When Retreat is the Best Option: Flood Insurance after Biggert-Waters and Other Climate Change Puzzles

Abstract

Commentators argue, with good reason, that flood risk polices are soft on retreat. We Americans are more interested in fortifying our castles or building them higher than in moving out of harm’s way. And that is despite warnings of rising seas and stronger storms associated with climate change. But the impulse to stay put may be eroding. In particular, the practices and policies of the Federal Emergency Management Agency (FEMA) are gradually encouraging retreat over other alternatives. As one example, FEMA’s current Mitigation Best Practice Database, the agency’s new National Disaster Recovery Framework (NDRF), now contemplates retreat mechanisms. For a while, Congress, too, beat the drums of retreat. The Biggert-Waters Insurance Reform Act of 2012 (BW-12), promised to remove important insurance subsidies for flood-prone homes, forcing some residents to consider relocation as a cost-saving option. Two years later, in response to public backlash, Congress repealed the law’s strongest retreat-based incentives. Congress is expected to reform the insurance program once again by 2017.

In this article, we consider retreat as a strategy of hazard-risk reduction, with reference to the developments in FEMA practice and legislation listed above. As the effects of climate increase the risks of floods and other extreme events, we also see FEMA’s evolving retreat strategies as an important part of the nation’s climate adaptation efforts. Unfortunately, initiatives like the new NDRF and Congress’s insurance reforms are developing piecemeal, with blind spots large enough to drive a tornado through. We believe that policy makers would do better to have a set of principles to guide them when considering and implementing strategies that are intended or will have the effect of encouraging retreat. In particular, we think that Congress could have avoided the embarrassing failure of BW-12 if lawmakers had more fully recognized the complex issues at stake in retreat-based policies. One aim of our analysis is to suggest what a successful reform of the NFIP might look like, setting the foundation for more detailed conversations about flood insurance as the 2017 deadline approaches.

Keywords: climate change adaptation, flood insurance, disaster law, natural resources, environmental law, legislation, Federal Emergency Management Agency, Biggert-Waters Insurance Reform Act of 2012