Overcoming Contemporary Reform Failure of the National Flood Insurance Program to Accelerate Just Climate Transitions

Wednesday, May 5, 2021
by Melissa Tier

By Melissa Tier 

Abstract

Managing and adapting to flood risk is an increasing concern of policymakers globally, as anthropogenic climate change contributes to sea level rise and the rising intensity and frequency of coastal storms. Moreover, it is critically important that policymakers design and implement equitable adaptation processes that are based in environmental justice principles. In the United States, the primary instrument for flood risk management is the National Flood Insurance Program (NFIP)—but the program already suffers from debt, low participation rates, outdated flood risk assessments, and myriad other structural issues. By integrating several models of policy development, this analysis offers explanations for why NFIP reform attempts of the past decade have repeatedly failed and offers the present moment (in the early months of the Biden Administration and as the pandemic crisis continues) as a potential policy window for realigning reform efforts. Achieving true NFIP reform remains crucial to ensuring that all coastal residents have affordable options for low-risk housing, despite the expected growth in high-risk flood zones.


 

Introduction

Flooding exacerbated by climate change will likely contribute to some of the most destructive natural disasters in the United States (and many other global regions) in the coming years (Kousky 2018), and damage is likely to affect low-income neighborhoods and communities of color in coastal areas more than others (Adler et al. 2019). The federal government’s long-standing National Flood Insurance Program (NFIP) helps to coordinate post-flood disaster recovery and other risk management policies related to flood risk. The critical role played by the NFIP will only become more consequential as rising sea levels, worsening storms, and further coastal urbanization all contribute to higher flood risk. Moreover, flood risk management is one of many governance areas that must evolve to facilitate an equitable and comprehensive “just transition” to a post-fossil fuel society.

Despite this, there is considerable agreement among U.S. lawmakers, bureaucrats, and scholars alike that the NFIP is in dire need of reform. Even more remarkably, this has been a general consensus for much of the program’s 50-year history. Despite chronic calls for improvement, surprisingly little has changed about the program since its inception in 1968. There have been many failed attempts at reform, however—including a cluttered set of legislative attempts in just the past few years that will be the focus of this analysis. In addition to these failed reform efforts, other characteristics of the NFIP also stand out: it is a complex and confusing program for households to navigate, it involves insurance structures and risk assessments often misunderstood by the general public, and it has been operating in debt since 2005. These concerns, combined with the immense challenges presented by climate change, indicate the urgent need to understand the failures of the past and identify promising new solutions for the future.

The present moment—in the midst of a pandemic and in the early months of a new presidential administration—provides a unique perspective to add to existing commentary on the NFIP. This analysis begins by providing a very brief overview and history of the NFIP, with a focus on the past decade. From there, four combinations of political science concepts are utilized to understand the stubbornly persistent NFIP reform failure of the modern age: 1) electoral incentives and issue emergence; 2) policy windows and policy entrepreneurs; 3) policy sustainability and path dependence, and; 4) the submerged state. Some of these models have been applied to the NFIP previously, but not collectively and not with a post-2014 (the most recent round of reform) focus. This analysis concludes with reform recommendations for the future, looking at a current confluence of factors—the legacy of recent NFIP reform attempts, new directions on climate action from the Biden Administration, and the COVID-19 pandemic—as a potential policy window.

 

About the NFIP

The NFIP was born out of the Great Society era, both as a result of many decades of debate about the role of government in disaster relief and spurred by recent high-impact flood events (Knowles & Kunreuther 2014). Private companies had almost entirely left the flood insurance market several decades earlier, after major floods in Mississippi in 1927 made them fearful of turning a profit. The NFIP, created in 1968, aimed to address this insurance market failure as well as other flood risk management needs. To that end, in addition to offering flood insurance the NFIP also assesses and maps floodplain risk, coordinates with other post-disaster emergency aid, sets standards for and monitors local floodplain development, and more (Kousky 2018). The American Academy of Actuaries summarizes the NFIP’s goals as building analytic tools, reducing risk exposure, spreading out and pooling risk, and maintaining solvency (AAA 2019).

The NFIP has failed significantly in at least two core areas: reducing development in floodplains and maintaining solvency.

Although there has never been a major overhaul of the NFIP, changes to the program have occurred over the decades—including the 1979 creation of a parent agency, the Federal Emergency Management Agency (FEMA), and several small-scale reform laws (Knowles & Kunreuther 2014). Currently, the NFIP offers flood insurance in the following manner (Knowles & Kunreuther 2014): municipalities must first apply to participate in the program by committing to create and enforce local floodplain ordinances. Property owners and renters within that municipality then become eligible for a variety of flood insurance types determined by a range of risk-assessment factors. For some in high-risk areas (designated as “Special Flood Hazard Areas,” or SFHAs1), [1] purchasing flood insurance is mandatory. Specifically, owners with a federally-backed mortgage or those who have previously received disaster aid from FEMA or the United States Small Business Administration are required to buy flood insurance. These mandatory requirements were added on piecemeal over time and have aimed to increase participation, via heavily subsidized premiums, among properties that have suffered repetitive losses. [2] Despite these later innovations, the NFIP has struggled throughout its history with take-up rates—especially outside of SFHAs, where households may not realize that they are at risk or may not qualify for the program (AAA 2019; Kousky 2018). 

The NFIP has failed significantly in at least two core areas: reducing development in floodplains and maintaining solvency. First, with regard to development, many claim that the NFIP’s subsidized insurance structure actually incentivizes risk-taking and has led to further flood-prone development (Strother 2018). Second, the program is in debt and sees low participation—despite insurance premiums being its intended primary source of revenue. Other common criticisms of the NFIP include: it does not regularly update flood maps with modern scientific information; it also does not take into account future risk projections, but instead utilizes only historical flooding data; it causes confusion by relying on the false boundary of the 100-year floodplain, and largely ignores flood risk outside of these areas; it does not include much by way of transparency requirements, so buyers and renters are often in the dark about a property’s risk; it rarely regulates participating municipalities’ floodplain ordinances; it is overly reliant within SFHAs on subsidized and grandfathered premiums, which do not represent actuarially accurate risk rates; and it neglects its buyout offerings while incentivizing rebuilding in high-risk areas (Elliott 2021; AAA 2019; Kousky 2018; Knowles & Kunreuther 2014). These issues are well-known and frequently discussed.

Additionally, Congress has opted to move away from long-term reauthorization of the program after a five-year term ended in 2017.

At first glance, fixes are seemingly low-hanging. But there has been a legislative standstill in the past decade that demonstrates that it is largely not a lack of know-how that prevents needed reform. The Biggert-Waters Flood Insurance Reform Act of 2012 (BW12), which aimed to address a number of common NFIP concerns, was largely dismantled just two years later with the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) due to public outcry about rising premiums after the passage of BW12. As will be shown, lawmakers learned an important political lesson from BW12—and have been reluctant to pass any further reform bills since. This sluggish reform activity has coincided with a rising frequency and intensity of flood-related disasters (AECOM 2013), and increasingly urgent calls to face an escalating climate crisis (White House 2021a). Additionally, Congress has opted to move away from long-term reauthorization of the program after a five-year term ended in 2017. [3] Since then, there have been 16 short-term reauthorizations, which have reinstated the program for periods ranging from a few weeks to one year. These reauthorizations (and even a few hours-long lapses) have created high levels of uncertainty among policyholders and insurers alike, including delaying thousands of home sale closings (CRS 2020).

Hurricane Katrina flood photo

Aerial photo of New Orleans after Hurricane Katrina. Image by Account ID 12019 is licensed on Pixabay

Just over a third of these short-term reauthorizations occurred during the 2019–2020 period. Approximately 40 bills were also proposed during this same period that took aim at the NFIP, mostly containing only small modifications (Table 1). Of note are three bills in particular: the National Flood Insurance Program Reauthorization Act of 2019 (H.R.3167); the National Flood Insurance Program Reauthorization and Reform Act (S.2187 & H.R.3872), and the Disaster Learning and Life Saving Act of 2020 (S.4815 & H.R.8569). None of these bills passed either the House or Senate, and they were distinct from the successful NFIP short-term reauthorizations (which all occurred via House Appropriations bills that extended a variety of federal programs). The 2012 and 2014 reform bills (BW12 and HFIAA, respectively), and the 2019–2020 reauthorizations and failed proposals are the primary focus of the present analysis.

 

Electoral Incentives & Issue Emergence

The Biggert-Waters Flood Insurance Reform Act of 2012 (BW12) aimed to remedy some of the well-understood issues with the NFIP—including phasing out many subsidized and grandfathered premiums (Kousky 2018). Also included in the law were requirements to update FEMA maps and to improve compliance monitoring and enforcement. 

Dozens of lawmakers did an “about-face” in the subsequent months, claiming that rates had gone up far higher than they had expected (Strother 2018).

Public opinion, local activist groups, and news media zeroed in on the possibility of rising premiums, which resulted in a public outcry against BW12 (Elliott 2021). The extent of this negative reaction seemed to catch lawmakers by surprise. Dozens of lawmakers did an “about-face” in the subsequent months, claiming that rates had gone up far higher than they had expected (Strother 2018). BW12 leading co-sponsor Representative Maxine Waters announced, for example, “I certainly did not intend for these types of outrageous premiums to occur for any homeowner” (Strother 2018, p. 473). Strother (2018), however, argues that lawmakers must have known that these premium increases were coming; the increases were, in fact, the goal: “increasing the costs to property owners so that their premiums reflected the true actuarial risk was a centerpiece of the reform measures in Biggert-Waters” (p. 473). 

The rapid switch from BW12 to the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) is a dramatic moment in the NFIP’s multi-decade history, and probably its most well-known instance of reform failure. Two political science concepts, electoral incentives and issue emergence, can help to make sense of this outcome, as well as its continuing impacts to the present day. To begin with, both Stimson (2015) and Arnold (1990) discuss the importance of attention among the general public and the effect that this has on lawmakers’ actions. Stimson (2015) describes how much of the time, most people are not paying much attention to policies. As a result, many people are not well-informed about any given policy issue, though they are at the same time discerning in that they hold (sometimes unrelated or even contradictory) opinions that could impact how they choose among options when voting. Many people also tend to have impressionable preferences when it comes to issues that they do not feel strongly about. Thus, change generally occurs at the margins—with small shifts in opinions occurring among the undecided when lawmakers are able to capture their attention.

The reform laws between the 1970s and the 1990s did not spark the vitriolic attention that BW12 subsequently did, but two critical moments occurred after the turn of the 21st-century that served as catalysts for increased public attention.

The import of these variations in attention among the public are better understood in the context of officials’ “electoral incentives.” Mayhew (2008) writes that for the most part, elected officials are motivated by actions that will help them get reelected. They most actively pursue strategies that help to achieve this goal, namely: advertising themselves, claiming credit for legislative accomplishments, and taking stances on issues that they think will garner votes (such position-taking may or may not be followed-up with actual legislative action). Because of this electoral incentive, lawmakers are often keenly attuned to public opinion—and particularly the opinions of those populations who are just attentive enough that their opinion can be swayed. Lawmakers are eager to move forward on policies that are both feasible and “politically attractive” in the sense that they help lawmakers with their electoral goals (Arnold 1990).

Given all this, the manner in which a new issue emerges can be of much consequence. A “critical moment” might launch an issue suddenly into the spotlight, forcing both the public and lawmakers to formulate clearer opinions about it (Stimson 2015). This process takes time, however, as more knowledge is gained about the issue, battle lines are drawn, and precedents become established. The history of the NFIP neatly fits this model. The reform laws between the 1970s and the 1990s did not spark the vitriolic attention that BW12 subsequently did, but two critical moments occurred after the turn of the 21st-century that served as catalysts for increased public attention.

River bank breach

Photo of water breaching a river bank causing flood. Image by Markus Distelrath is licensed under Pixabay

First, the immense destruction in the wake of Hurricane Katrina in 2005 (and several subsequent high-impact storms) greatly affected both the NFIP and its parent agency, FEMA. The NFIP went into an unprecedented amount of debt due to the high number of claims after Katrina (GAO 2020). A continued preponderance of high-loss years has led to a debt of $20.5 billion USD, and projected revenue streams are not sufficient to repay the amount (Elliott 2021; GAO 2020). This debt crisis for the NFIP is expected to worsen, driven by climate change (which is causing more frequent and more severe storms) and coastal urbanization (which is leading to more vulnerable coastal populations) (GAO 2020; Knowles & Kunreuther 2014). 

The NFIP’s debt woes began to bring the program unfavorable attention after Hurricane Katrina. Added to this criticism was the public’s intense negative estimation of FEMA’s post-Katrina disaster response in New Orleans (Strother 2018). These challenges to the NFIP and FEMA caused lawmakers to more carefully consider their public stances on and general knowledge about disaster management and, more specifically, flood risk. Strother (2018) describes how this led lawmakers to gain more “instrumental” knowledge about the ongoing failures of the NFIP—in other words, they began to more proactively learn about the minutiae of the program’s needs and challenges. 

But lawmakers failed during this period to keep the public up to speed on the specifics of persistent NFIP issues (Strother 2018). Thinking that they had come up with reasonable solutions to the NFIP’s growing debt crisis and other challenges, lawmakers passed the bipartisan BW12 with a large majority. “Because NFIP was a nonsalient issue domain,” writes Strother of the BW12 vote, “Senators had no reason to worry about harming their hopes for reelection with a vote adverse to the short-term interests of some of their constituents” (p. 468). 

It quickly became clear that the public (or at least a small, attentive minority) did not understand that removing subsidies from certain policies was—and remains—critical to reducing the NFIP’s debt and to decreasing development in floodplains.

A second critical moment thus occurred as the public became aware of changes to the NFIP without a robust understanding of what had prompted them. What had been an “issue without a public” now had an attentive and disgruntled one (Strother 2018). Rising premiums likely had also just become more salient to many people because of Hurricane Sandy, which had struck just a few months after the law’s passage in 2012. It quickly became clear that the public (or at least a small, attentive minority) did not understand that removing subsidies from certain policies was—and remains—critical to reducing the NFIP’s debt and to decreasing development in floodplains. BW12 forced lawmakers to further consolidate their opinions on an emerging issue, and they quite collectively moved to protect their electoral interests. Remarkably, HFIAA was passed with similar bipartisan and majority support as was BW12 (Strother 2018).

Where does all this leave us in the past few years? Lawmakers are currently at a standstill with reform—largely not because of inter- or intra-party disputes, but instead because needed reforms have become so unpopular among the public. It is not so surprising, then, that lawmakers have defaulted to short-term reauthorizations since 2017, when $16 billion USD of the NFIP’s debt was forgiven (GAO 2020). Since then, lawmakers have been at a loss as to how to decrease development in floodplains and increase relocation for at-risk households (even leaving aside, for the moment, how to do so as equitably as possible). At present, it seems lawmakers understand in a general sense what reforms the NFIP needs—but they cannot identify a politically-safe maneuver to achieve meaningful results. 

 

Policy Windows & Policy Entrepreneurs

It is important to consider, though, whether there have been missed opportunities in recent years to successfully achieve needed reform.

It is important to consider, though, whether there have been missed opportunities in recent years to successfully achieve needed reform. To answer this question, this analysis now turns to Kingdon’s (2014) three streams of agenda development—problem identification, policy ideas, and politics—which may come together fortuitously to yield a short-lived “policy window.” During these opportune times, enactment of a particular policy option that arises from the “primeval soup” of ideas might be possible. Certain factors can help facilitate the opening of a window, such as “policy entrepreneurs” (people who were working to identify problems and propose solutions since long before the window opened) and “focusing events” (similar to “critical moments” above). 

Policy entrepreneurs might come from a variety of governmental or nongovernmental backgrounds, but Grossman (2014) points out that they are typically well-known and have been politically active for long periods. The most commonly invoked NFIP policy entrepreneur is Gilbert White, a geographer active in the 1960s who was fundamental to the creation of the program (Elliott 2021; Knowles & Kunreuther 2014). White was an early expert in developing flood hazard mapping, and chaired a government taskforce that made plain the need for a coordinating government program. He was also prescient in understanding core problems that still plague the NFIP to this day. His taskforce wrote, for example, that although subsidies would be necessary at first, “for the Federal Government to subsidize low premium disaster insurance or provide insurance in which premiums are not proportionate to risk would be to invite economic development in floodplain areas” (as quoted in Knowles & Kunreuther 2014, p. 333). Knowles & Kunreuther (2014) also note that White was adept at navigating between academics and public officials.

The NFIP has never again had an intellectual or political leader with the legacy of Gilbert White.

The NFIP has never again had an intellectual or political leader with the legacy of Gilbert White. To illustrate this point for the present moment, this analysis looks at the approximately 40 bills that were proposed in either chamber of Congress between 2019 and 2020 that directly contained suggested modifications to the NFIP (Table 1). [4] No one lawmaker stood out as being both active and successful. Representative Maxine Waters [D-CA] (namesake of BW12), Senator Bob Menendez [D-NJ], and Senator Bill Cassidy [R-LA] were among the most active, having in various combinations with other colleagues co-sponsored the three reform bills mentioned earlier (see bolded bills in Table 1). All three proposals, however, have failed to date. There also has not yet seemed to be an entrepreneurial NFIP-reform spirit from the executive branch, as neither the Trump Administration nor the Obama Administration ever signaled a particular focus on this topic. (As discussed below, there are early signs from the Biden Administration that this topic may be of renewed interest to the executive branch.) Finally, although there are academics actively researching this niche area, they seem to be few and far between at present and have limited direct connections to the federal government.

Returning to the three proposed reform bills that this analysis has focused on, it is notable that Representative Waters and Senators Menendez and Cassidy are all from states that have seen tremendous flooding disasters relatively recently (CA: landslides/debris flows due to wildfires; NJ: Hurricane Sandy; LA: Hurricane Katrina). These disasters, which have reached national attention, had the potential to serve as focusing events for policy reform. There is some evidence that this was true at the local level. For example, Rosenzweig & Solecki (2014) see Sandy as a clear tipping point for coastal resilience action in New York City. Friedman et al. (2019) concur, and believe that local activity has to some extent been sustained—especially given that New York City’s resilience plan explicitly acknowledges Sandy as a catalyst that allowed the city to “rationalize their position on climate change policy” (p. 63). Nevertheless, Friedman et al. argue that not enough action was taken by the city government immediately after Sandy, and some reform efforts have fizzled out.

In addition to this electoral pressure, thinking about disaster relief in the present is cognitively easier than disaster preparedness for an unknown future (Meyer 2006).

Unfortunately, it is this result that has been seen time and again on the national scale. Wiering et al. (2017) write that although flooding disasters that serve as focusing events can sometimes lead to a collective interest in reform, they often instead result in an entrenchment of existing policies. Healy & Malhotra (2009) also show that although natural disasters are good at causing the public to demand post-disaster relief, they are not as successful at generating interest in preparing for the next disaster. Thus lawmakers might grandstand about hurricane relief, but not pursue long-term resilience standards that would be less attractive to voters. In addition to this electoral pressure, thinking about disaster relief in the present is cognitively easier than disaster preparedness for an unknown future (Meyer 2006). These findings likely explain why lawmakers repeatedly fail to harness the focusing events of recent flooding disasters in order to enact reform.

That said, certain predictable features about flood risk mean that additional policy windows can be anticipated. Kingdon (2014), for example, notes that program renewals are a common time for a window to open. The many short-term reauthorizations of the NFIP offer lawmakers knowable, repeated windows of opportunity—and the certainty of future flood disasters (and even their increasing likelihood) adds an additional layer of predictability for reform efforts. Going forward, perhaps lawmakers could draw on these constants to better harness the next NFIP reauthorization round. Buchanan et al. (2019), for example, found that survey respondents in New York City expressed more willingness to relocate if they had more experience with repeat, “nuisance” flooding. Increased frustration with flooding may lead to marginal changes in public opinion, a political shift that lawmakers should try to cultivate after each disaster. This could be a powerful tool if paired with the existing understanding of NFIP shortcomings (problem identification) and predesigned solutions ready to be implemented (policy ideas).

 

Policy Sustainability & Path Dependence

Despite this, many structural aspects of the NFIP have remained stuck in the past.

As mentioned above, the frequency of flood disasters in the United States has changed drastically over the NFIP’s lifetime. Despite this, many structural aspects of the NFIP have remained stuck in the past. For example, the idea of a 100-year floodplain derives from the original 1968 law and still informs the designation of Special Flood Hazard Areas (SFHAs) to this day. But this is far less useful than property-specific risk assessment techniques that have since been developed (Kousky 2018). Another disturbing example is that FEMA flood maps do not consider projected sea level rise or other forward-looking climatic data. This was understandable in 1968 (the NFIP was created before global warming was widely understood even among the scientific community), but is dangerously obsolete for the present day (Kousky 2018). These anachronisms are likely due to “policy sustainability” and “path dependence,” two closely related concepts.

According to Patashnik’s (2008) policy sustainability model, policy “stickiness” largely determines the life of a reform. Reforms will find long-term success if they 1) “realign public authority,” 2) “generate positive feedback effects,” and 3) “in many cases, unleash the creative destructiveness of market forces” (p. 155). Wiering et al. (2017) describe characteristics of a similar concept; that is, the reinforcing mechanisms of path dependence, whereby existing policies result in 1) infrastructural investments (“fixed costs”), 2) knowledge of how to do things a certain way (“learning effects”), 3) governance structures that facilitate the status quo (“coordination effects”), and 4) expectations from the public of how aid will be structured (“adaptive expectations”).

The original NFIP (a reform at the time) exhibits many of the sustaining and reinforcing characteristics of these two models: an entirely new and complex flood insurance market was created; homeowners were able to access flood insurance for the first time in decades, and at affordable (subsidized) rates; creation of the NFIP and, later, of FEMA resulted in fixed costs and deeply embedded bureaucratic structures; and the status quo bias after decades of operation is powerful among consumers. [5] Thus, reform of this entrenched program is incredibly difficult, despite the fact that it has largely failed in its overall mission.

Although further policy development is very much needed to ensure that premiums remain affordable for low-income households, lawmakers have since become wary of taking any reform action and have preserved subsidies in all subsequent reform efforts.

Furthermore, the reform efforts of the past decade demonstrate clear weaknesses. Patashnik (2008) warns that reform efforts with many “separable parts” are more vulnerable to erosion. This was the case for BW12, which aimed to improve more than just inappropriately priced premiums. HFIAA was able to dismantle the premium increases as well as other components of BW12, including efforts to update flood maps and increase community compliance with the floodplain ordinance requirement. BW12 also fell into another trap described by Patashnik (2008): maps and compliance were too abstract as goals, and there were not clear enough winners as a result of the reform. Furthermore, the manner in which the moral economy of flood risk (i.e., the possibility of loss) is operationalized—such as who is labeled causally responsible and/or accountable for loss, how loss is justified, and how loss is compensated—can lead to very different interpretations of the same policy (Elliott 2021). In this case, failure on the part of lawmakers to activate equity-based framings may have accelerated BW12’s demise.

Although further policy development is very much needed to ensure that premiums remain affordable for low-income households, lawmakers have since become wary of taking any reform action and have preserved subsidies in all subsequent reform efforts. Lawmakers should be actively pushing for creative options such as means-based subsidies (more accurate identification of households most in need) and “discounts-for-buyouts” (discounts now for buyouts in the future), [6] both of which would improve the program’s solvency and disincentivize floodplain development (GAO 2020; Adler et al. 2019). To achieve reform successes, lawmakers need to find new ways to articulate the winners and moral framings of such policies—namely, by stressing that these policies would maintain insurance affordability for vulnerable and low-income coastal households even while phasing out grandfathered subsidies for wealthier households.

Two other considerations from Patashnik (2008) are insightful for future NFIP reform options. First, Patashnik describes how lawmakers often exhibit cyclical behaviors when trying “to balance the pursuit of two attractive, yet contradictory, goals. Politicians cope with the tradeoff by favoring one phase of the cycle and then the other” (p. 170). We have already seen that there are two (seemingly) contradictory goals of current NFIP reform: increasing affordability on the one hand, and improving solvency on the other. Lawmakers should try to break this either/or cyclical thinking, so that they can approach all needs clearer-eyed and seek more integrative solutions—such as the innovative policy ideas mentioned above, which to date have received limited attention from policymakers.

So market development must be considered, but done while centering equity considerations and with “anticipation of future constraints”—in the words of Kingdon (2014).

Second, as briefly mentioned above, Patashnik contends that a reform is more sustainable if it successfully engages market forces. Many of the scholars, agencies, and companies currently writing about the NFIP see growth in the private flood insurance market as very likely (Elliott 2021; GAO 2020; AAA 2019; Kousky 2018). Novel data collection methods, improved mapping capabilities, and pilots with reinsurance are making it less risky for insurance companies to consider entering the market. That said, these same sources also have concerns with semi-privatization. [7] In particular, they are concerned that a growth in the private market might undermine the NFIP by “depopulating” its consumer base, resulting in even fewer financial resources for the program (AAA 2019). So market development must be considered, but done while centering equity considerations and with “anticipation of future constraints”—in the words of Kingdon (2014).

 

The Submerged State

NFIP policy reforms to date have been only “piecemeal” (Knowles & Kunreuther 2014), without fully considering how changes will layer on top of each other (Kousky 2018). This layering of low-efficacy reforms has added undue complexity to an already overburdened program. The increasing complexity of a program’s bureaucratic structures is precisely what Mettler (2010) describes in her analysis of the “submerged state.” Mettler argues that programs and policies of the federal government have, over time, become more beholden to entrenched interests and less visible to the public eye. The NFIP has arguably always been opaque to the public (as an issue without publics, at least until 2012), but it remains so today during an era with a dense network of such programs. 

In the case of the NFIP, it is often real estate agencies, developers, and even municipalities (who stand to gain from floodplain development) that have lobbied against reform (Knowles & Kunreuther 2014).

Mettler’s piece considers several bulky federal programs during the Obama years, and shows the immense profits that key private sector entities—including real estate agencies—achieved by way of those programs. She also notes that it is in these companies’ interest to maintain the complexity of these programs, so that few besides savvy policy elites can meaningfully participate in debate. In the case of the NFIP, it is often real estate agencies, developers, and even municipalities (who stand to gain from floodplain development) that have lobbied against reform (Knowles & Kunreuther 2014). One has to wonder what role these groups may have played in fomenting discontent with (or at least generating surface-level awareness of) BW12. Research on this is scarce, but Strother (2018) did find that the media vastly escalated public awareness of the NFIP after the passage of BW12—although perhaps this was the result of vocal coastal community activism that cropped up in opposition to BW12 (Elliott 2021).

500 Port of New Orleans aerial photo

Aerial image of 500 Port of New Orleans. Image by Alonso Reyes is licensed under Unsplash

Mettler also uses her case examples to show that President Obama missed crucial opportunities to explain the intricacies of his policy reforms to the general public. Recent NFIP reforms have mirrored this mistake—most clearly in the BW12/HFIAA incident, but also in lawmakers’ wariness in pursuing subsequent reform efforts. For example, neither the National Flood Insurance Program Reauthorization Act (H.R.3167) nor the National Flood Insurance Program Reauthorization and Reform Act (S.2187 & H.R.3872), both from 2019, even attempt to set the record straight on the debate over premium rates. [8] Statements from bill co-sponsors at the time also failed to meaningfully inform constituents; instead, co-sponsors expressed a somewhat contradictory combination of standing against rising premiums combined with stressing the importance of the program’s solvency. Here are some examples (all from Menendez 2019): “We’ve witnessed the NFIP fail our constituents in their greatest hour of need and, after countless reauthorizations that simply kick a broken can down the road, we want real reform,” said Senator Bob Menendez (D-NJ). Senator Bill Cassidy (R-LA) said, “the reforms in this bill are critical to any reauthorization effort to make the program sustainable and prevent families from being hit with drastic premium increases.” And Senator Kirsten Gillibrand (D-NY) claimed, “with hurricane season already here and sea levels rising on our coasts, we must act quickly to fix the program and give Americans the relief they need.” These are prime examples of missed opportunities to explain to the public exactly what is at stake if the NFIP is not improved.

A reframing of the goals and morals of policy reform is acutely needed so as to focus on benefits to communities.

All that said, the untapped potential for true reform seems to be high. A majority of Americans surveyed in 2019 said that “climate change is affecting their local community some or a great deal.” Among these, 70 percent said that “severe weather, like floods or intense storms” is affecting them and 56 percent said that sea level rise is affecting them (Pew Research Center 2020). Buchanan et al. (2019) also found that high numbers of interviewed participants in an SFHA in New York City were at least willing to consider various flood risk mitigation behaviors, but that take-up rates of insurance and buyouts via the NFIP remained surprisingly low. A reframing of the goals and morals of policy reform is acutely needed so as to focus on benefits to communities. This, of course, must also be paired with sound policy, particularly with regard to affordability. Policy entrepreneurs and key actors are needed here, to develop new options or perhaps to reframe some existing ones so that they are better understood by the American public.

 

Recommendations & Conclusion

Future reform efforts will need to work creatively to overcome this electoral pressure, and will also need to recognize that the NFIP is no longer an issue without a public—though that public may not be well-versed in the technocratic intricacies of reform options (Strother 2018). 

The political science theories described above illuminate why recent reform efforts of the NFIP have failed, and provide insight into potentially fruitful options going forward. First, intertwining the concepts of electoral incentives (Mayhew 2008) and issue emergence (Stimson 2015) offers an essential framework for understanding the dramatic failure of BW12 and why lawmakers’ subsequent reform efforts have avoided addressing subsidized and grandfathered policies. Future reform efforts will need to work creatively to overcome this electoral pressure, and will also need to recognize that the NFIP is no longer an issue without a public—though that public may not be well-versed in the technocratic intricacies of reform options (Strother 2018). 

Second, flood disasters have only limited usefulness as a focusing event. Electoral incentives again come into play, incentivizing lawmakers to finance post-disaster recovery aid but not long-term preparedness efforts (Healy & Malhotra 2009). Nevertheless, policy windows might repeatedly appear for NFIP reform given that reauthorizations regularly occur (Kingdon 2014) and that flood disasters will hit with increasing frequency (Kousky 2018). Policy entrepreneurs are needed in the present moment to develop ideas that can be utilized whenever the political stream aligns to open a policy window (Kingdon 2014).

Future reforms must do a better job of making holistic change, such as by requiring a comprehensive reform plan from FEMA (GAO 2019).

Third, because modern NFIP reforms have been very piecemeal, they are highly vulnerable to erosion and even reversal (Patashnik 2008). Future reforms must do a better job of making holistic change, such as by requiring a comprehensive reform plan from FEMA (GAO 2019). Additionally, more sophisticated engagement with private insurance companies is likely needed (although with an eye toward not deepening the NFIP’s current solvency crisis). Finally, the NFIP is a part of the modern submerged state, and as such is a technocratic program not well understood by the general public (Mettler 2010). This helps to explain why many mistaken beliefs about the program persist, despite the growing public attention. Key actors and policy entrepreneurs can help to clarify the intricacies of the program and reframe reform goals so that people can better appreciate reform benefits (Mettler 2010).

Two characteristics of the coming months may mean that a particularly robust policy window is on the horizon. First, the ongoing COVID-19 pandemic has created such a novel crisis that natural disaster preparedness may be emerging as a reframed issue. Whereas the dominant disaster preparedness paradigm in the United States post-2001 focused on counterterrorism (Knowles & Kunreuther 2014), and frustrations with FEMA and NFIP debt have clouded the conversation since 2005, the COVID-19 context has created new problems, innovative policy ideas, and shifting political alignments. Some have already seen this moment as an opportunity for uniting various disaster preparedness efforts. For example, bicameral legislation was introduced in October 2020 that, perhaps for the first time, drew a connection between flooding and infectious diseases. The Disaster Learning and Life Saving Act (S.4815 & H.R.8569) proposes an independent National Disaster Safety Board that would provide benchmarking tools, trend analyses, and recommendations on risk management across various types of disasters—modeled on the existing National Transportation Safety Board (Schatz 2020). It remains to be seen, however, whether interest in linking these risk resilience topics will persist as the pandemic crisis begins to wane.

Second, integrative policy ideas may come to be reinforced by the current presidential administration. President Biden took immediate action to signal that climate change and environmental justice are top-level priorities for his administration, including by issuing a wide-ranging executive order in January 2021 (White House 2021a). This was followed by a March executive order detailing the Administration’s infrastructure and jobs plan, which includes stipulations for flood resilience (White House 2021c) and a new U.S. Nationally Determined Contribution (i.e., emissions reduction target) to the global Paris Agreement in April (White House 2021b). These actions may well serve as a catalyst for a policy window, and the administration could play a further critical role in articulating more specific reform goals for the NFIP. For example, they could fund development of flood management policies rooted in environmental justice, as well as help to mediate some of the stigma and distrust of concepts like “managed retreat”—which may well stem from histories of redlining, community disinvestment, and other racist exclusionary policies (Elliott 2021). Furthermore, they could help push forward more radical and less piecemeal reform, such as through the creation of a novel National Disaster Safety Board.

Current lawmakers and the Biden Administration should keep in mind the following needed changes to federal flood risk management: 

First, an understanding of future climatic changes, especially with regard to sea level rise, must be integrated throughout NFIP initiatives. Critically, maps must be improved to incorporate climate change projections and provide accurate flood risk information for areas within and outside of SFHAs (Kousky 2018). 

Second, the solvency crisis of the NFIP must be addressed by phasing out subsidized and grandfathered policies in SFHAs (GAO 2020)—particularly for high-income households—and by exploring options with private insurers (AAA 2019).

Third, this must be done while not just maintaining but actually improving affordability for those most at need, especially as the climate crisis will likely worsen. Options to be explored in much more depth include means-based subsidies, Congressionally-appropriated subsidies, and pre-disaster “discounts-for-buyouts” (GAO 2020; Adler et al. 2019). 

Fourth, improvements to the NFIP’s engagement and transparency protocols are urgently needed, such as clarifying mandatory risk disclosure policies, increasing enforcement of municipality compliance, and providing more educational resources to communities and property owners/renters (Adler 2019).

Toward these goals, in April 2021 FEMA released initial information about its long-awaited Risk Rating 2.0 initiative, which aims to better assess flood risk on a property-specific basis (FEMA 2021).

Toward these goals, in April 2021 FEMA released initial information about its long-awaited Risk Rating 2.0 initiative, which aims to better assess flood risk on a property-specific basis (FEMA 2021). To help alleviate concerns about premium increases, especially in the midst of the pandemic, FEMA’s plan is to phase-in implementation of Risk Rating 2.0. Any new policies purchased after October 2021 will be subject to these changes, while existing policies will have until April 2022 before the changes go into effect. In an initial statement in response to this announcement, a Union of Concerned Scientists representative writes:

Risk Rating 2.0 could go a long way in helping homeowners better understand their risk, ensuring they can make informed decisions to protect themselves and their property. Risk Rating 2.0 will need to be accompanied by an affordability program that Congress must pass to ensure that anyone who needs or wants flood insurance can afford it. Without such policies, the department risks exacerbating the racial and socioeconomic disparities that already exist within flood-prone areas (UCS 2021, online).

The coming months are likely to see a continued confluence of factors leading to a critical moment with real potential for reform above and beyond Risk Rating 2.0. The NFIP was most recently reauthorized for a full year: from October 1, 2020 to September 30, 2021, likely due to the pandemic. In addition, the pandemic plus the coming hurricane season means that flooding disasters will likely continue to receive heightened attention. Finally, a new presidential administration is setting a tone for strong action on the climate crisis. Given this potential alignment of problems and politics, lawmakers and flood risk management experts should be ready with policy ideas that can overcome the post-BW12 hurdles—so as to mitigate harm to communities and maximize adaptive risk preparedness.

*This article was edited by Sherrod Smith (Princeton University), Nicholas Birdsong (University of Michigan), and Rebecca Gorin (Princeton University).


About the Author

Melissa Oberon Tier is a PhD student in the Science, Technology, & Environmental Policy program at Princeton's School of Public & International Affairs. She researches urban climate adaptation and environmental justice from interdisciplinary lenses including behavioral science, multi-level governance, and complex adaptive systems. Melissa can be reached at mtier@princeton.edu. 


Acknowledgements

The author would like to thank her JPIA editors (Nicholas Birdsong, Rebecca Gorin, & Sherrod Smith) and Dr. Frances E. Lee for their support with this article.


Notes

[1.] Importantly, SFHAs are defined as floodplains with 1 percent annual chance of flooding. These are also commonly known as 100-year floodplains and are based on historical flooding data (Kousky 2018).

[2.] These properties are also the costliest for the NFIP to cover and have contributed to its debt (Adler et al. 2019).

[3.] Previously, the NFIP had generally been reauthorized in five-year periods with sunset provisions. Although five-year reauthorizations offered more stability than at present, the NFIP’s long-term funding has actually never been guaranteed (AAA 2019).

[4.] Of note is that only bills that were limited to NFIP short-term reauthorizations during this period passed into law.

[5.] See, for example: Elliott (2021) on status quo thinking, feelings of loss, and the moral economy of climate adaptation.

[6.] This model would “offer homeowners discounts on their flood insurance premiums now, in exchange for a commitment to accept a future buyout once their home is substantially damaged by flooding” (Adler et al. 2019, p. 1).

[7.] These sources generally do not expect private insurers to fully replace the need for government involvement, particularly with the sharp expected rise in flood claims due to climate change (e.g., AAA 2019).

[8.] Perhaps their more meaningful contribution would have been that both proposed to reinstate five-year reauthorization provisions for the NFIP. Otherwise, both bills proposed minor reforms and were altogether quite similar to each other. The many other reform bills proposed during 2019-2020 were even smaller-scale.


References

[AAA] American Academy of Actuaries. (2019). The National Flood Insurance Program: Challenges and Solutions.

Adler, D., Burger, M., Moore, R., & Scata, J. (2019). Changing the national flood insurance program for a changing climate. Environmental Law Report News & Analysis, 49, 1-14.

AECOM. (2013). The Impact of Climate Change and Population Growth on the National Flood Insurance Program Through 2100.

Arnold, R. D. (1990). Chapter 4: Electoral calculations and legislators’ decisions. Logic of Congressional Action (p. 60-87). Yale University Press.

Buchanan, M. K., Oppenheimer, M., & Parris, A. (2019). Values, bias, and stressors affect intentions to adapt to coastal flood risk: A case study from New York City. Weather, Climate, and Society, 11(4), 809-821.

[CRS] Congressional Research Service. (2020). What Happens If the National Flood Insurance Program (NFIP) Lapses?

[FEMA] Federal Emergency Management Agency. (2021). FEMA updates its flood insurance rating methodology to deliver more equitable pricing. Federal Emergency Management Agency. Retrieved from: https://www.fema.gov/press-release/20210401/fema-updates-its-flood-insurance-rating-methodology-deliver-more-equitable.  

Friedman, E., Breitzer, R., & Solecki, W. (2019). Communicating extreme event policy windows: Discourses on Hurricane Sandy and policy change in Boston and New York City. Environmental Science & Policy, 11, 55-65.

Elliott, R. (2021). Underwater: Loss, Flood Insurance, and the Moral Economy of Climate Change in the United States. Columbia University Press.

[GAO] United States Government Accountability Office. (2020). National Flood Insurance Program: Fiscal Exposure Persists Despite Property Acquisitions.

[GAO] United States Government Accountability Office. (2019). Substantial Efforts Needed to Achieve Greater Progress on High-Risk Areas.

Grossman, M. (2014). Chapter 3: Does the issue agenda matter? Artists of the Possible: Governing Networks and American Policy Change Since 1945. Oxford University Press. 

Healy, A. & Malhotra, N. (2009). Myopic Voters and Natural Disaster Policy. The American Political Science Review, 103(3), 387-406.

Kingdon, J. (2014). Agendas, Alternatives, and Public Policies (2nd ed.). Pearson Education Limited.

Knowles, S. G. & Kunreuther, H. C. (2014). Troubled waters: The National Flood Insurance Program in historical perspective. Journal of Policy History, 26(3), 327-353.

Kousky, C. (2018). Financing flood losses: A discussion of the National Flood Insurance Program. Risk Management and Insurance Review, 21(1), 11-32. 

Levy. G. (2015). How Citizens United has changed politics in 5 years. U.S. News & World Report. Retrieved from: https://www.usnews.com/news/articles/2015/01/21/5-years-later-citizens-united-has-remade-us-politics.  

Mayhew, D. R. (2008). Chapter 1: The electoral incentive. In Parties and Policies: How the American Government Works (p. 19-53). Yale University Press.

Menendez, B. (2019). Menendez leads bipartisan, comprehensive flood insurance reform bill. Senator Bob Menendez Official Website. Retrieved from: https://www.menendez.senate.gov/newsroom/press/menendez-leads-bipartisan-comprehensive-flood-insurance-reform-bill

Mettler, S. (2010). Reconstituting the submerged state: The challenges of social policy reform in the Obama era. Perspectives on Politics, 8(3), 803-824.

Meyer, R. J. (2006). Why we under-prepare for hazards. In Daniels, R. J., Kettl, D. F., & Kunreuther, H. (Eds.), On Risk and Disaster: Lessons from Hurricane Katrina (p. 153-173). University of Pennsylvania Press.

Patashnik, E. M. (2008). Chapter 9. Conclusions: The patterns and paradoxes of policy reform. Reforms at Risk: What Happens After Major Policy Changes are Enacted (p. 156-180). Princeton University Press.

Pew Research Center. (2020). How Americans see climate change and the environment in 7 charts. Pew Research Center. Retrieved from: https://www.pewresearch.org/fact-tank/2020/04/21/how-americans-see-climate-change-and-the-environment-in-7-charts/ft_2020-04-21_earthday_01/

Rosenzweig, C. & Solecki, W. (2014). Hurricane Sandy and adaptation pathways in New York: Lessons from a first-responder city. Global Environmental Change, 28, 395-408.

Schatz, B. (2020). A National Disaster Safety Board: Toward a more resilient future. Senator Brian Schatz Official Website. Retrieved from: https://www.schatz.senate.gov/imo/media/doc/National%20Disaster%20Safety%20Board%20One%20Pager[1].pdf

Stimson, J. A. (2015). Tides of Consent: How Public Opinion Shapes American Politics (2nd ed.). Cambridge University Press.

Strother, L. (2018). The National Flood Insurance Program: A case study in policy failure, reform, and retrenchment. The Policy Studies Journal, 46(2). 452-480.

[UCS] Union of Concerned Scientists. (2021). FEMA releases new Risk Rating 2.0 information moving forward update of antiquated flood policies. Union of Concerned Scientists. Retrieved from: https://www.ucsusa.org/about/news/fema-releases-new-risk-rating-20-information-moving-forward-update-antiquated-flood-3

White House. (2021a). Executive order on tackling the climate crisis at home and abroad. White House Briefing Room. Retrieved from: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/.

White House. (2021b). Fact sheet: President Biden sets 2030 greenhouse gas pollution reduction target aimed at creating good-paying union jobs and securing U.S. leadership on clean energy technologies. White House Briefing Room. Retrieved from: https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/22/fact-sheet-president-biden-sets-2030-greenhouse-gas-pollution-reduction-target-aimed-at-creating-good-paying-union-jobs-and-securing-u-s-leadership-on-clean-energy-technologies/

White House. (2021c). Fact sheet: The American jobs plan. White House Briefing Room. Retrieved from: https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/31/fact-sheet-the-american-jobs-plan/

Wiering, M., Liefferink, D., & Crabbé, A. (2017). Stability and change in flood risk governance: On path dependencies and change agents. Journal of Flood Risk Management, 11, 230-238.


Appendix

Table 1. (Bills briefly reviewed from congress.gov)

Name

Year

Senate

House

Status

Flood Protection Modernization Fairness Act

2020

n/a

H.R.8761

Introduced

Build for Future Disasters Act

2020

n/a

H.R.8616

Introduced

Disaster Learning and Life Saving Act

2020

S.4815

H.R.8569

Introduced

Flood Resiliency and Taxpayer Savings Act

2020

n/a

H.R.8462

Introduced

Continuing Appropriations and Other Extensions Act

2020

Several versions

H.R.8337

Became Law (10/1/20)

NFIP RISC Act

2020

n/a

H.R.8311

Introduced

FEMA Disaster Preparedness Improvement Act

2020

n/a

H.R.6071

Introduced

Repeatedly Flooded Communities Preparation Act

2020

n/a

H.R.5776

Introduced

Continuing Appropriations and Health Extenders Act

2019

Several versions

H.R.4378

Became Law (9/27/19)

Group Flood Insurance Policy Extension Act

2019

S.2266

n/a

Introduced

State Flood Mitigation Revolving Fund Act

2019

S.2192

H.R.1610

Introduced

National Flood Insurance Program Reauthorization and Reform Act

2019

S.2187

H.R.3872

Introduced

Small Business Surcharge Relief Act

2019

S.2172

n/a

Introduced

Flood Insurance Continuing Education and Training Act

2019

S.2171

n/a

Introduced

MEMA Act

2019

S.2170

n/a

Introduced

National Flood Insurance Program Consultant Accountability Act

2019

S.2122

n/a

Introduced

Repeatedly Flooded Communities Preparation Act

2019

S.2088

H.R.5776

Introduced

Flood Insurance Integrity Act

2019

n/a

H.R.3258

Introduced

National Flood Insurance Program Reauthorization Act

2019

n/a

H.R.3167

Introduced

Fair Flood Insurance Act

2019

n/a

H.R.3146

Introduced

National Flood Insurance Program Administrative Reform Act

2019

n/a

H.R.3111

Introduced

Further Continuing Appropriations and Further Health Extenders Act

2019

Several versions

H.R.3055

Became Law (11/21/19)

National Flood Insurance Program Extension Act

2019

S.1693

n/a

Became Law (5/31/19)

National Flood Insurance Program Extension Act

2019

S.1520

S.1533

H.R.2578

Introduced

FIRM IT Act

2019

n/a

H.R.2318

Introduced

Flood Insurance Rate Map Interagency Technology Act

2019

S.1144

n/a

Introduced

Additional Supplemental Appropriations for Disaster Relief Act

2019

Several versions

H.R.2157

Became Law (6/6/19)

Further Consolidated Appropriations Act

2019

Several versions

H.R.1865

Became Law (12/20/19)

COASTAL Implementation Act

2019

S.810

n/a

Introduced

To amend the National Flood Insurance Act of 1968 to allow for the consideration of private flood insurance for the purposes of applying continuous coverage requirements, and for other purposes.

2019

n/a

H.R.1666

Introduced

Scientific Flood Mapping Act

2019

n/a

H.R.1402

Introduced

Post-Disaster Assistance Online Accountability Act

2019

n/a

H.R.1307

Passed House

Flood Insurance for Farmers Act

2019

n/a

H.R.830

Introduced

Community Mapping Act

2019

n/a

H.R.472

Introduced

Taxpayer Exposure Mitigation Act

2019

n/a

H.R.471

Introduced

To repeal the mandatory flood insurance coverage requirement for commercial properties located in flood hazard areas, and for other purposes

2019

n/a

H.R.470

Introduced

To require the use of replacement cost value in determining the premium rates for flood insurance coverage under the National Flood Insurance Act, and for other purposes

2019

n/a

H.R.469

Introduced

FIRM IT Act

2019

n/a

H.R.342

Introduced