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Federal Flood Insurance Logo
9.23.05
Politics and Economy:
Katrina: The Response
More on This Story:
Coastal Development and Federal Flood Insurance

NOW's producers recently traveled to Dauphin Island, Alabama, where 60% of the homes on the western edge of the island have been destroyed by Hurricane Katrina. But this isn't the first time the island has been hit hard. In the wake of previous flooding, communities like Dauphin Island have used federal dollars and federal insurance programs to rebuild. NOW asks if we have been making a mistake with government policies that encourage rebuilding in areas vulnerable to natural disasters. The National Flood Insurance Program (NFIP) is one of the focal points of a growing debate over coastal development, and coastal disaster. Faced with increasing costs of taxpayer funded disaster relief for flood victims, Congress instituted the National Flood Insurance Program (NFIP) in 1968. The Federal Emergency Management Agency (FEMA) manages the NFIP.

Central to the program is the mapping of areas prone to flooding. Flooding threat classifications run from minimal to severe — areas designated "Special Flood Hazard Areas" (SFHA's). The SFHA can also be defined as the "100-year floodplain." According to FEMA, this "is not the flood that will occur once every 100 years. Rather, it is the flood elevation that has a 1 percent chance of being equaled or exceeded each year...A structure located within a special flood hazard area shown on an NFIP map has a 26 percent chance of suffering flood damage during the term of a 30 year mortgage."

Buyers or builders in SFHAs are required to purchase flood insurance. By adopting and enforcing floodplain management plans, communities can benefit under the NFIP which makes the federally backed flood insurance available to homeowners, renters, and business.

In the wake of Katrina, and now Rita, which threatens areas previously destroyed by hurricanes like Galveston, Texas, some are questioning the NFIP program's structure and function. Critics wonder if the federal government should be underwriting development and rebuilding on flood-endangered areas. Read more about various proposals for change below and discuss your thoughts on the topic.

Relocate DevelopmentRethink Flood Insurance
It is almost impossible, in the middle of a disaster of this magnitude, to decide which communities should be abandoned. The wound is still too tender, and the rush to rebuild still too chaotic. We need to develop a national policy for the future -- one that can be implemented with each storm. We need to objectively determine those coastal areas from which we will retreat (pull federal support). We have the data to do so. We know where these areas are. All it takes is the will -- and a sense of personal responsibility from those who want to stay anyway.

- Rob Young, "Retreat from coasts: Develop exit strategy from high-risk areas," ORLANDO SENTINEL, September 13, 2005

Congress needs to mandate coverage for everyone and then come up with a mechanism to enforce compliance...In a vain attempt to persuade homeowners to buy coverage, the current system is subsidized; this allows people to build houses in exposed locations and then collect a federal check when the inevitable occurs, sometimes repeatedly. By pricing flood insurance accurately, the government would create price signals that would drive housing development to higher, drier land. Those who remain determined to live below sea level or on the beach -- or developers who put up low-income rental units in these places -- would pay the full cost of their preference.

- Rethinking Flood Insurance,", WASHINGTON POST, editorial, September 21, 2005

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