created Schiphol Airport – literally ‘Ship’s hole’ – today, one of Europe’s largest airports, close to the Dutch tulip and flower industry.

And in Rotterdam, three centuries of repeated floods forced us to create better protection for the Port and its workers.  Today, Rotterdam is Europe’s largest Port, and the lifeblood of the Dutch economy.

Our forefathers had a choice: to invest in the future, to put the ‘cost before the benefit’, or to ignore the past.  Without public investment, engineering, and innovation, the Dutch would now be living in Germany, or Belgium.

And because we didn’t have a powerful Head of State, we did that by cobbling together coalitions of the various provinces / states to support such investment. These coalitions could only be swayed by strong arguments and good cost-benefit data. And because the cost-benefit analysis was quite clear, investments were made. 

And the benefits?  Today, the Netherlands is the world’s 16th largest economy, the 7th largest trading nation, the 3rd most densely populated country in the world. We derive tremendous opportunity from being the Gateway to Europe. Not bad for a land of swampy marsh, gloomy weather, and stingy preachers!

(Flexible Design)

Let me now move to how our response to floods has changed over the last fifty years or so.

1953 marked our last major flood, just as we were emerging from the long shadows of the Second World War.  Still poor, still struggling, we invested $40 billion in a massive coastal flood protection system  known as The Delta Works.  The Delta Works protect our entire delta, and the areas around Rotterdam.  It has repeatedly prevented nuisance, costly localized flooding.  It has also prevented major floods.  On those terms alone, it was a wise investment. 

The barrier was designed to permit dynamic salt-fresh water exchange.  This was not a flood protection goal, but an environmental and economic one.  The dynamic design doubled the barrier’s cost.  Were those additional goals justified?  Instead of having a degraded, compromised back-swamp, our delta has a vibrant local fishing industry, robust regional tourism and abundant recreation.  And an ecosystem whose future health is guaranteed.  The marginal costs of the dynamic design have surely returned their investment. 

International trade and the Port of Rotterdam are the lifeblood of the Dutch economy.  Without protection, Rotterdam is at the mercy of North Sea storms.  A major flood that closed the Port would cripple the Dutch economy, likely for years.  Belgian, German and Danish competitors would permanently steal away our logistics and shipping industries. So, the massive storm surge barrier that protects Rotterdam is flexible.  It keeps the Port open to commerce, yet is closed to protect life and property when a coastal storm threatens.  Making the barrier “flexible” was an added cost, but keeping the Port open is crucial.  The flexible solution was a smart investment. 

2.Costs-Benefits – toward a new paradigm

The Netherlands in the 21st century faces new challenges.  Sea levels are rising.  Coastal storms will become more extreme.  Erosion.  Increased river discharge.  More rain.  And periodic droughts.  And salt intrusion.  Subsidence.  And the many challenges of occupying a dynamic landscape.

Our old “higher dikes” approach is no longer sustainable, or affordable.  We are learning to adapt, to live with water, and not always fight it.  Our collective DNA is mutating, away from flood resistance at any cost to flood accommodation wherever possible. 

This means that today, we are looking at a new paradigm in our cost-benefit analysis.

Let me step back here, away from geography and past projects, and into the realm of public finance, of costs and benefits.  And how climate change is nuancing traditional cost-benefit analysis.  Economics is a Dismal Science, so I’ll try to make this painless.

Since the early 1990s, the Netherlands has applied cost-benefit analysis to infrastructure and planning decisions.  We know that these analyses are imperfect.  And we know with certainty that politicians – even Dutch ones! -- don’t always make rational decisions even if they have perfect information!  But that’s a different Keynote speech, for when I retire… 

We ask “do the costs of increasing flood safety exceed the benefits of reduced flood damages?” 

On the cost side of the equation, we look at fixed and variable investment aspects of a project, and  operations and maintenance.

On the benefit side, we estimate the value of reduced flood damages to roads, buildings, infrastructure.  We estimate the economic benefits floods might produce, for instance the additional wages and materials production needed to rebuild after a flood. 

These types of valuations are traditional, and pretty easy. 

Where it gets tricky, but crucial, is in the assessment of indirect flood damages.  Like lower economic activity, business interruption, flood-related environmental damage, pollution.  The damage to unique fauna, flora, buildings and cultural assets. 

Valuing the loss of life is impossible.  No international consensus exists on how to precisely quantify these indirect damages.  Many assumptions are made.  Are assessments imperfect?  Yes.  But we are trying, because by capturing these values, better investment decisions can be made, better policies designed.

If you have seen the Dutch landscape, and understand our risks, you might wonder why our dikes are not higher, our rivers not more contained, our buildings not more elevated?  The primary reason: cost-benefit analysis says we can’t afford it because those very actions might increase the impacts of a catastrophic event.  This is a change in mentality, driven by recent events which show us that low probability, high impact disasters are still too common.  And another reason?  Because we don’t want to live in an overly engineered landscape that has lost its aesthetic charm.  We like our modern cities, but also our deep green polders, our Amsterdam canals, our low skies and distant horizons.

That is why a new paradigm — Living with Water -- infuses our policy and our public investments today. Of course: we must always be on guard against floods. That cannot and will not change.  The new paradigm means, however, that we can’t always fight the water.  Instead, we need to accommodate water, and give it room.  And in the world’s 3rd most-densely populated country, giving room to water means taking space from something else.  It is a zero sum game.  Or is it? Climate change, oddly enough, is reminding us of both the beauty and resiliency of nature, and the benefits of sustainable design.  The sober optimist is again making lemonade… 

3.Examples

I can best explain the breadth of the new paradigm by giving you some examples.  You will see that the New Paradigm extends into many fields and disciplines.

Room for the River

First, our Room for the River program, a $3.1 billion project-driven investment which started in 2007 and will be completed by 2015.  The projects are restoring resiliency – the “natural and beneficial functions” -- to our river floodplains.   The Room for the River project has two explicit, equal goals: improving floodplain functions and increasing the area’s spatial quality. 

One of these projects is in Nijmegen, a city of almost 200,000 along the Rhine River.  The river channel near Nijmegen narrows drastically, from one mile wide to less than a third of a mile wide.  When the snow melts in the Alps, or it rains heavily in Germany, water “stacks up” just above the city, threatening life and property.  A river bypass is the obvious option.  But that option would mean “takings,” land acquisition, increased infrastructure costs.  It would not improve the area’s spatial quality.  It would place citizens on a fortress surrounded by a raging river.  The bypass, the less costly option, was rejected.

Instead, the project will set-back the river dike, creating a new water channel, new high-value waterfront living opportunities, new parkland.  The project’s cost: $400 million.  But its benefits are many.  Additional economic activity from new retail, residential and commercial opportunities.   Environmentalists get new parkland.  Water managers get lower flood risks.  Shippers get more reliable navigation.  Local government has new high-value, river-front land.  The dike set-back option was more costly than the bypass option, but its benefits far exceed the additional costs.

Further west in the river delta, we are notching levees to create a wide high-water channel that will purposely flood farmland.  The Noordwaard polder project, at 11,000 square acres, will reduce water levels and flood risk in nearby cities of Gorinchem and Dordrecht.  It will restore a previously-diked wetland to its natural state, improve ecosystem connectivity in a nearby national park, and broaden a major European migratory bird flyway.  It provides lower flood risk to citizens in nearby cities and recreates a resilient landscape that disappeared almost 200 years ago.

IJBurg

A second example of the new paradigm can be found in Amsterdam, where the Past is Prologue.  Amsterdam is a great city: lively, cultural, walkable, and sometimes even controversial.  It is watery, and beautiful.  And it has a shortage of homes.  A new development just east of the City is rising from the bottom of Lake IJ that will house 45,000 people in 18,000 residences and provide jobs for 12,000 people.  Land uses are mixed, and dwellings, while dense, are spread across six manmade islands.  Public transport is close by.  New urban architecture is embedded .  Recreation, parkland and water storage areas abound.  The original Amsterdam floating home – a converted barge anchored in an old Amsterdam canal – is being replaced by a climate-ready version.  The navigable canal and waterfront living so prevalent in historic Amsterdam infuses this new area.  And the entire area is elevated well-above the water level.  The costs of IJBurg were substantial.  The benefits even more so.  This is a great example of a Dutch saying: “it is not either-or, but instead and-and…”

Rotterdam Climate Proof

A third example is in Rotterdam, which is as different from Amsterdam as Oakland is from San Francisco.  Rotterdam sees climate change as a mixed blessing, as a threat and an opportunity.  Climate change means water variability will increase from four directions: stormwater from above, groundwater from below, rising sea levels from the west, and more river discharge from the east.  Raising the dikes is not an option.  Additionally, as the old inner Port is abandoned for newer, larger facilities closer to the sea, urban renewal needs and opportunities abound.  Making new communities flood resilient is giving rise to an entire new school of water-based design.  Parking garages and skateparks are storing water.  Old, long buried canals are being reopened.  Water taxis and water bikes are connecting neighborhoods.  Green roofs and household stormwater collection systems are commonplace.  All of this, and a “climate neutral by 2030” goal is actively supported by the city government.

Maasvlakte 2

My last two examples – from the logistics and research realms – show the reach of the new paradigm.   At Maasvlakte 2, where Rotterdam’s Port is growing through a major $4 billion expansion into the sea, we are showing that economic development – or economic Darwinism -- can also be resilient.  

More than 8 square miles of deep sea port is being created to triple the Port’s container-handling capacity.  This investment is crucial for the Dutch economy.  But those investments are made with climate goals in mind.  Responsible dredging practices are required for 13 billion cubic feet of sand necessary for the expansion.  Sand re-use has the highest priority.  To mitigate the sand-mining impacts, sea-bed “eco-reservations” are being created.  Dunes are being enlarged.  20% of the project is set aside for nature and recreation.  2500 workers for the project reside nearby in residences made from recycled shipping containers.  A clean-coal plant has been built for the site, making electric generation incredibly efficient.  And close-by depleted oil fields will be used as a massive pilot project to test sea-bed CO2 storage.

Are these environmental features costly?  Yes.  Are they wise?  We think so.  Are they beneficial?  No doubt.

The Sand Engine

My final example is about the research project: the Sand Engine.  Every year we must stabilize our coastline by adding 12 million cubic meters of sand to our foreshore.  Sea level rise scenarios suggest a doubling, tripling or quadrupling of annual sand additions to maintain our shoreline.  We’re lucky to have large volumes of sand nearby and innovative, cost-effective Dutch dredgers.

Our Building with Nature program seeks to harness nature’s dynamic forces for public benefit.  How? 21 million cubic meters of sand, double our annual amount and occupying about 1 square mile, has been placed in a “big pile” along the Dutch coast.  Over time, nature’s “engine”-- wind, water and waves -- will distribute the sand along the coast.   Some of the sand will find its ways into the dunes, increasing their strength and environmental attractiveness.  Some of the sand will settle on the foreshore, providing immediate flood protection benefit.  And some of the sand will make its way northward along our coast.

This $70 million “Sand Engine” project is expected to make nearby sand supplementation unnecessary for the next 20 years.  It will save tens of millions of dollars.  This big Sandbox will be open for recreation and teaching, and accessible to people, plants and sea-mammals.  As the sand dissipates, the Dutch will learn to maximize the Sand Engine’s applicability to other parts of the Dutch coast, and maybe to other coastal areas around the globe.

Ecosystem Services

Having talked about the shift in paradigm, I want to return back to the realm of economics and science for a moment.  Also because of it’s relation to the costs-come-before-benefits idea.

I noted that the new paradigm is reminding us of the beauty and benefits of natural systems.  The Sand Engine demonstrates that the benefits of the natural systems are real.  In our Building with Nature program, of which the Sand Engine is but one part, we are learning to harness nature’s energy to improve our lives.  And we are trying to better understand the economic value of what is known as ecosystem services.  

Ecosystem goods and services are the things from nature we need and use: clean air, water, food.  They are produced by “natural capital” – trees, mountains, oceans, rivers – and yield beneficial processes, like flowing water, nutrient cycling.  They provide habitat, food, water storage, and generate thousands of services.  We know that these services and functions have value.

Economists have a difficult time quantifying those values in ways that will improve cost-benefit analyses.  And if our public investment strategies must yield certain benefits, capturing the value of these ecosystem services could substantially improve project design and in turn our return on investment. 

Let me try to explain this in simple terms.  A neighborhood with many trees and a clean pond should have higher value than a neighborhood without those goods.   A house on the beach should have higher values than houses three blocks away.  It is easy to look at house prices and see the value of being beachfront or pond side.  But we aren’t very good at quantifying the value of the ecosystem services created for individual properties or neighborhoods because of the ocean, pond or trees.  We know those values are there.  We know they are important, and not inconsequential.  If we learn to quantify their value with more precision, our investment decisions will lead to a better appreciation of our natural capital.  A byproduct of our new paradigm is more research into this quantification.  Fantastic work is also being done on this topic here in the western US. 

Perhaps a small, but true anecdote will help.  A Swiss landscape architect had worked in Napa Valley and in France’s Rhone Valley, restoring the riverbeds, native plants, and species, and creating more water natural storage.  He loved his work.  He said ”the charm” of the riverbed was improved as its function was improved.  “It’s the damndest thing, everyone agrees with me, and we can all see it and sense it, but no one can tell me how much the ‘charm’ is worth.” 

Tipping Points

And a last thing I wanted to mention deals with science and is also linked to better ‘Costs before benefits.’  I am talking about tipping points.

Hurricane Katrina showed us that the variability and intensity of climate impacts are large, unpredictable, and possibly catastrophic.  The consequences of a changing climate demand that we understand climate variability and climate intensity.  That understanding may lead to different policy choices.  Investments are always more effective when they are proactive and preventative.  And thus knowing when to start changing is an important piece of the puzzle.

Dutch scientists are using Adaptation Tipping Points to help us.  An Adaptation Tipping Point is the point at which a water management strategy can no longer meet its objectives.  At that point, the strategy is insufficient and likely to fail.  Tipping Points shows us also that the forces making failure likely are self-sustaining; that they are not one-off or cyclical events.  

Reaching a Tipping Point does not mean that water management is impossible, or that consequence of passing a Point will be immediately catastrophic.  Instead, Tipping Points help us understand how much climate change, how much sea-level rise, how much weather intensity, the current management regime can absorb.  After all, if the Costs come before the Benefits, a crucial question is which costs, at what place, and precisely when?

4.Conclusion

I have talked about our flood-shaped history. About the cost-before-the-benefit approach and our changing paradigms.  I now want to wrap up by talking about the relevance for you, here in the US. About our partnerships.  Let me do that by addressing a threat, an opportunity and an inspiration. 

The threat is captured by the Surging Seas report issued last month which draws a few stark conclusions for the US.  One is that sea-level rise along the US coasts will double the frequency of 1/100 yr storms.  The take-away?  More regular flooding and more flood impacts.  5 million people live in areas that will be below the normal high-tide line if the seas rise as projected.  Millions more live in areas just beyond the projected high-tide line.  Those areas will be flooded with storm surge.  Florida and Louisiana are most at risk, but New York, Maryland, Virginia, New Jersey and North Carolina are vulnerable too.   

They say that “Imitation is the Most Sincere Form of Flattery.”  I am not happy that these places are becoming more like the Netherlands.  But, as the Dutch Ambassador to the US, I see a golden opportunity: more things for the Netherlands and the US to share, more joint learning, more research partnerships, and more reasons to travel to New York, New Orleans and Miami, Amsterdam, Rotterdam and Zeeland.

But most of all, I see an inspiration.  The Dutch Calvinist in us demands that we “Do the Right Thing.”  That means to accept things as they are, prepare to make things better, work hard, do right by your neighbor, and be thankful.  The APA’s Paul Farmer, New Orleans’ David Waggonner and my Embassy’s Dale Morris started down a path that embodies that inspiration.  They started the Dutch Dialogues to show New Orleans how it could be safer, more attractive, and more resilient if it took and applied Living with Water ideas and practices to its urban areas. 

Over the last year, a Comprehensive, Integrated Water Management Strategy for New Orleans, funded by the Louisiana State Government and HUD, is being developed by a Calvinist – Cajun team.  The Dutch-American team is designing a new future for one of America’s most unique cities.

Neighborhoods and community blocks will get water assignments. 

Covered, buried, ugly and constricted drainage systems will be opened, restored, made functional and attractive.

A circulating water system will yield a healthy, flood resilient eco-system.  That same system will store more storm water and decrease the area’s flood risk.

Crucial, iconic water bodies – like the Bayou St John and the Carondelet Canal – can be restored to their past glories, and serve their historic purposes: conveyance, linkage and water storage.  Tweaking their designs and functions can add new amenity to these corridors of significance, and to the neighborhoods surrounding them.

A more imaginative, multipurpose use of drainage can enhance water quality, filter pollution and provide places for recreation and reflection, creating better economic opportunity, and better flood safety for those living nearby. 

And abandoned properties can be redesigned to provide new, innovative water storage assets that also improve community functions and community values. 

What the Water Management Strategy for New Orleans demonstrates is that Engineering alone is not a sufficient response to complex Landscape Challenges. Planning and design and function and form must also inform investment decisions. And that if you do this wisely, you weigh and value all costs and all potential benefits.

The flood protection and other community needs in New Orleans, in the Netherlands today, and in US coastal communities of tomorrow demand this broader approach.   In the Netherlands, and in New Orleans, businessmen, activists, politicians, stakeholders and other leaders are learning that only by comprehensively defining the problem can we design an optimal solution.  So that when you invest, maximum benefits will follow. I think you planners already knew that!

Finally, let me say this.

Han Meyer, a distinguished member of the Faculty of the Technical University of Delft and a Full Professor of Urban Design, was intimately involved in Dutch Dialogues and the New Orleans Water Management Strategy.  He was also inspired. And he said: “What is happening in New Orleans is breathtaking.  Never before have I seen a water strategy develop so organically.  The complexity of the task is overwhelming, maybe impossible. But the passion of the participants is inspiring, maybe because the need is so high.  And if they are successful in New Orleans, they will have done something that even we in the Netherlands have not yet been able to do.  Combine urban function, form and need into a strategy for resilience, a respect for nature and for the place where they live, and a clear path to guaranteeing New Orleans’ future.”

That, my friends, is high praise indeed.  Success there is the direct, intentional product of the Dutch partnership with New Orleans, with committed local planners, with the vision of concerned citizens like David Waggonner, the warm friendship with Paul Farmer and the APA leadership, and the professional drive of the staff and members of the American Planning Association.  That, too, my friends, is inspiring.

Thank you.

Originally posted at http://dc.the-netherlands.org/key-topics/water-management/more-informati...