House Financial Services Committee Issues Testimony From National Wildlife Federation

WASHINGTON, March 13 -- The House Financial Services Committee issued the following testimony by Collin O'Mara, president and CEO of the National Wildlife Federation, at a hearing entitled "Preparing for the Storm: Reauthorization of the National Flood Insurance Program":

"Chairwoman Waters, Ranking Member McHenry, and members of the Committee, thank you for inviting me to testify today. I am here on behalf of the National Wildlife Federation and the SmarterSafer Coalition. National Wildlife Federation is the nation's largest member-based conservation group representing six million members and affiliate conservation organizations in 51 states and territories. The National Wildlife Federation is an active member of the SmarterSafer coalition, a broad-based coalition that advocates fiscally sound, environmentally responsible approaches to natural catastrophe policy. The groups involved represent a broad set of interests including conservation groups, taxpayer advocates, insurance interests, and housing and mitigation experts. For over a decade the coalition has advocated reforms in the National Flood Insurance Program that ensure the program is smarter and safer for those in harm's way, the environment, and for federal taxpayers.

"Whether we are facing wildfire, earthquakes, hurricanes, or floods, it is clearer than ever before that our nation, states and communities must do more to prepare for known risk. Before I joined the National Wildlife Federation, I served as Secretary of the Delaware Department of Natural Resources and Environmental Control where I helped steward the state through the preparation and long recovery following the devastation of historic storms, Hurricanes Irene and Sandy. At the time of Hurricane Sandy, we had more than 25,000 properties participating in the National Flood Insurance Program and we had invested heavily in coastal protection (dune restoration) and wetland restoration. The places where our state had invested proactively in natural defenses, where property owners had invested in mitigation measures, and where communities had adopted thoughtful resilience and land use policies fared demonstrably much better than those communities that did not.1 It was a real life example of an ounce of prevention being worth a pound of cure.

"The costs of weather-related disasters are on an upward trend, exacerbated by our warming climate, exceeding $450 billion between 2016 and 2018 alone, for an average of $150 billion per year.2 Too frequently, we are responding to disasters after they occur, giving little thought and attention to proactively reducing risk and increasing the resilience of our nation's vulnerable communities. Responding after a disaster is necessary; however, without proper planning, resilience measures, and insurance, disasters are much more destructive, and rebuilding is more difficult.

"As I hope to convey in this testimony, a status quo approach to our disaster planning, preparation and response at a time of cascading hurricanes, typhoons, and inland flood impacts does not work. Given this reality, continuing on this same trajectory - including through additional extensions of the National Flood Insurance Program without meaningful reforms - will further jeopardize our natural environment and endanger human communities. As a nation we must confront and address the growing economic, environmental, societal, and cultural costs of disasters in a way that is just, equitable, and accounts for vulnerable populations. We encourage Congress to consider this goal in all its deliberations, including efforts to improve America's infrastructure, and certainly in this Committee's critical work to reauthorize and reform the National Flood Insurance Program.

"Of the 241 disaster events costing a billion dollars or more between 2000 and 2018, hurricanes and typhoons have caused the most damage, responsible for 55% of all losses, with flooding events responsible for another 7.4% of total losses.3 And these numbers can only be expected to grow. Projections under NOAA's high sea level rise risk scenario estimate that by the end of the century, homes and commercial properties currently worth more than $1 trillion could be at risk of chronic flood inundation.4

"Unfortunately, the current National Flood Insurance Program (NFIP)-which has borrowed over $40 billion from US taxpayers-- does not do enough to protect against these losses. The NFIP was originally intended to reduce the amount of floodplain development and encourage communities to take steps to progressively reduce flood risk. A half century later, the NFIP has--unintentionally--facilitated exactly the opposite result. Both the negative ecological impacts and the actual debt of the NFIP have risen to a level that is unsustainable at best, irreversible at worst.

Protecting Floodplains

"For the National Wildlife Federation, our interest in this area is driven by our longtime engagement in protecting and restoring the nation's floodplains, including natural coastlines, wetlands, and forests for wildlife habitat. These natural features are themselves critical natural infrastructure, and their protection and restoration produces extensive co-benefits for wildlife and human communities, including increased resilience in the face of storms, flooding, and wildfires.

"Naturally functioning floodplains:

* Provide vital habitat for countless wildlife species. Healthy rivers, floodplains, and wetlands provide essential grounds for breeding, foraging, and other parts of the life cycles of innumerable species, and are crucial to the survival and recovery of many threatened and endangered species. Wetlands are some of the most biologically productive natural ecosystems in the world, and America's wetlands support millions of migratory birds and waterfowl. Although wetlands account for just about five percent of land area in the lower 48 states, those wetlands are the only habitat for more than one third of the nation's threatened and endangered species and support an additional 20 percent of the nation's threatened and endangered at some time in their life. These same wetlands are home to 31 percent of the nation's plant species.5

* Provide an array of resilience and public health benefits. Natural infrastructure, both alone and in conjunction with structural projects, provides important protection from storms and floods. Wetlands act as natural sponges, storing and slowly releasing floodwaters after peak flood flows have passed, and coastal wetlands buffer the onslaught of hurricanes and tropical storms. A single acre of wetland can store one million gallons of floodwaters.6 Just a one percent loss of a watershed's wetlands can increase total flood volume by almost seven percent.7 Restoring a river's natural flow and meandering channel, and giving at least some floodplain back to the river, slows down floodwaters and gives the river room to spread out without harming homes and businesses. Healthy floodplains also improve water quality and supply by fostering vegetation to limit non-point water pollution from storm water runoff, and allowing water to recharge in underground drinking water aquifers.

* Provide recreational value and buoy the outdoor economy. Protecting floodplains is also a way to protect the areas where members of the National Wildlife Federation, hunt, fish, and enjoy wildlife. Hundreds of species of birds, waterfowl, and wildlife and 90 percent of fish caught by America's recreational anglers are wetland dependent. Often overlooked, the outdoor recreation sector supports more jobs than many American industries. According to the Outdoor Industry Association the outdoor recreation industry generates 7.6 million direct American jobs and $887 billion in consumer spending annually.8

"However, alterations to floodplains create multiple threats to wildlife and human communities through a range of impacts, including: changing the flow and hydrology of rivers; eliminating wetlands and side channels, destroying nesting and rearing areas and other important habitat; removing protective natural buffers; and causing siltation, nutrient, and other water quality problems. Unfortunately, decades of federal policies, with the National Flood Insurance Program as a key culprit, have led to increased development in floodplains that are no longer able to support the wildlife, ecological, and public safety benefits they once did.

Necessary Reforms to the NFIP

"We are pleased to see the Committee prioritizing the reauthorization and meaningful reform of the NFIP. Continuing the status quo in the flood program is not only a risky proposition for communities who rely on the indebted program to pay their claims, but it is poor practice from a longer-term planning perspective. NFIP has long masked risk by subsidizing rates, and FEMA flood maps do not provide the most up to date information about flood risks. This means that property owners and communities, including vulnerable communities where accessibility issues may be an added concern, are not provided the information they need to make needed decisions about risk and risk prevention, including mitigation opportunities to reduce risk. This has ecological ramifications, as the program promotes further development in ecologically sensitive floodplain areas. These considerations are particularly timely in light of renewed discussions of a comprehensive infrastructure package, as future infrastructure investments must be informed by and adapted to an accurate depiction of natural hazard risk, and should ensure deployment of natural infrastructure protections where appropriate.

"Congress must act not only to shore up the program's finances while addressing affordability concerns, but also to ensure more accurate mapping, to provide consumers with updated information on risks and choices in insurance coverage, and to encourage mitigation--including community-wide mitigation that uses natural infrastructure - to reduce risk and reduce rates.

"SmarterSafer has detailed recommendations for comprehensive reform to NFIP which I have submitted for the record and attached to this testimony, and below I highlight several priority areas:

* increasing pre-flood mitigation to reduce risk and rates;

* improving the accuracy of FEMA's flood maps;

* ensuring continued movement toward risk-based rates, with targeted support for reducing risk;

* closing the protection gap including through private sector participation;

* and increasing overall transparency.

Increase investment in pre-flood mitigation, and incentivize natural infrastructure approaches

"By far, one of the best ways to reduce flood insurance rates and to mitigate against future disasters is to reduce risk. While National Wildlife Federation and SmarterSafer support efforts to keep flood insurance premiums affordable, the best way to keep rates low and to protect people and property is through proactive mitigation actions that would avoid and minimize damages on the ground.

"Substantial new investments in mitigation, including through protecting, restoring, or enhancing natural infrastructure such as wetlands and dunes, can greatly reduce flood risks and save taxpayers from ballooning disaster payments. Proactive, preventative mitigation is the most cost effective investment the NFIP can make. According to a 2018 report from the National Institute of Building Sciences, for every dollar spent on hazard mitigation, the nation saves six dollars in post-disaster response.9

"However, not all mitigation is created equal. Community-wide, natural, and nature-based mitigation should be used and encouraged wherever possible. These are practices that protect, restore, or in some cases, even create natural features or processes that reduce erosion and flood impacts in coastal or riverine floodplains by dissipating floodwaters or wave energy, capturing sediment and debris, and building land elevation. Furthermore, with increased investments in mitigation - including nature-based mitigation - comes potential job opportunities, which should be steered toward vulnerable communities wherever possible. For example, the coastal restoration economy creates 30 jobs for each million dollars invested. 10

"Natural and nature-based mitigation practices may include but are not limited to:

* Planting or conserving native vegetation that increases floodwater infiltration, traps debris, slows erosion, and contributes to land building and elevation gain;

* Restoring, protecting, or constructing wetlands to attenuate floodwaters both along coastlines and in the upper reaches of a watershed, thereby delaying and reducing downstream flood peaks;

* Removal or modification of structures such as dams, levees (including setbacks), and culverts to restore natural hydrology and floodplain function to allow floodwaters to spread out across the landscape and slow down, thereby reducing downstream flood impacts;

* Managing sediment budgets to help build and maintain coastal ecosystems, helping them to keep pace with sea level rise;

* Implementing "living shorelines" that use site-appropriate, native biological materials to stabilize shorelines as an alternative to hard armoring;

* Open space protection and restoration (including via buyouts and easements) of floodplains and barrier islands that buffer communities from the full force of coastal storms.

"Floodplain forests, wetlands, wide beaches, vegetated dunes, tidal marshes, coastal forests, shrublands, mangroves, and oyster reefs all have a role to play as a form of natural infrastructure that can be even more resilient than hard armoring, like bulkheads, create less erosion, and can be cheaper to maintain over the long-term.11 These natural features serve not only as vital fish and wildlife habitat and help to boost the lucrative outdoor economy, but also to keep communities safe by dissipating floodwaters and wave energy, while helping to maintain and, in places, gain land elevation.

"Taking this into account, the National Wildlife Federation and SmarterSafer urge the Committee to consider any and all ways to drive immediate investment in mitigation, incentivizing natural infrastructure where possible and appropriate. Congress can do that by requiring FEMA to work with lenders and the Federal Housing Administration to facilitate mitigation loans, to provide more flexibility in Increased Cost of Compliance (ICC) mitigation funds so they can be used pre-disaster, and to require communities to plan for known flood risks and assess community-wide nature-based mitigation efforts that are cost-effective and will reduce future flooding. In particular, SmarterSafer recommends that FEMA identify 'Flood Hotspots'--communities with significant numbers of severe repetitive loss properties and areas with a significant number of properties at high flood risk. To further prioritize communities for initial investment, FEMA should also apply an environmental justice screen and overlay a map of vulnerable communities, such as EPA's Environmental Justice Screening and Mapping tool.12 FEMA should then work with hotspot communities to develop plans to reduce flood risk, with a priority for nature-based, non-structural mitigation.

"We are supportive of supplying communities with a diversity of tools to fund mitigation efforts, including the revolving loan fund for flood mitigation in Chairwoman Waters' proposal, and appreciate the priority given to severe repetitive loss properties and low-income homeowners, as well as the inclusion of environmental restoration activities as an eligible use of that fund. But loans alone are not enough to upgrade America's resilience to flooding. We also applaud the additional authorization of pre-disaster mitigation funds, as well as the proposed increase to Cost of Compliance (ICC) coverage up to $60,000, and the expansion of eligible mitigation activities to include pre-disaster mitigation. We are pleased to see a pilot for community-wide flood insurance policies, which would hopefully lead to greater investment in community-wide mitigation; however, we are concerned about provisions to require community-wide pilot policies to have a cap on premiums. This perpetuates the existing problems in the flood program where risk is masked and the program is unsustainable. As discussed in greater detailed in a following section, we must ensure that low-income policy holders have assistance in affording their premiums, but we should not create new subsidies in the program unless they are means tested and outside of the rate structure. We look forward to sharing additional perspectives with the Committee once we have an opportunity to more fully analyze the draft proposals.

"We also encourage the Committee to look at other investments and programs to help mitigate risk, both within and beyond FEMA. We need robust investment in FEMA's Hazard Mitigation Grant Program and Flood Mitigation Assistance Grant Program, as well as the Department of Housing and Urban Development's Community Development Block Grant Disaster Recovery Program. Competitive grant programs within NOAA and other agencies are also important for their ability to spur and cultivate innovative resilience-building approaches.

"Additionally, per provisions in the 2018 Disaster Recovery Reform Act, FEMA now has the authority (at the discretion of the President) to set aside up to an amount equivalent to 6 percent of the estimated aggregate total of other FEMA disaster grants for pre-disaster mitigation assistance. Congress should ensure that this provision is implemented swiftly and effectively, and guarantee through regular appropriations that FEMA's current Pre-Disaster Mitigation Fund is well funded until the newly authorized National Public Infrastructure Predisaster Mitigation Assistance comes online. Any infrastructure package considered by the House should also include a significant investment in pre-disaster mitigation and resiliency, especially natural defenses.

Ensure accurate mapping

"Flood maps are a critical component of the National Flood Insurance Program. These maps define the Special Flood Hazard Areas--the '100 year flood plain'--within which the purchase of flood insurance is required to obtain a federally backed mortgage. Because of this, it is essential that these maps accurately reflect risk. However, most of the flood maps FEMA uses to estimate exposure to flood risk are badly outdated and alarmingly inaccurate, resulting in an overwhelming number of at-risk properties lacking federal flood insurance.

"FEMA must be required to update its maps, using the best technology, such as LIDAR, and science on known conditions and risks to get property level elevation data, ideally combined with the latest climate modeling, including precipitation, sea level rise, and flood projections. This more accurate and finer-resolution data must then be used to map and set rates. The agency should also be required to either conduct surveys or purchase property level (or close to) risk assessments. This would not only ensure proper risk analyses and rates, but it would take the onus off homeowners who now have to go through a burdensome and expensive process if they believe they are mapped incorrectly. This is something that is possible--the state of North Carolina has undertaken a mapping effort where they have not only gotten property level data at a reasonable cost, but they have a digital system to allow property owners to search and understand their risk, potential flood premiums and mitigation options. In addition, Congress should consider mapping beyond the Special Flood Hazard Area (SFHA); floods and risk do not stop at a line drawn on a map, and many properties and communities outside of these areas are at risk of flooding. In fact, almost a quarter of all flood claims occur outside of high-risk SFHAs.13

"We are very supportive of the discussion draft proposals to reauthorize the flood mapping program and provide funding to support flood mapping, as well as the requirement for FEMA to use the most up-to-date technologies. However, we would like to work with the Committee to better understand provisions that contemplate mass removal of properties from Special Flood Hazard Areas (SFHA). At a time when it is clear that more and more areas even outside of the SFHA are at significant risk, and after recent storms have shown that too many people at risk do not have flood insurance, we should not be contemplating the removal of properties en masse from flood plains. We look forward to sharing additional perspectives with the Committee once we have an opportunity to more fully analyze the draft proposals.

Continued movement toward risk-based rates, with support for reducing risk

"For too long, the federal government has masked true risk through subsidized rates, resulting in a program deeply in debt to taxpayers and contributing to or enabling coastal and riverine development, which has in turn contributed to the loss of functioning floodplains and natural features that reduce flood damages. FEMA found in a report mandated by Biggert-Waters, that subsidized rates "can promote (and have promoted) poor decisions on the part of property owners and political representatives ... they also create a moral hazard, especially when the subsidies are not well targeted."14 The report also finds that the presence of subsidies "removes the incentive to undertake mitigation efforts, thereby encouraging ever increasing societal costs." We also note that the Government Accountability Office (GAO) found that over 78 percent of subsidized properties in NFIP are located in counties with the highest home values (the top three deciles), while only five percent of subsidized properties are in counties with the lowest home values (the bottom five deciles).15 This shows the inequities in the program and the need for a more targeted approach.

"We are not recommending a move to immediate actuarial rates; however, the current system is not transparent and incentivizes further development in vulnerable and ecologically sensitive floodplains and coastal areas. We recommend that all properties should either begin or continue to move towards risk-based rates, especially second residences, with annual increases capped to some percentage of current premiums to make the increases predictable. We also recommend that NFIP communication to policyholders-- particularly premium statements--contain what the property's risk-based rate is, as well as the current rate the policyholder is paying, to ensure property owners understand their risks.

"At the same time, we appreciate the Committee's attention to the significant equity issues related to affordability and the need to provide targeted assistance for low-income homeowners, vulnerable, frontline communities, and subsistence communities. We urge the committee to focus their affordability efforts on these at-risk communities, especially individuals who face higher flood threats due to land use decisions made by the federal and state governments and for whom full risk-based rates in a short time horizon would be unaffordable. This includes at-risk historic communities around the nation such as those in Delaware, Florida, and in coastal Louisiana, where the National Wildlife Federation has worked to restore coastal wetlands for over a decade. For many such coastal communities, the impacts of climate change became known after they settled and invested, making once low risk properties into high risk properties.

"We also urge the Committee to consider that the best way to help vulnerable communities with affordability concerns is to invest in upfront mitigation assistance wherever possible and cost-effective, and focus premium support where needed for those who truly cannot afford their insurance rates.

"In addition, FEMA should work with private lenders as well as the Federal Housing Administration to develop or modify existing loan products that homeowners could use to mitigate risk, helping to reduce their flood insurance rates while protecting themselves and their property.

"We were pleased to see the attention to affordability in the draft proposals, and look forward to working with the committee on those provisions once we have an opportunity to more fully analyze the proposal. However, as a coalition we are opposed to proposals to increase coverage limits, as this increases tax-payer risk.

Closing the Protection Gap

"FEMA has expressed a desire to double the number of people who have flood coverage - through both NFIP and the private sector. This is an important goal as we know that without insurance it is incredibly difficult to rebuild and recover after a flood. Historically, properties with insurance before hurricanes are 37 percent more likely to have been rebuilt than uninsured properties.16 While the federal government has a critical role and responsibility to help people rebuild following disasters, the amount of federal disaster assistance is available is frequently nowhere near the levels needed to rebuild.17 This was clear in recent floods-- after the 2015 South Carolina floods, the average assistance payment was about $3,200, and the average NFIP claim was $35,102. After the 2016 Louisiana floods, the average NFIP claim was $91,260, and the average disaster payment was about $9,349.

"People in harm's way need to understand their risks and purchase insurance. However, consumers should not only be able to access flood insurance through the National Flood Insurance Program, but should also have choice amongst private sector policies. Greater choice and competition will ensure over time that more people at risk get the flood coverage they need. As private insurers write flood coverage and become more comfortable and more familiar with the products, they will offer it more widely, helping to close the protection gap. SmarterSafer believes a functioning, financially stable NFIP is critical, and that we need NFIP along with a private market.

"Not only will additional insurance options help close the protection gap, but it will help on an issue of critical importance to those in harm's way and to this Committee--affordability. A recent study found that in the three states with over half of all flood insurance policies, even in the highest risk areas - V zones - between 62 and 88 percent of all homeowners could potentially access more affordable flood options in the private sector.18 If Congress wants to address affordability, consumer options are critical. In many cases, private insurance companies are also better equipped to credit site specific mitigation that property owners may take to reduce their own flood risk.

"Congress should clarify current law to make sure that homeowner can choose private flood policies if they find better rates and/or coverage in the private sector. Homeowners in harm's way should not be forced to purchase a federal NFIP policy if they can find a more affordable private policy merely because of a lack of clarity. The banking regulators recently released a final rule on this issue, and we are hopeful that this will remove most of the barriers to acceptance of private insurance. However, we likely still need a legislative clarification to ensure broad acceptance.

"It is also important that the increased involvement of the private sector works in concert with the NFIP's broader program goals and responsibilities. Currently, mapping and floodplain management are partially funded through a fee on all NFIP policies. If policies move from NFIP to the private sector, it is critical that mapping and floodplain management funds must not be reduced--these funds benefit everyone in communities, not just those who purchase flood insurance.

Increased transparency

"FEMA has a vast amount of information on flood damages, NFIP claims and policies, properties that have been repeatedly damaged, compliance of communities with NFIP provisions, and communities' actions under the Community Rating System. Unfortunately, relatively little of this data is available to the public. Homeowners and communities can only make decisions to reduce the potential for flood damages if they have access to information about flood risks. FEMA should be required to make more data available to the public on flood losses, repeatedly flooded homes, and community compliance with the NFIP. We encourage FEMA to give consideration to potential accessibility challenges for communities, including any potential language barriers. Homeowners and buyers should also have a right to know more about a home's history of flood damages to help guide their decisions about mitigation.

"We applaud the Committee for releasing discussion drafts that take strides toward improving the National Flood Insurance Program. We are pleased to see updates to mapping as well as plans to address affordability and mitigation, and we hope to work with the Committee to strengthen and pass meaningful NFIP reauthorization. Thank you again for the opportunity to testify today."

* * *

Footnotes:

1 Value of Coastal Wetlands for Flood Damage Reduction in Northeastern USA. Scientific Reportsvolume 7, Article number: 9463 (2017)

2 NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and Climate Disasters (2019). https://www.ncdc.noaa.gov/billions/time-series

3 NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and Climate Disasters (2019). https://www.ncdc.noaa.gov/billions/summary-stats

4 Union of Concerned Scientists. Underwater: Rising Seas, Chronic Floods, and the Implications for US Coastal Real Estate (2018). https://www.ucsusa.org/global-warming/global-warming-impacts/sea-level-rise-chronic-floods-and-us-coastal-real-estate-implications

5 Environmental Protection Agency, Economic Benefits of Wetlands, EPA843-F-06-004 (May, 2006) (factsheet).

6 Environmental Protection Agency, "Wetlands: Protecting Life and Property from Flooding." EPA 843-F-06-001. (2006) (factsheet) ("EPA Wetlands and Flooding Fact Sheet").

7 Demissie, M. and Abdul Khan. 1993. "Influence of Wetlands on Streamflow in Illinois." Illinois State Water Survey, Contract Report 561, Champaign, IL, Table 7, pp. 44-45.

8 OIA 2017. The Outdoor Recreation Economy. https://outdoorindustry.org/wp-content/uploads/2017/04/OIA_RecEconomy_FINAL_Single.pdf

9 National Institute of Building Sciences 2018. New Report on the Value of Mitigation. https://www.nibs.org/news/381874/National-Institute-of-Building-Sciences-Issues-New-Report-on-the-Value-of-Mitigation.htm

10 Natural Infrastructure Report. Audubon. 2018. https://www.audubon.org/sites/default/files/audubon_infrastructure_jan192018.pdf

11 Sutton-Grier AE, Gittman RK, et al. Investing in Natural and Nature-Based Infrastructure: Building Better Along Our Coasts. Sustainability. 2018; 10(2):523.

12 https://www.epa.gov/ejscreen

13 https://www.fema.gov/media-library-data/20130726-1803-25045-8083/st_broomein.pdf

14 Oliver Wyman. Flood Insurance Risk Study: "Options for Privatizing the NFIP. P60 Available at: http://www.floods.org/ace-files/documentlibrary/2012_NFIP_Reform/Reinsuring_NFIP_Insurance_Risk_and_Options_for_Privatizing_the_NFIP_Report.pdf

15 U.S. Government Accountability Office. July 2013. Flood Insurance: More Information Needed on Subsidized Properties. (Publication No. GAO-13-607). http://www.gao.gov/assets/660/655734.pdf

16 US HUD Office of Policy Development and Research. Housing Recovery on the Gulf Coast. 2011. https://www.huduser.gov/publications/pdf/gulfcoast_phase2.pdf

17Congressional Research Service. Closing the Flood Insurance Gap. 2019. https://fas.org/sgp/crs/homesec/IN10890.pdf

18 Milliman. Could private flood insurance be more affordable than the NFIP? 2017. http://www.milliman.com/insight/2017/Could-private-flood-insurance-be-cheaper-than-the-NFIP/

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