The problem of who should bear the costs of climate-change-induced rises in flood frequency in coastal communities is difficult even before throwing in the not-trivial problem that is it also highly politicized. And as readers will see from the stalemate over what to do about Federal flood insurance subsidies, even coming up with “kick the can down the road” remedies is fraught. They also fall well short of what long-term solutions look like, since they ultimately involve relocating some, perhaps lots, of people away from these areas and coming up with more comprehensive approaches to community development (I’m reminded of a Jay Leonhardt song on global warming, which includes: “Goodbye Miami, goodbye Lauderdale/Pass me a bucket, pass me a pail”).
And if you think that because you live comfortably inland, this discussion doesn’t affect you, think again. The insurance program under discussion, called the National Flood Insurance Program (NFIP) went from being more or less breakeven for decades (as in it actually once worked as insurance) to being $24 billion in the red thanks to more frequent and severe storms. The current political row that people outside flood-prone states haven’t heard of is over a bill to restore the program to break-even by raising premiums back to a viable level. But “viable” is now so high in many cases as to be unaffordable to homeowners. So whose ox is to be gored?
*Note* This topic is sufficiently large that I’m only going to address some of the major issues in this piece. I anticipate returning to it and drilling deeper.
Background: Climate Change Threatens Settled Communities on a Mass Scale
Ironically, even with the flood insurance debate putting some of the tangible costs of climate change in the spotlight, the US is less at risk than many developing economies. James Boyce of PERI at Amherst explained the issue in a recent Real News Network interview about Typhoon Haiyan, which devastated the Philippines.
Well, as all of the news stories always repeat, one can’t draw a connection to say that any specific event was caused by climate change. But what we can do is we can look at the statistical probabilities associated with events and we can see how climate change affects them.
Perhaps the easiest way to explain this is by means of an analogy. Say we’ve been playing a game of Russian roulette. We’ve got six chambers in the gun. We put a bullet in one. And once a year, we hold it up to our heads and we pull the trigger. Say that’s the game we’ve been playing. And now we’re going to change the game. We’re going to change the climate, so speak. And instead of doing that once a year, we’re going to do it once a month. And instead of having only one bullet, we’re going to have three bullets in the six chambers. Now we start playing the game again. Well, you know that what’s going to happen when you do that is you’re going to see a lot higher incidence of people getting killed. Right? One can’t say for any given person who got killed that they wouldn’t have been killed in the old game and it’s the new game that killed them, but what one can say is that the frequency of deaths is going to change. The frequency of climate-related disasters is changing.
In the case of the super typhoon that struck the Philippines, this was not only a question of frequency, but also a question of intensity. And for that, another thing we know from the science is that as the climate changes, the damages that are done by events like typhoons not only go up, but they go up much faster then the wind speed of the typhoon itself in this case. It’s not the case that doubling the wind speed from 100 miles an hour to 200 miles an hour doubles the damage. Instead, the relationship is such that basically doubling the wind speed makes the damage go up by about 250 times. And the wind speeds in the super typhoon in the Philippines are estimated to have come close to 200 miles an hour.
So we’re talking about devastating events happening with increasing frequency around the world. And that’s a connection that I think is apparent to anybody who really looks closely at the problem.
And this is a serious issue on a global scale. As Edward Barbier wrote at Triple Crisis in November:
First, coastal population densities across the globe are nearly three times those of inland areas, and they are increasing exponentially. Thus, as population grows, we are packing more people into our coastlines than ever before.
Second, many estuarine, coastal, and marine ecosystems naturally protect coastlines from storm surges, wind, flooding, erosion, and other storm impacts, but as coastal development and populations expand, these systems are disappearing rapidly. Their resulting loss and degradation due to human activities is intense and increasing, such that 50% of salt marshes, 35% of mangroves, 30% of coral reefs, and 29% of seagrasses are either lost or degraded worldwide. Such rapid deterioration of these systems is making coastlines more vulnerable.
Third, across all the cities worldwide, about 40 million people are exposed to a one-in-100-year extreme coastal flooding event, and by 2070, it will be 150 million people. Consequently, because of the growth of urban populations generally, and cities in coastal areas specifically, more and more cities are facing the growing risks of major storm events.
Efforts to Fix US Flood Program Illustrates Difficulty of Making Even Modest Changes
Now let’s return to the US. Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012 to address the problem that a flood insurance program originally intended to remedy a short-term market failure was on its way to becoming a taxpayer subsidy to property-owners in flood-prone areas.
The main change was the in-theory simple fix of increasing rates to reflect the “new normal” risks more accurately. That included tasking FEMA to redraw flood maps, since area that had been thought of formerly as safe were increasingly exposed.
New Jersey Spotlight provided a good recap:
Congress created the National Flood Insurance Program in the late 1960s after Hurricane Betsy hit New Orleans, causing over a billion dollars in damage. Flood insurance was nearly impossible to secure from the private market, so lawmakers felt the federal government had a duty to step in and provide help to residents along the coast. The program was set up to be self-sustaining, borrowing from the U.S. Treasury only when necessary, and it generally worked for several decades. But beginning in 2005, Hurricanes Katrina, Rita, Wilma and several other storms caused it to blow through its budget and go $24 billion in debt.
With 5.6 million policyholders depending on the NFIP and costly natural disasters becoming more common every year, many lawmakers were concerned about its long-term sustainability. Indeed, a Congressional Budget Office study found that current premium rates were not enough to cover the program’s expected costs. There were also some who compared flood insurance to a Ponzi scheme and called for the government to get out of the business. “I would say that this is a program that would make Bernie Madoff blush,” said Michigan Republican Congresswoman Candice Miller, who introduced an amendment back in 2011 to eliminate the NFIP entirely.
In the end, the Biggert-Waters Act, which passed with overwhelming support, was seen as a compromise by continuing to provide a safety net for residents of flood-prone areas while making changes to help put the NFIP back on more secure financial footing….
Insurance rates could rise dramatically over the next few years for coastal residents rebuilding their homes who don’t elevate them to comply with the new FEMA flood maps. Secondary homeowners and business owners could see their flood insurance premiums increase 25 percent a year. For primary homeowners who don’t have to rebuild as a result of Sandy, the rate increases would kick in if there’s a lapse in policy, if they suffer severe or repetitive flood losses, or when they sell their homes. That could depress real estate prices along the Jersey Shore, since new homeowners might be willing to pay less for properties if they knew their insurance premiums would be much higher.
Those who do choose to elevate can file increased-cost of-compliance claims and receive up to $30,000 from their flood insurance companies, and there are Sandy-related grants to help offset elevation expenses, but for many, it’s still an expensive proposition. Caught between spending tens of thousands of dollars to elevate or possibly spending ten thousand dollars or more per year for insurance, some residents — particularly in working class communities like Asbury Park and Union Beach — might be unable to afford to continue living along the coast.
But as the new, higher flood insurance bills went out (for instance, homes sold after July 2012 no longer receive flood insurance subsidies), the howling started. A sampling of news stories:
Included were a house in Belle Chasse where the annual premium will rise from $600 to more than $17,000; a house in St. Petersburg, Fla., that will experience an increase from $1,000 to almost $11,000; and a car dealership in Slidell whose insurance premium will shoot from around $5,700 to more than $53,000.
Next front to fight flood insurance rate hikes: lawsuits Tampa Bay Journal
Rising flood insurance rates hits Marin harder than other Bay Area counties Marin Independent Journal
Now there are no doubt cases where the new assessments can credibly be argued to be excessive. For instance, a NOLA story reported that Caitlin Berni, an analyst with Greater New Orleans Inc., claimed that the new FEMA flood maps didn’t include some levees and pump stations which would considerably reduce flood risk. But presumably an appeal process could be implemented to deal with cases like that.
Various efforts to “fix” the bill died in Congress before year end. A Senate proposal by Mary Landrieu of Louisiana was to delay the rate increases for four years. While the logic might have been to buy time to implement a more comprehensive set of revisions, these minimalist solutions often wind up being all that gets done. But the House version by Bill Cassidy, also of Louisiana, failed by virtue of being seen as too skimpy, in particular by delaying some hikes by a mere six months and by not providing relief to those who’ve received notices of premium increases or of ending subsidies on properties sold.
Given how important this issue is in states like Florida and Louisiana, it’s likely that this issue will be revisited when Congress is back in session.
But if you look at this from a broader vantage, the problem is being defined around the squeaking wheel, the pending insolvency of the insurance program, and not the vastly more important issue of doing triage on neighborhoods and communities: which are too much at risk to be viable long term (say to anyone other than someone wealthy who can afford to do extensive flood/storm proofing?). Are we better off trying to subsidize moving rather than subsidizing property-owners in place? What is the rationale for intervening to preserved these property values in the light of indifference to property rights and owner losses in other cases (foreclosure abuses, failure to apply pressure to servicers to offer principal modifications to viable borrowers, the goring of private and public pensions while top executive packages remain intact, the momentarily-at-bay efforts to cut Social Security and Medicare?).
A devil’s advocate might argue that they are no guiltier of getting the benefits of the modern American lifestyle (particularly car use and the inefficient, from an energy perspective, configuration of modern suburbs), so why should they suffer disproportionately? But city dwellers who use public transportation could just as easily argue that their way of living needs to become the norm and it’s time to stop giving handouts to support habits that over time are becoming costly.
I’m late to be reading Jared Diamond’s Collapse, and his first chapter describes how Montana would be in collapse were it not for trade with the rest of the US. He also sets forth how the various major constituencies: the old timers who farmed the land, mining interests, the wealthy who buy large plots but don’t spend much time in state, and the pro-growth, pro-developemt types, who want more aspirational wealthy to move in and buy nice homes, can’t agree on much of anything, let alone on sustainability. And we see a variant of this type of impasse with coastal flooding. The losses due to greater storm damage are baked in, although their precise incidence (in cost and location) can’t be determined now. It’s hard enough to reach agreement on how to distribute losses from broad societal issues even when their incidence can be estimated more accurately. Put more simply: this wee and comparatively simple case shows how ill equipped we are, societally, to handle the challenges facing us. And it isn’t clear that muddling through, which has worked pretty well so far, will suffice now.