The Paradox of Water Management: Insights from Cadillac Desert and Their Implications for Flood Risk and Insurance
Over the Thanksgiving holiday, I had the fortune to catch up on my reading. Marc Reisner’s Cadillac Desert: The American West and Its Disappearing Water was on my reading list for a long time. As a native Californian born and raised in Los Angeles, I have always been fascinated with water and weather, which is partly why I am in insurance today. The book is an authoritative exploration of water management in the United States, highlighting the overexploitation of natural resources to support human development in arid regions. While the book primarily focuses on drought and scarcity, its themes of human intervention in natural systems offer vital insights into another hydrological challenge—flooding. The principles outlined in Cadillac Desert are deeply relevant to the evolving landscape of flood risk and insurance, particularly for innovative firms like reThought, which are reimagining how we approach flood insurance in a changing world driven by climate risk, unbounded development, and the complex interplay between natural topography and human impact.
The Hydrological Irony: Scarcity and Surplus
Reisner’s narrative of the American West is a paradox: an arid region transformed into an agricultural and urban powerhouse through massive infrastructure projects, always teetering on the edge of water bankruptcy. This irony mirrors the challenges in flood risk management today. Despite sophisticated dams, levees, and flood control measures, catastrophic flooding is on the rise, driven by climate change, urbanization, and aging infrastructure.
Floods, like droughts, are exacerbated by human intervention. Reisner critiques the Bureau of Reclamation and the Army Corps of Engineers for their hubris in manipulating natural systems. This is evident in today’s floodplain development and inadequate stormwater management. These interventions often create a false sense of security, encouraging riskier behaviors such as building in flood-prone areas. This translates into higher exposure and losses, necessitating innovative solutions like those pioneered by reThought.
The Role of Infrastructure: Mitigation or Maladaptation?
One of Cadillac Desert‘s central arguments is that large-scale infrastructure projects, while solving immediate problems, often create long-term vulnerabilities. Dams and reservoirs in the West, for instance, have provided water security but at the cost of ecological degradation and unsustainable water use.
Similarly, flood infrastructure such as levees and seawalls can mitigate risk temporarily but often lead to maladaptation. These structures can channel floodwaters with greater force downstream or encourage development in areas that would otherwise not occur. We saw this most recently in the Appalachian region after Hurricane Helene. This creates a compounding risk for insurers as floods’ financial impact increases alongside the events’ frequency and severity.
reThought’s approach—using advanced data analytics to assess flood risk dynamically—addresses these challenges head-on. By focusing on granular, property-level risk factors rather than relying solely on FEMA flood maps or outdated models, reThought is revolutionizing how insurers and communities understand and mitigate flood risks.
Climate Risk: The New Cadillac Desert
Reisner’s portrayal of water scarcity in the West was prescient, but the challenge of managing water has grown more complex in the era of climate change. Rising sea levels, more intense storms, and shifting rainfall patterns reshape flood risk across the United States. Coastal areas face inundation from storm surges, while inland regions grapple with flash flooding and overwhelmed infrastructure.
This is where reThought’s innovations stand out. Traditional insurance models have struggled to keep pace with the changing risk landscape, often leading to underpricing or overpricing of policies. reThought leverages AI and machine learning to integrate real-time climate data, hydrological models, and building-specific factors. This enables insurers to offer more accurate pricing while incentivizing risk mitigation behaviors, such as elevating homes or implementing flood-resistant designs.
Lessons for the Future: Sustainability and Resilience
Reisner’s work is a cautionary tale about the consequences of ignoring sustainability in water management. This means rethinking how we price risk and incentivize resilience for flood risk and insurance. Public-private partnerships, improved land-use planning, and investment in green infrastructure—such as wetlands restoration and permeable urban surfaces—are critical to reducing flood exposure and losses.
reThought’s emphasis on predictive analytics and risk reduction aligns with these principles. By providing actionable insights to property owners, insurers, and policymakers, the company is fostering a more proactive approach to flood management. This reduces claims and contributes to broader societal resilience against the escalating threat of floods.
Bridging the Gap: From Cadillac Desert to reThought Flood
The lessons of Cadillac Desert underscore the importance of respecting natural systems and planning for long-term sustainability. As water scarcity in the West has demanded innovative solutions, the rising tide of flood risk requires a fundamental shift in how we think about insurance and risk management.
reThought exemplifies this shift, bringing cutting-edge technology and a sustainability ethos to the insurance industry. Through its Commercial, Residential, and facultative facilities and other bespoke insurance and reinsurance programs, reThought is tackling these challenges head-on. By addressing the root causes of flood risk and promoting adaptive solutions, reThought provides solutions to protect properties and deliver solutions.
Joe Zuk is an advisor and board member to reThought.