The National Flood Insurance Program (NFIP) was created by Congress in 1968 to provide insurance and prevention against flood risk and to shift some rebuilding costs off the federal budget. The program, administered by the Federal Emergency Management Agency (FEMA), includes a flood mitigation grants component available to communities and a financial insurance component available to individuals and businesses. The program has been criticized for its environment and economic impacts.
This presentation will provide a interdisciplinary retrospective benefit-cost analysis of the NFIP from the period 1996 through 2009, covering data available from FEMA for the program. The paper evaluates the impacts of both the flood mitigation program and the financial insurance component to estimate the net benefit to society during the time frame. The impacts include direct financial transfers, shifts in the consumer surplus, increased cost of building maintenance in flood hazard areas, and environmental changes.
The results of this research inform interdisciplinary and policy questions about the NFIP including whether the program should be restructured, whether Congress should enact additional natural disaster insurance programs, or how the benefits and costs of the NFIP extend into the future. The results also provide the baseline for determining how the benefits and costs of the program are allocated among social classes.
This talk will cover one of the three research questions in my dissertation proposal.