The hurricane season of 2017 has reminded us again about the flaws in our federal flood insurance program. What was a law that was originally written to discourage development in flood prone areas has instead encouraged development in these areas by protecting property owners’ otherwise risky investments. A simple well-meaning policy decision has impacted thousands of lives and caused billions of dollars in damage in places like Houston, where floodplains and other low lying areas that should never have been developed now have thousands of homes and businesses on them.
It’s time to modernize this program. We know the flood insurance program operates on a deficit, we know it’ll never be a profitable or beneficial system, and to continue it in its current form is a waste of taxpayer money. It is a program that encourages people to build and live in unnecessarily risky areas. The post-storm destruction causes environmental harm. Why then, should the flood insurance program continue unmodified?
Is it too late to change the program?
I don’t think it’s reasonable to stop insuring existing homes. People made an investment based on the current policies and to change them after the fact would put people at risk of financial ruin. They would never have chosen to build in those areas if the flood insurance program did not exist.
What we could do is modify the program to protect property owners, to provide future environmental protection, and to protect taxpayers from continual reimbursement of property owners who shouldn’t rebuild in flood-prone areas.
How do we do this?
We can change the flood insurance program so that if a claim is filed, the owner will get reimbursed, but then the property rights would be transferred to the government for conservation. The site can be restored to a natural habitat, and turned over to state or local government for management. This restored habitat will create a buffer for future storms. It’ll help improve water quality, and it will provide public access to areas that were previously private.
There won’t be a clean solution to this problem that will make everyone happy, but its a problem that needs to be addressed. Inland landowners (most of the country’s population) shouldn’t be held forever responsible for rebuilding coastal landowner’s houses. My idea is a relatively minor adjustment to the policy, but I think it is one that can solve a lot of problems with the unsustainable flood insurance program. With more development in areas like Houston and the Gulf Coast, we as a nation will be more vulnerable to disastrous storms, with or without the effects of climate change.