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Flood Hazard and climate change

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Joined: 07 Mar 1999
Posts: 16182
Location: Berkeley, California

PostPosted: Wed Sep 26, 2012 2:03 pm    Post subject: Flood Hazard and climate change Reply with quote

This topic deserves its own topic heading, given some of the rather bizarre spin under the climate change heading.

The collapse of any bi-partisan cooperation over at least the last 4 years has made the task of policy reform even more difficult. The structural problems with the National Flood Insurance Program, and the policy debate this year which involved kicking the issue around as a political football in the wake of the Mississippi River floods, shows the risks of electing people with little understanding for either established programs, or the processes by which those programs can be modified and reformed.

The NFIP was established in 1968 legislation, and has been roundly criticized by reformers from the left and the right. The program involves a Federally licensed effort to map the flood hazards in the country, and require insurance in order to qualify for Federally insured loans. As a practical matter, virtually all mortgages for residences comply with the program.

There are a number of problems with the program. The mapping is not terribly accurate, and excludes many properties subject to hazards and wave run-up. That mapping is out of date and scheduled to be updated, but even thought the update will not include sea level rise, the update will certainly shift many properties into the hazard areas, triggering a requirement for flood insurance and huge political problems. The program is not actuarially sound, and thus represents a subsidy to the real estate industry and generally wealthier Americans. The program currently has a $19 billion deficit, and only collects about 1/3 of the payout.

In a less partisan world, the NFIP should be an easy target for reform; well reasoned calls for reform have come from libertarians,, the Competitive Enterprise Institute (Reforming the National Flood Insurance Program after 35 Years of Failure), from the Heritage Foundation (Reauthorize and Reform the Flood Insurance Program, David C. John, June 11, 2012, as well as from non-partisan groups, like “Flooding the Market” J. Scott Holladay Jason A Schwartz of the Institute for Policy Integrity.

Among the critiques from the left are that the program encourages development in hazardous places by underestimating risk and subsidizing coverage. That viewpoint is supported by past payments; the program has paid out $38 billion, $18 billion of that in Louisiana, and the gulf states exposed to hurricanes are the chief beneficiaries.

The Government Accounting Office has issued a number of critiques over the past ten years identifying problems with the program, most notably that 1% of the policies account for 25 to 30% of the claims. The program generates about a third of the revenue that pays out, and has no policies that would accumulate a surplus to pay for periodic losses, or increased damages over time due to increased development in hazard zones, or climate change.

Payouts under the NFIP seem to be increasing, although I couldn't find a secondary source that tracked payments over time. There are two underlying causes of this increase that are difficult to tease apart. First, the underestimating of risk and subsidized insurance have certainly stimulated some increased development in risk areas. Second, there appears to have been an increase in the severity of storms due to climate change. No attempt is being made to forecast these increases into the future.

Despite a common ground identifying the fiscal problems with the program, the left and the right were unable to have an adult discussion about consensus reforms. Instead, the reauthorization became a political football over who was most unkind to victims of the Mississippi River floods, with the Tea Party taking the now familiar "take no prisoners" posture:

Hurricane Irene is approaching Washington, D.C. right now, but the high political winds of fiscal austerity hit long ago. As federal programs go, one would assume disaster relief is the least controversial way to spend government dollars, especially just a few years removed from the tragedy of Hurricane Katrina.

But in a time of outrage at trillion-dollar deficits and perceived largesse, some House Republicans have sought to change the way Congress funds relief efforts, proposing after the Joplin, Mo. tornado that disaster money be offset by unrelated budget cutting or tax tax hikes. Politico reported in May:

Disasters will no longer be considered "emergencies" if conservatives win this battle to redefine the way Congress funds aid packages for states and cities stricken by natural and man-made catastrophes. ...
On Monday, House Majority Leader Eric Cantor (R-Va.) made clear that offsets would be part of the discussion for any aid package in the wake of a tornado that killed more than 100 people in Missouri. By Tuesday, the House Appropriations Committee had approved a $1 billion package for disaster relief - certainly less than will ultimately be needed for flood- and tornado-ravaged states - that is fully offset by cuts to an unrelated energy-efficient vehicle account.

The word "emergency" is key. Under "pay-go" budget rules, Congress must pay for all of its new spending -- except in cases of "emergency." To the chagrin of Republicans, the definition of "emergency" tends to expand and contract.

Over the next several months, Republican presidential candidates will be traveling in and out of South Carolina, one of the states expected to be hit by Irene. Even fiscally conservative residents probably won't like the idea of budgetary strings attached to relief funding. It will be difficult for presidential candidates seeking South Carolina votes -- or the backing of key South Carolina Republicans -- to stand by the pay-go paradigm of disaster funding. (Chris Good in the Atlantic)

While the insurance industry is heavily regulation, particularly in California, it appears clear that pattern of subsidies are resulting in some unintended consequences that are bad policy. It also is clear that continuation of those subsidies without better consideration of current risks, and the impacts of sea level rise, will increase the exposure of the Federal government. Yet meaningful reform eludes the middle, perhaps because of the trucculent approach of the Tea Party.
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Joined: 12 Dec 1999
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PostPosted: Wed Sep 26, 2012 2:24 pm    Post subject: Reply with quote

Read Lomborg.
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Joined: 07 Mar 1999
Posts: 16182
Location: Berkeley, California

PostPosted: Wed Sep 26, 2012 4:34 pm    Post subject: Reply with quote

Post too long to read, must not get confused. Return to talking points.

More seriously, Iso gives no indication that he might have actually read Lomborg for understanding. Lomborg is a warming skeptic that has modified his viewpoint substantially as evidence of warming piles up. As someone who appears to have integrity--or at least isn't being paid as a consultant to the carbon industry to lie to you--Lomborg revised his viewpoint in the second book to say that warming is happening--but to then argue that the cure is worse than the disease, that measures to curb carbon emissions will destroy our economy and way of life. So posting material here that shows that Lomborg and others have ignored huge areas of costs, and that the cost of more sustainable energy is coming down rapidly in some areas--are directly on point, and continue a discussion where Lomborg, unlike some on this forum, appears to dwell in the fact-based world.

But true to form as someone who only reads the title or those who already agree with him, Iso completely missed the point that there are areas where we can agree on and reform things like the flood program--but hyper-partisanship (and his fake plonking) prevent any efforts to do so.
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