Be Prepared: Progress Report

In 2023, the R Street Institute, in conjunction with Florida TaxWatch and the American Conservation Coalition, published “Be Prepared,” a series of short white papers highlighting different policy changes Florida could implement to increase its resilience to changes in climate and extreme weather. The papers focused on three primary issue areas: 1) water quality, 2) property insurance, and 3) the use of so-called “natural infrastructure,” such as wetlands and marshes, to reduce storm damage. The series focused on policy responses consistent with conservative principles like fiscal responsibility and reliance on market forces.

The “Be Prepared” series aligns with a larger movement to develop positive responses to climate and extreme weather from a fiscally conservative perspective. This way of thinking has been gaining ground nationally as well as in Florida, and over the last year, the state has enacted multiple reforms of this ilk that warrant brief comment.

Water Policy

The “Be Prepared” series highlighted several challenges posed to Florida’s drinking water and wastewater systems brought by sea-level rise and increased flooding. For example, storms, flooding, and heavy rainfall can overwhelm sewage wastewater collection and treatment systems, forcing sewage dumps that create environmental and public health harm. Rising sea levels can exacerbate this problem by leaving less margin of error between normal and flooding conditions. Addressing these risks would require significant upgrades to Florida’s wastewater system, but not doing so would be even more costly.  

Over the past year, the biggest Florida water reform achievement has been the passage of SB 1638, “Funding for Environmental Resource Management.” The bill establishes a permanent funding mechanism for water infrastructure, conservation land acquisition and management, and flooding and resilience projects by dedicating 96 percent of the revenue from the Seminole Gaming Compact to be used for those purposes. According to new, significantly increased official state revenue estimates, the distribution to the Water Protection and Sustainability Trust Fund will exceed $500 million annually by FY 2027-2028. The Resilient Florida Trust Fund will receive $100 million annually.  

The new FY 2024-2025 budget, along with SB 1638, appropriates more than $500 million for targeted water quality improvements, including $214 million for the Water Quality Improvement Grant Program. The Statewide Flooding and Sea Level Rise Resilience Plan receives $225 million. Revenues dedicated to these programs are now expected to grow to around $550 million a year by FY 2028-2029.

For the state to continue making long-term improvements to its water quality and resilience efforts, it must maintain the beefed-up water quality, resiliency grant programs, and measures designed to promote better statewide planning and fiscal discipline in the allocation and deployment of funds. This is consistent with the 2023 Florida TaxWatch report that recommended creating a multi-year water project work program with a dedicated source of revenue.

Storm Insurance

Another area that has seen significant progress in the last year involves property and casualty insurance. It’s no surprise that Florida has been ground zero for storm damage in the United States. The state’s long coastline and geographic position leave it uniquely vulnerable to hurricanes.

One might therefore expect the state to have the most sophisticated and up-to-date policies relating to storm insurance, given its long experience with the issue. Yet, until recently, the opposite was the case. Laws surrounding insurance—particularly the ease with which unscrupulous litigants could take advantage of the tort system—meant that Florida was quickly becoming an especially unappealing market for insurers. Despite accounting for 9 percent of the nation’s homeowners’ insurance policies and homeowners’ property losses, Florida accounted for 79 percent of the entire country’s homeowner insurance lawsuits.

This resulted in Florida having the highest property insurance rates in the country and led to private insurers drawing back from the Florida market. The stress on the private market could be seen in the increase in policies served by the state-created Citizens Property Insurance Corporation (Citizens). Citizens was created to serve as an insurer of last resort, and a rapid expansion in Citizens claims was a flashing warning light that the private insurance market was in trouble. Between 2018 and 2022, the number of Citizens’ policies tripled. 

To address the growing crisis, last year Florida enacted HB 837, a bill containing sweeping tort reform for insurance-related claims. For example, prior Florida law provided that in insurance cases, a victorious plaintiff could recover attorneys’ fees, but if the insurer was victorious, it still bore its own legal costs. The law also contained several mechanisms for so-called “fee multipliers,” whereby plaintiffs’ attorneys could be awarded a multiple of their fees. HB 837 eliminated these one-way attorney fees and attorney fee multipliers. The bill also reduced the statute of limitations for filing claims and made other changes to prevent frivolous or fraudulent litigation.

The reforms have had a positive effect on Florida’s insurance markets. The depopulation of Citizens has begun, and new and existing players have become active on the takeout front. Property reinsurance treaty rates for the mainly Florida-focused June 1 treaties came down by approximately 5 percent. This was the first time in many years that there was not an increase.

Natural Infrastructure

A key method of increasing Florida’s resilience to extreme weather is to enhance the state’s natural infrastructure. Features of the environment, such as wetlands, marshes, and mangroves, can have a powerful effect in reducing damage from flooding and hurricanes by absorbing storm surge. This type of “green” infrastructure can be cost-effective—compared to traditional “built” infrastructure—and can also serve as a source of independent revenue to the economy through tourism or other activities.

Grant programs are also encouraging resiliency options that include natural infrastructure. For example, applicants under the Resilient Florida grant program receive additional points if their proposal incorporates “natural system restoration and revegetation” and “nature-based options for resiliency.” The use of natural infrastructure can be a win-win policy whereby preserving Florida’s environmental resources also helps protect the state’s economic resources in the future.  

Conclusion

These examples of reforms will not only better protect Floridians from the ravages of extreme weather, but they also show that conservative governance is perfectly compatible with a sensible, proactive approach to dealing with the challenges of a changing climate. Given that Florida is front and center when it comes to potential vulnerabilities to extreme weather events, the fact that the state has taken these actions should serve as a beacon to all states and elected officials about what is possible.