From Heartland Institute:

Rebuilding Disasters

Congress established a similar buyout program at FEMA and NFIP in NFIP’s 2004 reauthorization, but the authorities allowed property owners to rebuild on land that was supposed to be converted to green space, says R. J. Lehman, director of the Finance, Insurance, and Trade program at the R Street Institute.

“The idea there was the ‘three strikes and you’re out’ bill, where if you had three major losses from the national flood insurance program, you would have to accept either a grant to mitigate your home, which mostly meant raising it [above the expected flood level], or accept a buyout,” Lehman said.

“One thing that happened with the FEMA program was as some time passed, the land that was supposed to be converted to just open space was seen as valuable by developers who wanted to rebuild on it, and they lobbied the government for that ability, and they got approval to build again,” Lehman said.

This started the cycle over again, says Lehman.

Local Resistance

Despite the benefits to properties downstream from these floodways and the offers of up to $200,000 for resettlement in the case of the Restore Louisiana program, some people and local governments may not be on board with the policy, Lehman says.

“The biggest problem with implementing these programs is there’s going to be local resistance because some people won’t want to move, and cities and counties—in Louisiana’s case, parishes—are not thrilled about properties being taken off the tax rolls,” said Lehman.

The only way for the policy to be really cost-effective for localities is if entire neighborhoods are bought out and removed and thus no longer need municipal services, Lehman says.

“It’s nice a property is no longer going to be getting subsidies and disaster assistance and so forth, but the real savings would come when an entire flood-prone neighborhood no longer needs to be serviced—you don’t have to pick up the trash, worry about the power lines, etc.—[and] the whole neighborhood gets knocked down in a coordinated fashion,” Lehman said.

“In general, while we [R Street] support this policy, you really need to pay attention to the particulars of how it’s being implemented, because there is a lot that can go wrong,” Lehman said.