Socioeconomic Effects of the National Flood Insurance Program PDF
Preview Socioeconomic Effects of the National Flood Insurance Program
SPRINGER BRIEFS IN POLITICAL SCIENCE James P. Howard, II Socioeconomic Eff ects of the National Flood Insurance Program 123 SpringerBriefs in Political Science Moreinformationaboutthisseriesathttp://www.springer.com/series/8871 James P. Howard, II Socioeconomic Effects of the National Flood Insurance Program 123 JamesP.Howard,II Columbia,MD,USA ISSN2191-5466 ISSN2191-5474 (electronic) SpringerBriefsinPoliticalScience ISBN978-3-319-29062-1 ISBN978-3-319-29063-8 (eBook) DOI10.1007/978-3-319-29063-8 LibraryofCongressControlNumber:2016937005 ©SpringerInternationalPublishingSwitzerland2016 Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpartof thematerialisconcerned,specificallytherightsoftranslation,reprinting,reuseofillustrations,recitation, broadcasting,reproductiononmicrofilmsorinanyotherphysicalway,andtransmissionorinformation storageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilarmethodology nowknownorhereafterdeveloped. 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Printedonacid-freepaper ThisSpringerimprintispublishedbySpringerNature TheregisteredcompanyisSpringerInternationalPublishingAGSwitzerland ForNina,Chase,andBeatrix Foreword Let a policy-oriented data scientist approach a problem of long standing and somethingnewcanhappen.SocioeconomicEffectsoftheNationalFloodInsurance Program is the first synthesis of this government-run behemoth that insures from flooddamagesover5millionpeopleand1trilliondollarsinpropertyvalue.There issomethinginhereforalmosteveryoneinterestedinpolicyaboutflooding. • Government budget watchers can find how the program likely shifted half a billion dollars a year from the federal budget back onto beneficiaries, but at thesametime,governmentpolicieskeeptheprogramfrombeingself-sufficient whenparticularlylargedisastersstrikesuchasHurricanesKatrinaandSandy. • Consumerwatchdogsandinsuranceandpolicyanalystscanfindnewestimates ofwhathomeownersinflood-proneareasthinktheprogramisactuallyworth. • Studentsofbehaviorcanfindtheodditiesofhowpeoplerespondtoaperennial riskandthegeographicdistributionofwhopaysinandwhogetspaid. • Those seeking efficiency in government can find quantitative estimates in a frameworkendorsedbypresidentialexecutiveorders,abenefit-costanalysis. Butthetotalisgreaterthanthesumofitsparts.Jameshascreatedatransparent, analytical Christmas tree on which readers of all persuasions can hang their own perspectiveanddata.James’sanalysismaynotbethelastword,butwhatwouldbe onsuchalargetopicaffectingsomany?Likethebestofanalyses,hehasprovided astructureandestimatesthatframetheconceptualandquantitativedebate. WhenImentionedJames’stopictotheheadofaninstitutespecializinginhazards suchaflooding,Iwasemphaticallytoldthetopicwasmuchtoobroad.ButJames pulled it off with distinction in a model “as simple as possible but no simpler.” I highlyrecommendacarefulread. Foundingeditor,JournalofBenefit-CostAnalysis ScottFarrow,Ph.D. FormerChiefEconomist U.S.GovernmentAccountabilityOffice vii Preface This evaluation came from my doctoral research at the University of Maryland, Baltimore County. I had approached Scott Farrow, who would later become my advisoraboutwritingmydissertationonbenefit-costanalysis(BCA).Heresponded withafewpossibilities,butoneabouttheNationalFloodInsuranceProgram(NFIP) jumpedoutatme.IhadneverexperiencedafloodeventnordidIliveparticularly closetowater,buttheprojectseemedimportantandchallenging. The NFIP has been the subject of a great deal of research following Hurricane Katrina.Katrinaexposedthelargerisksassociatedwithcoastalliving,andmanyof the payments necessary to support Katrina’s victims came from the NFIP. Much of the research has focused on the risk to the government and the risk to the environment.Alloftheseanalysesinformthisevaluation.Withthisevaluation,the researchissynthesizedandreducedtoestimatesofthenetsocialbenefits(NSB)of theNFIP. UsingBCAprovides aunique lens toevaluate any program.BCA provides the first estimate of the long-term benefits to society, but can do much more. BCA, coupled with distributionally weighting, provides a distributional analysis of the NFIP.Withthatevaluation,wecanconfirmtheresultsofotheranalysesandshow thattheNFIP’sbenefitsflowmoretowardhigher-incomeregions.Wecanalsoadapt theBCAmethodtoshowtheeffectsoftheprogramonthegovernment’sfinances, anopenquestion. Theframeworkdevelopedherecanbeadaptedtoothergovernmentalprograms, especially insurance programs. The framework can also be extended to revise the analysis of the NFIP. Both are options for future exploration and I encourage researcherstoexplorethem. WhiletheNFIPhasbeenandwillbethetargetofreformefforts,thisevaluationis notdesignedtosupportordetractfromanyparticulareffort.Thepolicyisevaluated as-is, and recommendations on how to adapt the analysis for reform efforts are provided. However, no policy pronouncements about “what should be done” are madehere.Theresult,Ihope,isacleanandhonestevaluationoftheNFIPthatcan provideframeworkandguidancetofuturescholarsandpolicymakers. ix
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