Roy:
Sorry, but you can’t argue against a public-sector role for levees and then rebuff attempts to think the practicalities through. It is indisputable, as I think you have written about in a related context in the past, that the public sector will inevitably be involved in decisions about issues such a flood control, via the courts.
For example: a power company or land developer builds a dam or levee either for flood control or to generate power. This increases the stress on an upstream or downstream levee, whose owners (again presumably private) sue in court for damages. I can?t imagine any judge ruling that any dam or levee built up or downstream from an existing one is inherently an encroachment. More likely, as is true for pollution and lots of other externality issues, the judgment would be about size, stiffness, and extent ? about doseage or emission levels, in the pollution context. So you have government officials deciding how big, how tall, how strong levees and dams are going to be along a river system. Alternatively, there might well be lawsuits against private dam or levee owners by landowners arguing that the existence of the obstruction caused their land to be flooded elsewhere. Many other permutations of this claim can be thought of.
At some point, you have what amounts to a government-regulated system for flood control, anyway. As I understand it, this is close to how the Corps of Engineers got into the business along the Mississippi in historical fact. So the question remains: should this system be administered by judges, operating case to case, or by some other governmental entity accountable to voters?