The New York Times has published a piece about Rockaway Beach in the New York City area of Queens. The Engineers have an expensive plan ($4 billion dollars) for defending the area against flooding and the local politicians seek to have the federal government pay for it. In a world where $ does not grow on trees, this is a euphemism for having tax payers in other states pay for New York City's defense. Does this make sense? Or is this another case of spatial moral hazard?
A basic idea in public finance is that local public goods should be financed locally. Local home owners are the main beneficiaries of such dunes, beaches and sea walls. So, if the benefits of the investment are enjoyed by local firms and local land owners, why should the people of other states be paying for them? Yes, I would like some random person in Iowa to buy me a Tesla but is that "good public policy"?
It interests me that the NY Times (the paper of record), does not begin to bother to discuss this point. If localities have to pay for their own defense, this will encourage them to make more cost-effective decisions as they aren't spending "other people's $".