What can we expect in the next few days? How is the state coping with the floods and, what will be the longer term impact?
These questions and others will be addressed by our two guests this evening. L.D. McMullen, now an engineering consultant, was Director of the Des Moines Waterworks during the flood of 1993. David Swenson is an economist with Iowa State University and does research on various sectors of the state’s economy.
Yeager: Gentlemen, thank you for coming in tonight. L.D., I want to talk to you. What is going on right now? Can you flash back to 1993?
McMullen: Oh, without question I get flashbacks of '93. It looks the same, it sounds the same. When people say what does a flood sound like? It sounds the same, smells the same. And it's very close to what happened in '93.
Yeager: So, you're sitting in a different chair tonight. Is it too early to grade what's going on? But how are we doing? What has gone right?
McMullen: I think we're doing great. There was a lot of lessons learned from '93. We've made a lot of preparations as a result of it, just picking drinking water, for example. The treatment plant at Fleur Drive has been protected with higher levees and the great big steel gates to keep the floodwaters out. We also have a second treatment plant located at Maffit Reservoir, a third one under construction up by Saylorville. So, we've learned that redundancy is a very important thing. And the other thing that we really learned, which only an engineer would probably get excited about, is that groundwater can get behind a levee system and actually flood out something and not have to come over the top of the levee. So one of the things that we learned is how to de-water that treatment plant site on Fleur Drive and keep the groundwater from flooding out the treatment plant.
Yeager: So, those will be things that some outsiders might say right now is maybe not going right. They see water on the other side of a levee. Are there other things that it looks like, I don't mean to make you critical of anything, but is there anything that doesn't look like it's working?
McMullen: I haven't seen anything that I would classify as not working. I think the communication of the three times a day news conferences are a great way of communicating to the public. The media has done a great job of covering those things. I think people are being upfront and telling the story, Bill Stowe in particular is saying this is a critical thing or this is an area that we need to be prepared for. He's preparing people ahead of time rather than having a crisis situation and having to get people out. I think we learned so much from '93 that we have not forgotten that we're using today.
Yeager: Well, Bill Stowe is the Des Moines Public Works Director and he had said earlier this week, he said, it's almost unfair at times to compare '93 to 2008. Is it fair to compare the two?
McMullen: I think it's fair to compare the two. I mean, we're only going to be a foot difference on the elevations. So, the response is going to be roughly the same other than the fact that we've made a lot of improvements.
Yeager: Sure. David, you had traveled recently back from South Dakota just over the weekend and you saw some of the higher rain that had gone -- just as someone who saw a lot of that water is there as much water out there as it sounds?
Swenson: There's water everywhere coming across eastern South Dakota, coming across northwestern Iowa. All the stock dams, all of the rivers, the Boyer, the Little Sioux, the Boone, Des Moines, they're all full. There was water standing in the fields, large, large tracks of perfectly good Iowa farmland that had geese in it and walking around happy as could be. So, yeah, you could see that this is one different year.
Yeager: We were just talking here just before we got into this interview, we were handed something that came with the Lieutenant Governor and it looks like there is going to be a legislative panel to create a flood study panel and impact on the livestock economy. We're seeing record corn now, $7. We thought $8 would be the record. They might be talking $9. What does this mean?
Swenson: Well, what it's going to do, there are two things. The people that are able to grow corn are going to be very happy. But the people that have to buy corn, which is primarily in poultry and the hog producers and cattle producers and the dairy people, that's going to create quite a lot of stress on those operations. And as we look at those kinds of prices might be realized, I don't know about $9 but as we have continued this upward pressure on prices we're going to start seeing -- this is one of the categories of economic impact that we're going to see as a consequence of this flood.
Yeager: We had a map up earlier that showed some of the areas that had the 10 inches of rain or 10-15 inches of rain in what some of those darker colors meant. This was something, it's a lot of corn growing territory. Iowa is a huge leader, the leader. There's where the counties in disaster areas -- that's a lot of corn producing counties in the state.
Swenson: Yes, it's hitting some of the best corn produced not just in the state, in the nation and into Minnesota and eventually some of the areas over into Illinois as well have been impacted with high water. So, it really has hit right at the heart of our corn growing capacity.
Yeager: So, we have corn, we talk about that. What other aspects of this are we going to see? A tourism drop? Are we already looking at a downturn in the economy where people are going to be staying in the state? There are more gawkers looking at some of the floodwaters right now. L.D., I'm sure you remember some of those that would come to look at your facility. But what type of broader implications is this flood going to have?
Swenson: Well, when you look at what happens during a flood the first thing you focus on is just simply households get devastated, they lose their personal belongings, they have damage to their homes and so they have property losses that much of which aren't going to be insured. Storms and storm damage gets insured but often times floods aren't covered. People have to eat those losses, that's all there is to it. So, you have a loss in net worth among households and households are devastated. Then you move over and you say, okay, whose productivity has been impacted? Who has had to constrain productivity? Has Quaker Oats shut down? Has John Deere shut down? Do our businesses in our town? That's when you start seeing the slowdown in the economy for however much and for however many days. Lost productivity from farmers, many farmers, not all, many farmers are going to have not as good a year as they anticipated. That is going to constrain their current behavior in terms of being willing to buy equipment or invest in their operations, it's also going to constrain family household spending at the farm level. So, you're going to have those impacts plus those linkages. We've already talked about the livestock industry. You're already seeing stress in that industry. You hear from the hog producers and from different types of commodity groups that they're feeling quite a lot of stress. So, those are all of the ways that that's going to multiply its way through. Now, how much is it going to be of something? We don't have a clue. There's so many variables because you have one set of people losing their livelihood, you have one set of people having stress and struggles and then you get a massive infusion as a consequence of a flood and of a disaster. You get public aid, you get public works, you get a repair, you get insurance payments that help people re-buy things that they lost and so over time we get a perverse outcome which is our economy actually didn't go down that much or it might even, in some cases, show like it's improved. It's apples and oranges, though, because there the gains are accruing aren't where the losses were accruing.
Yeager: L.D., in '93 we saw $18 billion of losses. That is nationwide or Midwest wide is where that storm hit. From a public works standpoint, from a planning, a utility planning, there are costs that you have to put out, there's costs that have to be passed onto taxpayers. Looking at some of those costs that have happened in the past are we using the '93 lesson to make changes so we're not going to be impacted as much economically?
McMullen: I hope that we learned from '93 and Des Moines Water Works was a good example of what I think was the right way to do things. We had private insurance to protect our property and our investment and pumps and everything else. The $12 million dollars of loss that Des Moines Water Works had, $9 million of it was covered by private insurance. We ended up with about $2 million that ended up coming from federal assistance. And we had some state and local assistance. In total of that $12 million, $200,000 was picked up by the water repairs.
Yeager: So, a small, minut percentage to what it could have been.
McMullen: And I've tried to tell that story over and over again to my colleagues that don't just assume it's never going to happen and try to self-insure for those type of losses. Yeah, you can self-insure for a $6000 loss but not for a $12 million loss.
Yeager: You talk about your colleagues, your phone obviously had to ring after you got things turned back on and settled down in Des Moines in '93. What type of colleagues around the state did you have, what conversations did you have with some of those colleagues about how can we prepare our water supply? We see Mason City this week without water. It's probably going to be this weekend.
McMullen: Well, Mason City is a good example because Mason City lost their treatment plant primarily from contamination getting into their clear well, their treated water storage tank. There was real pressure to get that system back on, start pumping water so that people have water but one of the things that they were cautioned about, which was a lesson we learned from '93, was don't put water into the distribution system unless it's safe because it will take months to clean up a contaminated distribution system. So, just take one more day, one more day and make sure that that water is clean and safe and that was a lesson that they did do, they did a great job of telling their citizens that's what they were doing and when they do come back up they're not going to have to worry about cleaning up the distribution system.
Yeager: So, those are lessons. Have you had conversations recently as you get ahead to this? You're in an engineering consulting role now. Are you having conversations now?
McMullen: We have conversations every day about small communities and it's the little ones that are out there that you don't really hear about that are struggling and so as a result that is our business is basically small towns and communities and trying to help them and most of the time it's a contamination issue rather than a loss of equipment.
Yeager: What was the timetable -- how long was it before you felt you were back to normal in Des Moines after '93?
McMullen: Well, there's an interesting story to that is that the night of the flood the first question I got from the media was, when is the treatment plant going to be back up and running? Well, it had only been down for like three hours and I thought, well, can I say I don't know? And I said, no, that's not going to be an appropriate answer and I said, seven days. And as it turned out seven days was when we had the plant back up and running. We got the distribution system filled and people were back to, I remember the headline, and on the 12th day we could flush.
Yeager: Big deals and we talk about time extension of what the roll out is before you're back to normal. Is there any type of a timetable, David, on how long it would take once the floodwaters subside for us to get back to normal economically?
Swenson: Well, that's the first thing that any business is going to do is try to get back up and running. They make their money by producing goods and services and so they're going to do that and they're going to try to make up their losses and make up for lost time. Those firms that can do that are going to do that. Those entities that can't do that are just going to have to live with their losses and adjust their behaviors accordingly. There's a lot of, L.D. was talking about, there's a lot of activity that's also going to go on at the local government, the county government level, there's going to be a tremendous amount of repair work that's going to happen. We're going to have a drawdown of public accounts. So, it's going to have impacts in a lot of different ways in our economy that can also ripple through the distribution of general public goods. So, we've got to wait. We also have to wait and see how this season finishes out. We're just right in the middle of it.
Yeager: We might have four dry days now, who knows. We're just about to tick over to a new fiscal year for the state. 55 counties declared, some of those will get federal help but the budget that the Governor put out was pretty rosy on economic future. Does this put any dent? In one minute can you answer that question?
Swenson: Well, our economy, despite what's going on at the national level, was looking pretty good. There is a large demand for our manufactured goods, our ag sector with the high prices, those high prices mean people are willing to pay for that. So, to the extent that we have those commodities for sale or we're going to have those commodities for sale our economy is going to continue to tick. The Iowa economy whether it slows down like the nation remains to be seen. It always has but we have to wait and see. But for the time being we're looking a lot better than much of the rest of the United States.
Yeager: And we'll just see because we don't know how much the water will be turned off in Mason City or how long we get back to normal. So, it will be interesting to see. L.D., final question, do you wish that you were back in your position or are you glad retirement started early?
McMullen: Part of me would like to be right in there in the thick of it all and be involved in the action but there's another part of me, especially at night when I'm sleeping that I'm glad I'm on the sidelines and in retirement.
Yeager: Very good.