A major plot point of the most recent season of Netflix’s House of Cards saw fictional President Frank Underwood try to exploit the Stafford Act’s vague definition of a “disaster” to divert the Federal Emergency Management Agency’s entire budget toward an equally ill-defined job-placement and wage-support program called “America Works.”

This being Hollywood, the plan was, of course, absolutely ridiculous and would spark congressional lawsuits – if not, indeed, impeachment proceedings – should any real-life president ever attempt something similar. But kudos to the show’s producers for shining a light on the little-known Stafford Act. America Works would be a terrible idea, but the notion that American disaster-response policy needs a major overhaul is not.

Originally passed in 1974 to provide a rational process for appropriating federal disaster-response funds, replacing the largely ad hoc responses that previously had been the norm, use of the Stafford Act has exploded in recent years. The number of federal disaster declarations spiked from 16 in 1988 to 242 in 2011. Moreover, as a new report from the SmarterSafer Coalition shows, with each new catastrophe, the proportion of the cost of recovery borne by federal taxpayers continues to grow.

This is not a coincidence. The more the federal government spends on cleaning up disasters after the fact, the more businesses and individuals are encouraged to build in, and move to, disaster-prone areas. The vicious cycle continues as more and more risk is transferred from the private sector onto the backs of taxpayers.

The facts are incontrovertible. Research by Erwann Michel-Kerjan at the Wharton School’s Risk Management and Decision Processes Center shows pretty definitively that federal disaster assistance crowds out private insurance coverage. In an April 2014 paper, Michel-Kerjan estimates that residents in zip codes that receive significant disaster aid subsequently reduce their insurance coverage by an average of $17,000. Individuals who receive direct assistance from the federal government drop about $6,400 in coverage for every $1,000 in aid they receive.

The Stafford Act, which leaves the federal government on the hook for 75 percent of the cost of post-disaster aid, isn’t the only problem. The U.S. Forest Service has seen the percentage of its budget devoted to managing fires shoot up from 13 percent in 1991 to 40 percent in 2012, as the overall federal bill for wildfire maintenance has grown from $440 million in 1985 to $1.7 billion in 2013. The National Flood Insurance Program, which makes use of outdated flood maps and charges inappropriately low rates for older and frequently flooded properties, is now $23 billion in debt to federal taxpayers, with virtually no prospect to ever pay off that debt.

Even leaving aside the potential impacts of climate change, current disaster policy undoubtedly has contributed to what was already a massive shift in settlement patterns toward disaster-prone areas. The 1990s and 2000s saw 2.2 million new housing units built in coastal regions, with roughly a third of the U.S. population now living in low-lying, flood-prone areas along the coast. In the West, housing units in “wild-and-urban” interface regions have grown 52 percent since 1970, with 1.2 million of those homes at high risk of wildfires.

Clearly, these trends are unsustainable. At the current rate of growth, federal disaster spending through programs like the NFIP and Federal Crop Insurance Corp. is expected to grow by between 54 and 110 percent by the end of the century. The U.S. Department of Agriculture projects the number of acres burned by wildfires each year to double by 2050. Taking into account both current spending and settlement patterns, and rising sea levels, by 2100, areas deemed to lie in floodplains could grow by 45 percent for rivers and 55 percent for coastal areas; flood damages could reach $360 billion and hurricane damages could reach $422 billion.

These aren’t just the paranoid Chicken Little fantasies of the environmental left. They are the hard-nosed, dollars-and-cents calculations of the global insurance industry, which as of 2012 found itself on the hook for $10.6 trillion of U.S. coastal property, up 20 percent from $8.9 trillion just five years earlier. And with a huge and growing portion of these costs actually borne by taxpayers, they should be a serious concern to anyone who considers himself or herself a fiscal conservative.

It is that overlap of concerns, from elements that might ordinarily be considered “strange bedfellows,” that explains the genesis of SmarterSafer, of which R Street (originally in our previous incarnation as the Heartland Institute’s Center on Finance, Insurance and Real Estate) is a founding member. Our new report, “Bracing for the Storm,” represents the final product of nearly a year of deliberations and debate among our 30 very disparate members – everyone from environmental organizations like American Rivers and the National Wildlife Federation to budget watchdogs like Taxpayers for Common Sense and the National Taxpayers Union to major insurers and reinsurers like Allianz, Chubb, Liberty Mutual, Swiss Re and USAA.

The report contains a number of detailed recommendations, but they all come down to the two basic themes of removing federal subsidies for risk-taking and shifting federal investments to mitigating the risk of disasters before they happen, rather than merely responding to them after they occur. As the following chart makes clear, this is the precise opposite of federal spending priorities today.

recovery v mitigation

Beyond that general focus, the report also calls for three crucial reforms:

  1. Tie the federal share of disaster-response spending to concrete mitigation and preparedness benchmarks, so that communities that better prepare receive more post-disaster aid and communities that don’t receive less.
  2. Shift more flood risk back to the private insurance market, phasing in accurate rates for the National Flood Insurance Program and reserving subsidies solely for those who can’t afford insurance premiums.
  3. Create a central, high-level federal office dedicated to coordinating among multiple levels of government resources that go toward disaster preparedness, rather than simply disaster response.

One hopes that’s an agenda that proves much more palatable to our real-life lawmakers than America Works did in Frank Underwood’s fictional Washington.

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