Just as war is big business, so are natural disasters. It is no secret that as climate change and development combine to create disasters increasing in frequency and intensity, the amount of funding needed to respond to and recover from those disasters continues to escalate; entire industries are built on disaster recovery. But for how long can we continue this trend?
According to a report released last month by Chicago-based Aon Benfield, the largest global disasters of 2012 were Hurricane Sandy and the Midwest Plains Drought. Global natural disasters in 2012 combined to cause economic losses of $200 billion, just above the ten year average of $187 billion. Hurricane Sandy was the single costliest event of 2012. It killed 254 and cost an estimated $65 billion, of which $28.2 billion was insured. The top 10 insured loss events in 2012 were six U.S. severe weather outbreaks, two tropical cyclones (Sandy and Isaac), the U.S. drought, and a nine-day stretch of quakes in Italy.
We find ourselves caught in a Catch-22 situation: As technology continues to make our world much smaller, the threat of rapidly spreading contagious diseases, terrorism and the increased frequency of catastrophic weather events becomes that much greater, along with the resultant federal funding to help those communities and states most heavily impacted by disasters.
As federal funding increases to help those communities, fiscal watchdogs begin to take note, and follow with suggestions of decreased funding, not only for disaster response and recovery, but for disaster planning and preparedness as well.
On Monday, Homeland Security Secretary Janet Napolitano cautioned that the “sequester,” –automatic spending cuts set to go into action on March 1 – will weaken the nation’s national security and preparedness efforts. She warned that disaster relief funding will take a hit of nearly $1 billion and that reductions in homeland security grant funding—funding many communities rely upon to fund local preparedness efforts—will lead to “potential layoffs of state and local emergency personnel across the country.”
“Threats from terrorism and the need to respond and recover from natural disasters do not diminish because of budget cuts,” she said. “Even in the current fiscal climate, we do not have the luxury of making significant reductions to our capabilities without significant impacts.”
The sequester has not been the only threat to funding disaster preparedness. In fiscal year 2010, FEMA was appointed $3.05 billion for preparedness grants designed to strengthen our nation’s emergency management efforts to prepare for, respond to and recover from natural and man-made disasters. Communities depend on Pre-Disaster Mitigation Grants (PDM), Hazard Mitigation Grant Program (HMGP) funding, and other grants designed to incentivize communities to put into place measures that will mitigate against the impact of disasters, saving property, money and lives. In fiscal year 2012, that appropriation was reduced to $1.35 billion, less than half the amount appropriated in 2010. When Rep. David Price, D-N.C., Chair of the House Appropriations Homeland Security Subcommittee, protested the reduction in preparedness funding, Appropriations Committee Chair Hal Rogers, R-Ky., said, “In today’s environment, we can’t be subsidizing local governments to the extent we have.”
In voting for the Mulvaney Amendment on January 4, Representative Jim Bridenstine, R-Okla., voted against funding the National Flood Insurance Program (NFIP). Citing the “urgency of our national debt crisis,” Bridenstine said he “could not vote for a massive spending increase that was not offset by cutting spending elsewhere.” The NFIP provides homeowners with their only opportunity to purchase flood insurance policies. Private insurance carriers do not offer flood insurance. Without the NFIP, people living in flood zones, and even outside designated flood zones will have no recourse (25% of all flood insurance claims come from homes outside the flood zone). Though the amendment did not pass, Bridenstine remains firm in his position. “Given our crisis, fiscal responsibility is real compassion."
Since, as Secretary Napolitano wisely pointed out, cutting the funding for emergency management will do nothing to prevent the disasters, perhaps a fiscally wiser policy might be to invest more in preparedness and mitigation, enabling citizens and communities to put into place practices that will decrease the impact of a disaster, saving lives, property and money.
A 2007 analysis by the Congressional Budget Office regarding the reduction in federal disaster assistance as a result of mitigation efforts found that nearly $500 million in mitigation projects funded from 2004 through mid-2007 through pre-disaster grants reduced future losses by $1.6 billion for an overall ratio of 3:1.
According to a study commissioned by the National Association of Mutual Insurance Companies (NAMIC), examining the impact of the Building Code Incentive Act and states which have adopted and enforced statewide building codes, “$11 billion could have been saved if states had begun adopting such codes in 1988. Since 1988, $125 billion in FEMA grant funds have been issued related to natural disasters.” It goes on to say, “If buildings exposed to these disasters had been built to model codes, losses could have been reduced by nearly 20 percent or $13 billion.”
Our federal lawmakers need to take another look at Project Impact, a now defunct program that worked well in the 90’s, and think about funding communities to develop public/private partnerships that will educate their communities about preparedness and institute mitigation measures that will save lives and money in the long run. This will do several things:
• Eventually decrease the amount spent on response and recovery
• Encourage community planning and building with disaster mitigation, preparedness and sustainability in mind
• Encourage communities to depend more on themselves and each other and less on the federal government
There’s a baby in definite need of a bath here. Let’s encourage our lawmakers to not throw out the baby with the bathwater in terms of cutting funding for disaster response and recovery, but to think about changing our approach to disaster funding by focusing on disasters before they occur.
A look at disaster costs over the years:
• 2001: The 9-11 terror attacks on the United States brought 2001’s global disaster losses to more than $115 billion. The September 11 attacks cost an estimated $90 billion, of which $19 billion was insured. More than 33,000 people died as the result of disasters in 2001, almost half of those in an earthquake in India. At over $115 billion, the economic losses were more than three times the annual average for the 1990s.
• 2004: The tsunami in Southeast Asia killed 230,000 and cost $17 billion.
• 2005: Hurricane Katrina cost $62.2 billion, the single costliest disaster ever until 2011.
• 2010: The earthquake in Haiti killed 226,431 and cost nearly $20 billion.
• 2011: The earthquake in Japan killed more than 15,000 and is projected to cost between $122 -235 billion over a five-year recovery period. The quake and its resultant tsunami wiped out entire villages and displaced more than 500,000 Japanese citizens. More than 130,000 buildings completely collapsed; more than 254,000 half collapsed and more than half a million buildings partially damaged. The tsunami caused level seven meltdowns at three nuclear reactors. The Bank of Japan offered $183 billion to the banking system to help normalize market conditions.
• 2012: Super Typhoon Bopha and Hurricane Sandy. Bopha left more than 1,900 dead after making landfall in the Phillipines; 14 tropical cyclones made landfall globally; two earthquakes struck Italy causing considerable damage; major flooding affected China and the United Kingdom, with other floods recorded in Asia, Europe and Oceania, for a combined insured loss of more than $1 billion. 2012 ended as the eighth warmest year in world history since global temperature records began in 1880. Sandy was the single costliest event of the year, causing an estimated $28.2 billion in insured losses and approximately $65 billion in economic losses across the United States, the Caribbean, the Bahamas and Canada.
From 1980-2011, North America accounted for $510 billion of insured losses, 69% of the global total.