Low-Energy Fridays: What are we getting right (and wrong) on federal hurricane relief?

This hurricane season has been especially bad for the United States. Aside from the tragic loss of life, Americans can expect a substantial economic hit from the hurricanes (outlined in a previous issue of Low-Energy Fridays). As the southeast recovers, it’s worth evaluating the sufficiency of federal hurricane relief. Given the increasing frequency and severity of these storms, it’s important to identify where our policies succeed as well where they can improve.

Federal hurricane relief can be summed up in one word: complicated. Here is a brief overview (with tables!) of the three basic ways in which the federal government offers hurricane relief:

• Established programs through the Federal Emergency Management Agency (FEMA), including National Flood Insurance Program (NFIP) disaster relief through the Stafford Act.
• Access to federal resources and equipment, such as military search-and-rescue missions.
• Additional Congress-approved financial aid, such as the 2013 relief bill passed after Hurricane Sandy, in cases where funding is insufficient.

A 2019 report from the Congressional Budget Office (CBO) estimated government spending on federal hurricane relief at $17 billion per year, broken down as such:

This spending occurs across a variety of agencies and programs. Here’s a further breakdown of the percentage of relief for which each government agency and program is responsible:

It’s important to understand that no matter what happens after a hurricane, the federal response will never be perfect—and some people won’t get all the help they need. Fortunately, the federal response to hurricanes is generally effective at limiting the physical hazards associated with them. Despite climate change intensifying more recent hurricanes and more people living in at-risk areas, weather-related fatalities haven’t increased commensurately.

That said, the way the United States responds to hurricane damage and the policies that dictate that response are likely creating some systemic problems. When estimating hurricane-related damage, the CBO noted that the federal government covers about 20 percent of residential losses from flooding and wind damage, and about 42 percent of residential losses are uncovered—with the remaining losses covered by insurance, both private and through the NFIP. A 2016 study found that a lack of adaptation to tropical cyclones in the United States leads to a “damage function which is 14 times higher than other developed (OECD) countries.” Obvious policy offenders in this regard are programs like the NFIP.

For context, because the NFIP is a government-managed program, it is subject to typical politicking, including caps on premium hikes and out-of-date flood maps, which are only recently being updated. The effect has been to subsidize people who put themselves and their property in harm’s way, thereby incentivizing more people to do exactly that. Under private insurance, residents in high-risk areas bear the full cost in their premiums, which either encourages people to avoid living in those areas or to take measures that mitigate the damage a hurricane may inflict on their property. At R Street, we’ve come up with some recommendations to address these shortcomings.

Another problem is that while the federal government spends a lot on hurricane relief and resilience investments, these efforts aren’t undertaken efficiently. For reference, resilience efforts can help avoid losses of $3 to $13 per dollar spent. However, each agency is free to manage their resilience efforts as they see fit—permitting redundancy while neglecting other high-risk areas. Louisiana’s Coastal Protection and Restoration Authority provides a coordinating mechanism that helps direct funding for resilience projects in an effective manner. The federal government should do something similar, particularly because hurricane-related costs are rising.

Another obvious way to reduce hurricane-related risk and damage is to create more up-to-date flood maps using better methodology. First Street has done great work highlighting how inefficient existing flood maps are at identifying risk. The firm also noted—rather prophetically—the major underappreciation of flood risk in North Carolina just one year before Hurricane Helene hit. Congress ought to arm FEMA with the tools and funding to solve this issue.

Hurricanes are a big deal in the United States. They claim hundreds of lives and cause billions of dollars in damage—harms that the federal government spends billions more to try and mitigate. Federal responsiveness is undoubtedly critical to Americans affected by hurricanes, but the lumbering inefficiencies of bureaucracy leave substantial gaps to be addressed.