Senate Banking, Housing and Urban Affairs Subcommittee on Economic Policy Hearing
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Mr. Chairman and members of the Subcommittee, thank you for the opportunity to present
Enactment of The Flood Insurance Reform and Modernization Act of 2011 will phase out subsidies that have undermined the financial stability of the program; will require the
Why Reform Is Needed Now
Waiting to implement reforms will continue a policy that results in increased risk, destruction of homes and infrastructure, and cost to people, property and the natural resources upon which we depend. The National Flood Insurance Program (NFIP) is currently over
Without significant reform, the NFIP will not be economically sustainable and American taxpayers will continue to be asked to bail out the program and subsidize public and private development in flood risk areas.
Extreme Weather Events Predicted to Increase
Results from scientific studies indicate that a changing climate has exacerbated and will continue to intensify extreme weather events including flooding and coastal storms. Over the last 50 years, Americans have seen a 20% increase in the heaviest downpours. In addition, newly published research demonstrates that proportion of category 4-5 hurricanes has doubled from 20% to 40% in only 35 years n1. Coastal storm surge and storm impacts will only intensify as sea levels continue to rise the predicted 0.6 and 2 feet globally in the next century. n2
A published study conducted by
Associated Costs Are Increasing
In the first decade of the new millennium, floods and flood damage associated with extreme rainfall events have increased, with damages rising from
Maximizing our Return on Investment by Integrating Built and Natural Infrastructure
Under the current National Flood Insurance Program (NFIP), a dangerous feedback loop is in play. Subsidized insurance rates facilitates development in coastal zones and in freshwater floodplains which not only puts people and property at risk, it simultaneously facilitates the destruction and degradation of ecosystems that provide a natural defense to people and properties. Left in place, coastal marshes and sand dunes and inland wetlands and floodplains serve important flood- and storm-control purposes.
The overall benefits of flood mitigation efforts implemented has been studied and found that for every dollar spent on flood mitigation
In addition to flood control benefits provided by protection and restoration of floodplains and coastal wetlands, these ecosystems provide many services that support and protect humans and nature such as filtering pollutants, erosion protection, habitat that supports fish and shellfish populations. These services provide real economic benefits that can be measured through reduced cost of water quality protection, increased revenue from fishing and increased value to personal property.
The traditional approach to flood protection in river-floodplain systems has been to rely on dams and levees to contain flood waters and in coastal areas has been to build sea walls, bulkheads and other "grey" infrastructure and to "nourish" beaches with additional sand to slow erosion and diminish the impact of storms. While built infrastructure plays an important role in helping to secure our communities, it requires substantial investments for both initial construction and ongoing maintenance. Moreover, an over-reliance on built infrastructure in
Simply investing to renew the nation's over-reliance on built flood control infrastructure poses a daunting challenge. There are more than more than 110,000 miles of levees across the country n9, the average of which is well over a half century and which the
Engineers estimates would require
Instead of relying solely on grey infrastructure, an alternative approach involves integrating the use of natural infrastructure (or so-called "green infrastructure") with built infrastructure. This specifically involves maintaining and restoring the connectivity of rivers along with sufficient area of floodplain and conserving and restoring coastal natural infrastructure such as wetlands, reefs, dunes and barrier beaches and islands.
An example of this approach is the
On the
Nature Conservancy Supports Legislative and Administrative Reforms
Enactment of The Flood Insurance Reform and Modernization Act of 2011 will accomplish several policy objectives. It will put the program on a path of financial sustainability, will improve communication of risk through more accurate, higher quality maps, and finally will streamline and strengthen mitigation programs to help decrease flood risks and better protect flood-exposed communities and homes and businesses. In addition to passage of the legislation, there are additional policy changes that support the legislative goals that are needed and could be achieved administratively that would support, amplify and run parallel to the legislative reform efforts.
Scientifically Accurate Mapping of Current and Future Risk
Providing scientifically sound data and information related to flood risk, land use, and natural resources is essential to communicating the actual flood risk to people and properties. Information on future changing climate conditions must also be incorporated to enable individuals, communities, and regional and state government entities to sufficiently plan to mitigate their flood risks. The Senate NFIP bill accomplishes this by requiring the incorporation of the most accurate science on current conditions and future conditions by assessing the best available climate science related to flood risks including the impact of sea level rise and other future conditions. The bill also requires outreach and education to property owners to ensure sharing of this new risk based information.
Charging Rates that Accurately Reflect Flood Risk
Only if rates reflect the true risk to people and property will people understand the true risk of living in or developing certain areas and act to discourage development in the most risky areas. Additionally, the current Program allows and subsidizes redevelopment in flood risk zones, not properly incentivizing retreat of structures and restoration of the important natural systems. It is the American people who are currently supporting the subsidization of this Program through our tax dollars, and this subsidization occurs regardless of the economic status of those benefiting from it. The National Flood Insurance Program will never be financially sound until actuarial sound rates are charged. Currently there are 1.2 million NFIP properties (20 percent) that are charged premiums well below the actuarial value of the insured liability. On average (including subsidized and unsubsidized policies) NFIP premium collections cover approximately 70 percent of the actuarial value of the insured liability. The
We recognize that increase rates for flood insurance will place an economic burden on people of lower economic means living in flood prone areas. The
Ensuring nature based solutions are properly incentivized and funded in all
The
As discussed above, preserving and restoring natural ecosystems like floodplains and coastal wetlands can provide cost-effective protection against some of the threats that result from current natural disasters which will be exacerbated by climate change. For example, coastal ecosystems like wetlands, mangroves, coral reefs, oyster reefs, and barrier beaches and intact freshwater floodplains all provide natural protection from storms and flooding in addition to their many other benefits such as habitat for fish populations, water quality improvement, economic development from recreation and tourism. Incentives to protect and restore floodplains in the
While the legislation begins to make more efficient the mitigation programs of the NFIP, more changes need to occur to enable, facilitate and encourage floodplain and coastal protection and restoration. Doing so will play a significant role in returning the National Flood Insurance Program to solvency, thereby making a relatively modest - yet important - contribution to federal debt reduction. Overall greater emphasis should be made to improve these programs which as cited before, return
These policy changes will better protect American communities from the threat to life and livelihood of future flooding, improve the quality of our drinking water, and help restore the health and productivity of the nation's rivers and estuaries.
Summary
Thank you for the opportunity to present
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n3 Shepard, C.,
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n5 Examples include a report on the effect climate change will have on
n6 Shepard, C., Crain, C., Beck, M.W. 2011. The protective role of coastal marshes: a systematic review and meta-analysis. PLoS ONE 6(11): e27374. http://bit.ly/vfAHvT
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n8 Freitag, B. S.,
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n10 ASCE. (2009). "Facts about water and environment, levees." 2009 infrastructure fact sheet, http://www.infrastructurereportcard.org/sites/default/files/RC2009_levees.pdf (
n11 Sommer T, Harrell B, Nobriga M et al. (2001)
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