Houston's most fundamental flood problem is its extraordinarily flat topography. Most of its waterways are slow-moving creeks and bayous that wind their way through the city and eventually trickle into the shallow, marshy coastline of Galveston and Trinity Bays. During a deluge, drainage is slow, so these systems fill rapidly with water that effectively has nowhere to go.
These factors created a flood-prone city long before Houston's growth spurt. In fact, downtown Houston has suffered a major flood on average about once a decade as far back as records extend. One of the first such floods struck during a hurricane in 1837 and submerged what is now downtown Houston under four feet of water. A particularly catastrophic storm in December 1935 flooded most of the city and stands out for its similarities to the flood patterns of Harvey.
Houston was a much smaller city in 1935, both in population and geographical area. Water absorbing farmland covered much of what today are the city's sprawling suburbs. Yet, Buffalo Bayou—the main waterway through downtown—peaked at more than 54 feet. During Harvey, by comparison, it hit "only" 40 feet.
While Houston has grown significantly since 1935, the lack of zoning has not turned Houston into giant concrete water-retention pond. Among America's 10 largest cities, Houston has the most total acres of parkland and green space. In fact, a 2011 study by the Houston-Galveston Area Council found that more than 90 percent of the city's land has low levels of impervious coverage relative to greenery and other water-absorbing surfaces.
Even though Houston's free-market approach to development has kept it affordable, many of the city's poorer residents were displaced by the recent flooding because the National Flood Insurance Program (NFIP), which helps drive housing patterns, is not driven by market forces.
In effect, NFIP subsidizes the risk people assume by living on a flood plain or in an area prone to storm surge damage. According to a recent study some 15 percent to 20 percent of NFIP policy holders receive subsidies that reduce their premium costs by approximately 60 percent to 65 percent.
Although rates of purchasing flood insurance outside of Special Flood Hazard Zones have been dropping nationally and in Houston, the subsidy within these zones leads developers to build more houses in the flood plain, just as it encourages building in hurricane-prone areas of the East Coast.
Ironically, what this means is that it's not the lack of regulation that exposed many of Harvey's victims to catastrophic loss, it was government policy.
Though Houston's lack of zoning can't be blamed for the city's flooding problems, it can be part of the solution. With few regulatory impediments, rebuilding should happen more quickly than it might otherwise.
Due to the recent hurricanes, Congress will be under intense pressure to increase funding for the National Flood Insurance Program, which the White House had proposed reducing earlier this year. Instead, Congress should get rid of the program. It encourages bad choices, which produce bad results.
Commentary by Benjamin Powell, a senior fellow with the Independent Institute, Oakland, CA, and director of the Free Market Institute and professor of economics in the Rawls College of Business Administration at Texas Tech University and Phil Magness, a Houston native and visiting assistant professor of economics at Berry College, Rome, GA.
For more insight from CNBC contributors, follow @CNBCopinion on Twitter.