John Whitehead blogs that the costs of saving Cairo, Illinois [town between river arms below], probably exceeded the benefits (Corps of Engineers blew out a levee to flood fields instead), but that's just the beginning, I hear (via JWT), of what will be the worst flooding in 500 years.
My thoughts are that it's always made sense to live near rivers, but that sense was bounded by the obvious problem of getting flooded occasionally. People around the world know how to live with floods (houses on stilts, moving around -- see this National Geographic article on Bangladesh), but that knowledge and action can get distorted by "help" from outsiders, whether it be subsidized flood insurance or infrastructure defenses.
I am just going to point out that these interventions were never a good idea; they are an even worst idea when combined with climate change, since water "events" (floods, tornadoes) are going to get more dramatic. (The Dutch are pursuing a program called Ruimte voor de Rivier, or room for the river, to allow for higher flows.)
Bottom Line: Don't subsidize people to protect them from the weather. Help them understand the risks, rescue them from folly, and then do not let them return to dangerous areas. Nature needs more room to maneuver as climate change increases water flows.