The Case for, or Against, New Orleans
Too asses and give recommendation on whether or not to rebuild the city of new Orleans I will be examining the cost to benefits of such a rebuild and the impact and benefits it will have towards the city. In the CBA, I will be examining the cost of rebuilding New Orleans to pre Katrina conditions without making any additional upgrades to the levees and infrastructure. This will give me a more accurate cost model to base my recommendation on.
As for the benefits I will examine the benefits of recovered losses when comparing pre Katrina data to post Katrina dat. The areas where I will be examining are tourism recovered, port operations recovered, wages recovered, …show more content…
The second rate is the Real Rate of 3% which will factor in the rate of inflations (Federal Reserve www.federalreserve.gov). The third rate is the Real Rate in addition to the probability of another “major” hurricane hitting New Orleans, which we’ll use here as the Rate of Risk. In an analysis done by Dr. Bob Sheets, he gives New Orleans a 3/100 probability of a “major” hurricane touching down in the next 100 years. This means in the next 20 years there is a 30% chance of a “major” hurricane hitting New Orleans (USA TODAY). So by adding the Rate of Risk to the Real Rate, we get a new discount rate of 7% to better assist in the decision making process.
Tax Revenues Recovered
We compared past historical data to present, post Katrina data to find trends, and losses to use to make a prediction on tax revenues lost and revenues that can be recovered (Figure 1).
Looking at pre Katrina tax revenues and compare them to post Katrina tax revenues we see a total of 508 million in tax revenue losses to New Orleans (New Orleans Metropolitan Conservation & Visitors Bureau Inc.) from tourism. If spread over the next 20-year with a reported 8% trend increase, New Orleans stands to recover 25.11 billion (FV) in lost revenue from taxes. When discounted to Present Value: 5.3% discount (8.94 billion PV), a 3% discount (13.9 billion PV), and a 7% discount (6.49 billion PV).
With Port Operations, New Orleans stands to recover 800 million a year in