The federal government is still encouraging people to settle in hazardous areas a year after Superstorm Sandy damaged the East Coast, according to insurers and other groups that believe U.S. policies are exacerbating the impacts of climate change.
Congress will provide them with a perfect example: Lawmakers will unveil a bill today that seeks to preserve the flood insurance subsidies that critics say have contributed to the massive buildup of homes and business structures in flood-prone areas along the nation's coastlines. The flood program is expected to pay at least $12 billion in Sandy-related claims, contributing to its debt of $24 billion.
Adding to the confusing state of federal disaster policy, these lawmakers are trying to keep the same subsidies that many of them voted to phase out a year ago. The Biggert-Waters Flood Insurance Reform Act, signed into law in July 2012, seeks to diminish discounts received by many of the 1 million homeowners who are eligible for them. Some of the same politicians leading that effort are now involved in the delay.
"It effectively guts the reform," Frank Nutter, president of the Reinsurance Association of America, said yesterday of the new bill being introduced today by Rep. Maxine Waters (D-Calif.) and others. "It's a remarkable turnaround for Congress to do that."
The flip-flop reflects the unintended consequences of a number of federal policies, observers say. The government promotes things like farming practices that are vulnerable to drought, coastal development in hurricane-prone areas and building codes that don't anticipate sea-level rise.
"Our policymakers don't get it," said Steve Ellis, vice president of Taxpayers for Common Sense. "We're going in exactly the opposite direction of where we should be going in terms of reform and as far as reducing taxpayer risk to debt from natural disasters."
Ways to reduce climate-aggravated claims
He and others support a set of recommendations released yesterday by Ceres, a group of institutional investors pressing for climate action, that call on Congress to overhaul federal crop insurance, flood insurance, wildfire policies and disaster aid. Extreme weather last year, including Sandy, cost every U.S. resident $300, or more than $100 billion altogether, the report by Ceres says.
The Federal Crop Insurance Program (FCIP), for example, paid a record amount in claims during last year's drought, or about $17.3 billion. Farmers' premiums didn't cover those claims. Taxpayers picked up about 75 percent of the costs, according to the report.
Apart from the subsidies, the crop program also encourages practices that could result in more yield losses with climate change.
"Because FCIP is so heavily subsidized it rewards short-term thinking without regard to long-term consequences," the report says. "The subsidized premiums enable farmers to plant on wetlands and grasslands with no incentive to manage the environmental impact and no incentive to manage water usage, even in areas facing drought risks."
The Ceres report also calls on Congress to put conditions on disaster aid that require communities to consider things like sea-level rise when designing building codes and permitting development. Ceres also says states should have to use a portion of their federal wildfire funding to pursue wildfire protections -- also called climate adaptation. And state hurricane insurance plans should deny coverage for new developments in risky locations, like on barrier islands.
"As climate change results in more frequent, volatile and damaging extreme weather across the country, the potential liabilities of these public programs and the bottom line costs to taxpayers will soar," the report says.
Bipartisan search for a solution
Disaster funding is no longer free of controversy in Congress. As the cost of damage rises with sharpened natural impacts, like flooding, and denser development, lawmakers are increasingly skeptical about unleashing billions for rebuilding efforts. That was evident after Sandy, when many Republicans sought budget cuts in return for the $50.7 billion disaster package.
In New Jersey, where more than 350,000 homes were damaged or destroyed during Sandy, some groups are calling on Congress to create a fund that could be tapped by stricken states. The nonprofit U.S. Strong is advocating for a federal fund that draws its money from a fee on carbon emissions.
It has some unlikely supporters. State Sen. Bob Singer, a coastal Republican, said in a recent interview that he could support a price on carbon if it meant the Sandy-damaged towns in his district could be rebuilt.
"As a Republican I'm not walking away saying, 'No, no, there's a fee, I can't do it,'" he said. "Well, if you're going to say that, come to my district and tell the thousands of people who can't get their homes fixed, 'Sorry, there's no money for you.'"
Other conservatives say federal programs should be improved whether or not climate change will have an impact.
For Eli Lehrer, president of the R Street Institute, that begins with overhauling flood insurance.
"For more than 40 years, we've subsidized huge numbers of people to live in flood-prone areas," he said. "This policy alone ... would with or without climate change result in massively increased damage resulting from flooding. And that's exactly what we've seen.
"Climate change is likely to make this worse."
The political pitfalls that Congress is facing over raising the price of flood insurance extend to other areas of public resiliency. Just as lawmakers are wilting under public anger over flood rates, other politicians at the state and local levels sometimes question the wisdom of buying private insurance to protect their infrastructure, Megan Linkin of Swiss Re said yesterday at a discussion hosted by the American Association for the Advancement of Science.
Some politicians have expressed concern about purchasing coverage because the payout might not come during their term.
“I think there’s a little bit of hesitation to be overprepared,” Linkin said.
Bill Hooke of the American Meteorological Society said that risks from human development are rising much faster than those caused by climate change. When a pipeline is built near a fault line, for example, the exposure to financial loss from disrupted energy supplies and physical damage can skyrocket.
“As substantial as climate change might be, social change is far more rapid and consequential,” Hooke said. “We struggle to see how rapidly our vulnerability is changing as a result of our success. We’re succeeding technologically, we’re succeeding socially, we’re urbanizing. Those are qualitatively changing our vulnerability. Disasters are a socially caused problem.”
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