Should FEMA act as a national zoning board or use market incentives to reduce disaster risk?


Last week, a nominee to lead the Federal Emergency Management Agency generated fireworks when, during his confirmation hearing, he said he does not know the cause of climate change. The comment reignites the debate over how FEMA, which provides subsidized flood insurance and disaster relief, should respond to the risk climate change poses for both functions. Fortunately, given FEMA’s role, the cause of this increased risk shouldn’t matter. If FEMA recognizes the risk, the only question is figuring out whether and how to respond to it.

Climate change, to the extent it increases the risk of sea level rise and destructive natural disasters, substantially affects FEMA programs. It increases the National Flood Insurance program’s liabilities, if the risks are not appropriately priced (as they’re usually not). And it may increase the frequency and costs of FEMA disaster responses. But that climate change may pose risks that FEMA should account for…

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