The New Orleans area does not have access to grid electricity right now due to Hurricane Ida. What resilience lessons will be learned about holding a diversified portfolio of power generation and distribution strategies? Is "small beautiful"? A thread.
wdsu.com/article/new-or…
wdsu.com/article/new-or…
After Hurricane Sandy, my brother (who lives in New Jersey) purchased a diesel backup power generator. Power access raises "make versus buy" issues. How many non-poor people in the Ida Impacted Area have the ability to make their own power right now?
How will Facebook and other platforms be used to help people who demand electricity find access to those decentralized suppliers who can supply it? How will such Hayek market forces and social networks fuel the disaster recovery?
Why did New Orleans political leadership trust Entergy and give it a monopoly? I understand what the words "economies of scale" mean but such a better resilience strategy builds in redundancy into supplying key inputs.
entergy-neworleans.com
entergy-neworleans.com
Let's return to the Arrow and Debreu complete contracts world. Given that New Orleans faces storms, why didn't the Mayor have a clause in the contract with Entergy of the balloon $ payout that must be made if a disaster knocks out its services? This incentive would nudge Entergy!
If Entergy is responsible for service delivery failure then it has strong incentives to invest in redundancy such that it will have transmission lines from other distributed generators ready to go. How can free markets be used to enhance resilience? What lessons will be learned?
A Silver Lining of Ida is learning about how to mitigate the resilience challenge. This learning flattens the "climate damage function" so that the next storm will cause less damage. The macro climate economists ignore all of this in their tight parametric models.
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