Protect What We’ve Gained in Flood Loss Reduction

Flood damage on Staten Island from Hurricane Sandy in 2012.

Flood damage on Staten Island from Hurricane Sandy in 2012.

One of the ongoing, perhaps permanent, struggles in public policy in a democracy like ours involves finding a balance between enabling private sector opportunities and protecting both the public interest and the public purse. Depending on their philosophies and perspectives, people will naturally draw those lines in different places on different issues. But sometimes it is perfectly clear when the public interest is about to suffer a hit. Currently, one of those possibilities involves the fate of the National Flood Insurance Program (NFIP).

On April 28, the U.S. House of Representatives passed HR 2901, a bill that seeks to make it easier for private companies to write private flood insurance policies that can take the place of those provided by the NFIP. The NFIP was created under the National Flood Insurance Act of 1968 to provide insurance that was then largely unavailable on the private market, but it also set in motion the creation of a federal regulatory program that has established standards for floodplain management in more than 22,000 communities nationwide. Many of those communities, particularly smaller ones, have no other meaningful land-use regulations, unlike bigger cities and suburbs and communities in states that mandate planning, which typically have comprehensive plans, zoning ordinances, and subdivision regulations. The reason is that federal flood insurance is made available only in communities that have adopted the minimum standards of the NFIP, which seek to achieve flood loss reduction, thus reducing the damages from flooding and the resultant payouts under flood policies.

It makes perfect sense. There is no good reason for the federal government to insure properties against flood losses without making some attempt to minimize those losses through sensible land-use measures. Private casualty insurers certainly make attempts within their means to reduce losses from other types of accidents and disasters. Why not the federal government?

There is nothing inherently wrong with expanding opportunities for private flood insurance coverage. But there are serious issues with HR 2901, and the Association of State Floodplain Managers (ASFPM), an organization with which I work closely as manager of the Hazards Planning Center at the American Planning Association (APA), has mounted an alert among its members to urge U.S. Senators to take time to examine the bill closely before taking any action this fall. It has also addressed the issue earlier in testimony before the Senate Committee on Small Business and Entrepreneurship. The Senate is in recess until September 6. ASFPM would ideally prefer that Congress defer action until next year, when the NFIP is due for reauthorization in any case, in order to consider the unintended consequences of the House bill in line with the larger objectives of the NFIP. APA is in support of the ASFPM effort in this regard.

The NFIP has evolved for nearly half a century with numerous revisions and reforms over time. Like any such program, it has needed to evolve in response to new lessons and changing circumstances. Some of the most significant lessons of the past came from the 1993 Midwest floods, which spawned reforms a year later. Among numerous changes that year was modification of policies to include Increased Cost of Compliance, which allows policies to pay for building improvements in response to higher local building standards, for example, by requiring elevation of buildings above the Base Flood Elevation, which is basically the height of the 100-year, or one percent chance annual flood, as mapped on the NFIP’s Flood Insurance Rate Maps. It is in the public interest to facilitate the capacity of communities to upgrade such codes over time as new lessons are learned, and to make it financially feasible for policy owners to comply with those new standards when rebuilding after a flood.

To be sure, these maps have never been perfect indicators of flood risk, though they are getting better with current digitization initiatives. Still, only about 1.2 million miles of shoreline and riverfront have been mapped, while more than 2/3 of the miles of the nation’s waterways are not. Most of the latter are small creeks and streams outside developed areas, which clearly have always been the priority. But it also means that development can occur in less developed areas without requirements to meet standards that only apply to mapped floodplains—unless a local jurisdiction is proactive enough to require developers to map such areas before new subdivisions or other development can be considered. Mostly, that is not the case.

So what is at issue with HR 2901? For one thing, NFIP policies include a policy fee that helps underwrite the cost of all this mapping, including updates and corrections over time. It is an ongoing process in part because floodplains are not static geographic entities. They expand or contract with the impact of our development practices, which affect the amount of impervious surface in urbanized areas, which affect how stormwater and other runoff is absorbed into the ground or directed downstream. Further, according the Federal Emergency Management Agency (FEMA), about 40 percent of flood-related losses occur outside mapped floodplains. Why? Because not all floodplains are adequately mapped or as yet mapped at all, and because flooding can occur outside and beyond the 100-year floodplain, and often does.  We have Certified Floodplain Managers these days because this is, in fact, a complex and technical subject.

The problem with not including policy fees in the private policies is that the burden of financing this public good of mapping floodplains and maintaining a mountain of data about flood hazards falls to those NFIP policyholders who are paying for it, or to the American taxpayer when Congress allocates money directly for the purpose. The fee also supports flood hazard reduction efforts under FEMA’s Flood Mitigation Assistance program. That creates an inequity in favor of private flood insurance. But that is not all. Although federal financial regulators have had authority to establish policies concerning what provisions in a private policy would make them acceptable as an alternative to an NFIP policy, they have not acted. FEMA legal advisors, for whatever reason, decided in 2013 they did not have the authority to issue guidance. So the House bill assigned this responsibility to state insurance commissioners while prescribing that lenders and federal bank regulators “shall accept” the standards laid out by the states. It would be small surprise to anyone knowledgeable in this field to discover that state regulation in most cases is likely to be minimal and limited. The only required equivalency in the House bill will deal with the coverage amount, which may result in much smaller private premiums with high deductibles that may be superficially attractive—until homeowners with large deductibles find they lack the resources to rebuild and just walk away, quite possibly leaving communities and the federal government holding the bag for addressing the problems of neighborhoods with spotty redevelopment and blighted properties.

All of this, at the very least, deserves some serious debate before the Senate accepts the House version, but proponents have been seeking to fast-track the Senate bill (S 1679) under a process known as Unanimous Consent. However, if enough Senators hear enough complaints, fast-track may become a less attractive option. And, as noted earlier, there are good reasons to delay this discussion and take it up as part of the NFIP reauthorization next year, so that both Senators and the public can begin to understand the full implications of what has been proposed.

In no way would this be a death knell for private flood insurance. One problem the bill deals with in two useful paragraphs is to allow the private policies to be considered “portable” for the purpose of maintaining an unbroken record of coverage for a property if the owner switches between public and private insurance. That has not been the case but is not hard to fix. ASFPM notes that there has been a doubling in the last couple of years of companies offering private insurance. In other words, the expansion of private flood insurance is already happening. There is no reason to create a whole class of private policies that are not truly equivalent to those of the NFIP and, in the process, undermine the public goods produced by the NFIP and quite likely, increase the number of property owners seeking disaster assistance after discovering they are inadequately covered.

Flood insurance policy has already entered a volatile period that began with the Biggert-Waters Flood Insurance Reform Act of 2012, passed just a few months before Hurricane Sandy. While trying to place older, subsidized policies on a path to actuarially justifiable rates, it triggered a political backlash when rates began to soar after the impact of Hurricane Sandy. By 2014, Congress somewhat reversed course but has left unresolved a number of issues concerning how previously subsidized policyholders could afford their now escalating premiums as Congress sought to reconcile affordability with a desire to place the NFIP on a fiscally sound footing. It is a thorny issue at best, and we surely have not heard the end of it.  The simple fact is that large numbers of older, poorly protected properties in or near floodplains are likely to continue to generate flood losses into the future.

We already have a flood insurance program that is $23 billion in debt to the U.S. Treasury because of Hurricanes Katrina and Sandy, which overrode assumptions that the NFIP would largely insure garden-variety disasters. Next year’s reauthorization could sensibly forgive this debt in order to begin to place the NFIP back on a fiscally sound footing, but not with the approaches in HR 2901. We need to strengthen, not weaken, a system that at least drives toward stronger floodplain management and flood mitigation. We need to get this train moving again in the right direction. Congress needs generally to be more productive than it has been in recent years, but it also needs to put more thought into this particular issue and act in less haste. The alternative is to continue to generate a long train of unintended consequences and later ask what happened and why.

Jim Schwab

Hold That Soil, Please

Photo by Suzan Erem

Photo by Suzan Erem

 

Ours has often been a profligate society in using the vast natural resources with which it was originally endowed. We’ve improved our attitudes about conservation, but we have a long way to go. Among those resources we have been prone to waste in the interest of short-term gain has been the deep topsoil that made the Midwest superbly productive. Less than 200 years ago, according to Rick Cruse, an Iowa State University researcher, Iowa had an average of 14 inches of topsoil in which grew thousands of square miles of prairie. Now that soil is about six inches deep, less than half what we inherited—or more accurately, mostly took—from the Native Americans who first lived here.

Those estimates come from an August 12 article in the Chicago Tribune that I shall credit as the inspiration for my addressing this topic. However, those familiar with my first book, Raising Less Corn and More Hell, will be well aware that the topic is not new to me. In 1985, farmer Gary Lamb and I wrote an op-ed for the Des Moines Register decrying the lack of conservation and what it might do in the long term to the fabled productivity of Iowa farmland. In essence, we were saying, nothing lasts forever if we insist on killing the goose that lays the golden egg.

Farmers mostly tore up the prairie to plant the corn, soybeans, wheat, and other agricultural products that now grow on the vast majority of the land in states like Iowa, Illinois, Missouri, and Kansas. Prairie plants had deep roots that held topsoil in place and nurtured it. With prairie grasses removed, loose soil began to erode, clogging streams and rivers that feed the Mississippi River, which dumps its overload into the Gulf of Mexico, producing what has become known as a “dead zone.” This is an area suffering from hypoxia—a shortage of oxygen in the sea that chokes out life. This comes at the additional cost of stripping Midwestern farms of much of the topsoil with which they were originally blessed. We have unhinged that layer of topsoil by depriving it of the prairie root systems that once anchored it. In fact, we continue to do so.

But the problem is more serious and immediate than simply undermining the long-term productivity of the soil. Current practices also threaten the public health and welfare of people in states like Iowa. Not long ago, the Des Moines Water Works filed suit against three upstream counties for failing to control the nonpoint source runoff that is contaminating the capital city’s water supply. That suit is being met with a good deal of anger and skepticism, but it is symptomatic of a larger conflict. That conflict pits the priorities of agriculture versus public welfare, a dispute playing out in other forms in even larger venues like California. But there the issue often has more to do with drought and the protection of adequate water supplies than with polluted runoff. In Iowa, floods have been a more persistent danger in recent memory.

Lawsuits, however, are not the only rational response to such a major public policy problem. It is critical that public universities support research aimed at viable solutions, and at least some research at Iowa State University is pointing to an answer that should seem remarkably obvious: restore the prairie. The imperatives of modern food production may make it clear that we are not going to restore all the farmland in the Midwest to pre-modern conditions. But the prairie provides demonstrable ecological benefits that we can ignore only at the cost of prolonging current problems with flooding and water quality. In a sense, what we are learning about the value of restoring some prairie for the purpose of reducing runoff and improving downstream water quality is similar to what we are learning in more urban contexts about the value of green infrastructure—the urban forest, the green roofs, the living shorelines, and other nature-based features that enhance the environmental quality of our communities.

But green infrastructure is not a concept that need be limited to our urban areas. Nature provides vast ecological functions for human benefit in all sorts of settings if we are wise enough to investigate them and learn to use them.

In that sense, I think that Iowa State University is on to something. Researchers there have been demonstrating the value of prairie restoration with a project called Science-based Trials of Rowcrops Integrated with Prairie Strips (STRIPS). Test sites have shown not only that these prairie strips can capture much of the polluted runoff from farms and enrich the soil, but that they provide valuable habitat for birds and other wildlife, restoring some of the richness of the land in the process. For instance, one research project by Lisa Schulte and others showed that such treatments doubled or tripled the presence of bird species, both in overall abundance and variety. Other research has found that wider strips of prairie serve to trap greater levels of sediment that would otherwise clog streams and reduce water quality. It is as if, having been blind to the free benefits of natural systems for so long, we have at last begun to learn to sing nature’s tune anew.

But it will take time to change attitudes and perspectives in a farm sector that has often been rather conservative about adopting such techniques. There is still likely to be a lively debate between environmentalists and dominant sectors of the agricultural industry, with varying levels of resonance in different states, but results speak volumes and gradually help to change minds. There may be more lawsuits like the one that originated in Des Moines, and there may ultimately be some meaningful legislative debates about incentives and regulations. We can at least hope that the steady infusion of research-based information on the benefits of prairie restoration will make a difference soon enough to matter. There is certainly a great deal at stake.

Jim Schwab