John–you conclude, “So the question remains: should this system be administered by judges, operating case to case, or by some other governmental entity accountable to voters?”
This is a premature question. Before this it must be decided whether or not a levee makes sense in the first place. Your first answer assumes the market makes this decision and then the the liability problems are worked out in the common law process. Your second alternative assumes that the government makes both this initial decision and all others to follow. Given this I’ll take option 1. BTW, I do not know whether or not there may be common law precedent that might handle all or some of the questions that you pose. I am not willing to assume first that there isn’t and second that such precedent wouldn’t evolve.
BTW–public choice suggests, and I agree (especially after hearing Bruce Yandle last night speaking to our faculty affiliates) that “public entitties” are not “accountable to voters,” assuming you mean the will of the majority, but special interests.
