Land rents and ecological crisis: The case of the Oder River Valley

In the summer of 1997, the Oder Valley experienced an almost unprecedented flood. By calling in the army, the German government prevented the dykes fr om bursting, yet massive floods occurred in neighboring Poland, as the Rive r Oder is now the border between Germany and Poland. Similar floods occurre d in the Czech Republic and Romania. In October of 1997, a seemingly unrela ted event occurred: The Nobel Prize in economics was awarded to Myron S. Sc holes and Robert C. Merton for their pioneering contributions to the theory of how options are priced in financial markets. Ironically, the options co ntract model provides a solution to the Oder Valley crisis. This article ti es the two events together and also draws on insights from the radical refo rmer, Henry George.