"The levee system was largely designed in the early 1960s. By the standards of their day, the levees were built conservatively, but within certain constraints. In particular, they were built to withstand a Category 3 hurricane.
...The question, then, is not whether the failure to improve New Orleans's flood protection was a mistake in hindsightâ€"obviously, it wasâ€"but whether it was a reasonable choice in foresight, based on the probable odds and costs as they appeared at the time.
Weighing low-probability, high-cost events is, as it happens, something economists and engineers know a bit about... In any given year, then, figure that the expected economic cost of the swamping of New Orleans is $1 billion (divide the $200 billion cost over 200 years). A $2 billion levee project could be expected to pay for itself, probabilistically speaking, in two years; a $14 billion Delta restoration project, in 14 years."