Privatizing Disaster Relief.

• Author: Brannon, Ike
• Position: BRIEFLY NOTED

Natural disasters have become more frequent in the United States over the last 15 years. They have also become more costly: from 2014 to 2018, the United States averaged 13 natural disasters per year that did more than $1 billion in damage.

This is happening for several reasons. For starters, the United States adds to its wealth each year, especially when it comes to housing, and that means more wealth is vulnerable to loss in a disaster. Last year the nation added nearly 1.5 million units to its housing stock and home prices nationwide climbed an average of 8.5%. Hence, any random hurricane, flood, tornado, wildfire, or mudslide can damage more--and more valuable--property.

Another reason is that people are locating to disaster-prone areas. Florida (subject to floods and hurricanes), Texas (which recently suffered through a record cold snap that may have done over $100 billion in damage to the state's economy), and California (subject to floods, wildfires, earthquakes, and mudslides) have seen plenty of disasters in the last decade. These are the three most populous states in the country.

Moreover, some 127 million Americans--40% percent of the national population--live in coastal counties. If they comprised a nation unto itself, these coastal counties would rank third in the world in gross domestic product, behind only China and the United States as a whole, according to the National Ocean Service. In fact, population density is over five times greater in coastal shoreline counties than the U.S. average. Coastal communities face such natural disaster risks as high-tide flooding, hurricanes, sea-level rise, erosion, and climate change.

The federal government has not done much to preemptively mitigate such disasters or encourage residents of such places to take mitigation steps on their own. The National Flood Insurance Program, which effectively subsidizes the risk of living by flood-prone bodies of water--especially for high-income people--has exacerbated the costs of coastal disasters for residents and the government. (See "The Flood Insurance Fix," Winter 2011; "The Unintended Effects of Government-Subsidized Weather Insurance," Fall 2015.)

Government failure / Federal disaster management authorities have a well-documented track record of inefficiency and mismanagement. A 2019 report by the Government Accountability Office (GAO) found that the federal government struggles in its efforts to help communities recover from disasters. Among...