...for people living in flood areas (e.g., levees). Combine this with mandatory flood insurance, and people will move away -- or pay the price -- from flood areas.

Mary Kelly doesn't go far enough in her recommendations. The federal flood insurance program should be eliminated completely. It allows people to rebuild damaged homes in floodplain areas with minimal restrictions, thus enabling people to collect money over and over. Building or rebuilding in flood plains, including coastal barrier islands,should be denied  federal insurance, mortgages and infrastructure. Taxpayers should not pick up the bill for such folly, including any rebuilding of New Orleans. The same goes for fire-prone and landslide-prone areas like chaparral and coastal zones in California. Global warming will continue to induce more severe climate events and taxpayers should not be required to pick up the bills for those who deliberately build or live in these areas. Let private insurers decide if they want to insure these homes. If they don't (and more and more they are cutting back coverage), then homeowners will bear the full cost.