Econ215: PLU Econ in Italy 2018: MOSE System in the Venice Lagoon

Upon arrival in Venice, our class was able to witness the beauty and atmosphere of the city on the water. In more ways than one, you get lost within this city. Located in the "armpit" of Italy, Venice is a complex network of islands of buildings, bridges, and canals. Venice is in a lagoon on the Adriatic Sea. One either walks or boats, there are no road vehicles to be seen. In almost any case water is in sight. Due to tides, storm surges, and rising sea levels, flooding becomes a negative consequence of living in this lagoon. Venetian people call it, "acqua alta." The noticeable costs of flooding are due to structural damage and loss of tourism sales, yet there are other costs like elderly and child care that are not necessarily thought of right away.
To combat the economic downfalls of flooding, a barrier system called "MOSE" was created. It is almost fully functional and expected to be completed in 2018. Ramp like panels lay in the bottom of the lagoon where it meets the Adriatic Sea and at certain tide levels, the barriers rise at an angle to prevent the water from rising. The negative consequence of this system is that while the barriers are raised, boats such as oil tankers and tourist ships cannot enter the lagoon. In Venice there is disagreement about the benefits of the MOSE system between various sects of the economy. Those who need to take boats in and out of the lagoon and more likely to be pessimistic towards the project, though shop keepers show optimism. When determining the net benefits of MOSE, it is important to take into account ambiguity. This idea that known risk is better than unknown risk. With the case of sea levels, a lot of the risk is unknown we can never be certain how much and when it will rise. Being ambiguity averse differs from risk aversion which is when one does not like to take on either type of risk.
We saw first hand what the local people have to do during high tide. As daily business must continue, they have platforms in the streets that they can quickly set up to create a dry pathway. During the tour of the Arsenal, our speaker, Lala, told us that we were on the verge of acqua alta. We certainly saw waves splash onto the walkway, although we did not see much standing water. However, we did hear the bells sounded for peak tide. In addition, when we visited the Basilica di San Marco we saw that the entrance area floods very frequently and semi-permanent walkways and precautions have been installed.