Do No Harm: Managing Retreat By Ending New Subsidies

The NFIP is fiscally unsustainable. Despite billions of dollars in prior bailouts, it still owes $20.5 billion to U.S. taxpayers and its average expected costs exceed its expected revenues by $1.4 billion a year. Climate change will exacerbate this problem, as sea-level rise turns what once were 1-in-100 year floods into 1-in-10-year or even annual floods.

Nationwide, new development has grown faster in 100-year floodplains than outside of them, while in several coastal states, development in areas projected soon to be 10-year floodplains has grown faster than in safer areas. To remove incentives to build in flood-prone regions, the NFIP should no longer insure new construction in 100-year floodplains.

Investigations by several federal agencies confirm the NFIP’s maps are woefully out of date. Moreover, sea-level rise will require even more extensive changes to those maps in the future. To keep pace with those updates, for all new construction, the NFIP must end its practice of allowing properties to retain lower rates when assessments of their flood risk increases.