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The National Flood Insurance Program.

If the National Hurricane Center is right, the next 25 years could be the most deadly--and expensive--quarter century this country has ever seen. Scientists on the staff of the center, which is part of the National Oceanic and Atmospheric Administration (NOAA), predicted last April that the country was beginning a new storm cycle of "super hurricanes," noting that the new cycle comes on the heels of a relatively quiet storm period in the 1970s and 1980s. Those decades brought an explosion of coastal development that degraded coastal resources and placed millions of people, their structures, and taxpayer dollars at risk.

So far, the center's 25-year forecast has been eerily accurate:

* Last August, Hurricane Andrew slammed into Florida and Louisiana, causing dozens of deaths, massive fish kills, and other environmental damages, and claimed the title of the most expensive natural disaster ever to occur in the US--far outstripping the 1906 San Francisco earthquake and other acts of nature.

* In September 1992, Hurricane Iniki hit Hawaii, ravaged portions of the islands, causing millions of dollars worth of damage.

* In December 1992, a nor' easter, the area's worst storm in 20 years, pulverized the Atlantic coast from New Jersey to Massachusetts, causing major flooding and erosion, toppling shorefront houses, and breaking through portions of the barrier islands that form the Fire Island and Cape Cod National Seashores.

* In March, the Blizzard of 1993 pounded the eastern seaboard from Florida to Canada, leaving massive destruction and over 100 dead.

As storm waters receded from coastal towns and cities, a new flood poured into the affected areas: Millions of tax dollars were released through more than 50 federal programs that provide taxpayer dollars for coastal development and redevelopment. In fact, unless Congress acts to protect the federal treasury, the storms predicted by the National Hurricane Center will wreak havoc not only on shorefront property owners, but on federal taxpayers across the US.

The Grandaddy Coastal Development Subsidy: The National Flood Insurance Program

In 1968, Congress acted to end the cycle of development and redevelopment in flood-prone areas by creating the National Flood Insurance Program (NFIP). The idea was simple: Flood-prone communities could buy flood insurance that was otherwise unobtainable if, in exchange, they planned new development away from the hazardous water's edge. In this way, money would be generated through insurance sales to offset federal disaster relief payments for flood-prone buildings already in place, and, in the long run, new construction would be sited a safe distance from the water so that disaster relief would become less and less necessary. This would benefit the federal treasury, help save lives, and protect coastal resources from the pollution and habitat loss caused by shorefront construction.

But it hasn't worked out that way. The National Flood Insurance Program is now one of the nation's largest domestic liabilities, right behind the Social Security system. It has roughly $210 billion worth of insurance in force, composed of about 2.5 million individual flood insurance policies. And instead of discouraging coastal development, more than three-quarters of the policies insure development along the marine and Great Lakes coasts. In fact, the Department of Interior concluded that federal development subsidies, like the National Flood Insurance Program, are one of two major factors that help make possible the explosion of development along the nation's shores.

Unfortunately, the boom of subsidized development may spell the bust of the federal taxpayer. Five years ago, the Federal Emergency Management Agency (FEMA), which directs the National Flood Insurance Program, calculated the probable program cost for a bad storm year. It's conclusion was sobering: Anywhere from $3.5 to $4 billion in federal flood insurance claims could be expected from just one catastrophic year of storms, hurricanes, and nor'easters. But a quick look at what's in the NFIP fund to pay the claims is even more sobering: The fund currently holds less than $400 million, roughly one-tenth of the probable price tag. What stands between a flood of insurance claims and the balance in the bank are the federal taxpayers.

Taxpayers have already bailed out the National Flood Insurance Program once. According to a report by the US General Accounting Office (GAO), the program operated from 1978 to 1987 at a $652 million deficit, which was made up by federal taxpayers. But what GAO didn't calculate was the cost to coastal resources that unwise shoreline development, underwritten by federal flood insurance, causes.

Polluted Waters and Destroyed Habitats

Experts estimate that 70 to 80 percent of coastal pollution is attributable to land-based sources. The explosion of coastal development over the past 25 years was paydirt to realtors and developers, but brought disaster to wildlife and fisheries that depend on clean, healthy coastal resources:

* Roughly 40 percent of the nation's shellfish beds are closed because of sewage discharges and nonpoint runoff from coastal towns and cities.

* Every year, 20,000 acres of coastal wetlands are lost, mostly to development. The Fish and Wildlife Service estimates that 75 percent of the nation's commercial fish species depend on coastal wetlands for survival. Every lost wetland acre is further shrinkage of fish habitat, and the recreational and commercial fishing industries supported by that habitat.

* Dozens of endangered species, including birds, sea turtles, and marine mammals, depend on clean coastal waters and abundant habitat for their survival. Yet development annually gobbles up thousands of acres of the barrier islands, beaches, and coastal wetlands these animals call home.

Coastal development threatens to swallow up the very resources that draw us to the shore. Unless action is quickly taken, it may also overwhelm an equally scarce resource: federal tax dollars.

Reform of the National Flood Insurance Program

When Congress tried to overhaul the dangerously imbalanced Flood Insurance Program last year, it ran into a force as powerful as any hurricane: the National Association of Realtors and the National Association of Homebuilders, working in conjunction with a handful of well-placed coastal homeowners.

After four years of research, hearings, and investigations, in May 1991 the House of Representatives passed (by a vote of 388 to 18) a bill to reform the program. More than 100 conservation groups around the country supported the legislation, as did coastal state officials. The Office of Management and Budget declared that it would save $11 million in just four years.

A similar bill was introduced in the Senate by John Kerry (D-MA) in August. Several senators joined in support of the Kerry bill, including Alfonse D'Amato (R-NY).

The bill would have taken a common-sense approach to the problems plaguing the program. It would have denied federal flood insurance for new construction in eroding coastal and Great Lakes areas. This would have protected the program from insuring development that is most prone to hurricanes, storms, flooding, and erosion, and the costly damage these storms cause. The bill also would have provided money to make current structures less vulnerable to flooding, thereby decreasing expensive and repetitive claims.

But by early 1992, the tide began to turn against the legislation. Characterizing it as everything from a land-grab to a constitutional "taking" to forced relocation of property owners from the shore, the realtors and homebuilders mounted a national campaign against the bill. They realized that if they didn't have the federal taxpayer insuring hazard-area development, construction on the shore would become a more dangerous and less profitable enterprise. Acting on behalf of property owners on New York's Fire Island, the former supporter of the legislation, Senator D'Amato, became one of its chief opponents. The special-interest pressure became too much, and the legislation died in the Senate in the closing days of the last Congress.

Action at Last

Three notable events have occurred since the flood insurance legislation was killed last October. A new president was elected, a new Congress came to town, and the bills started pouring in from Hurricanes Andrew and Iniki, the dreadful December nor'easter, and the Blizzard of '93. Faced with a mounting federal deficit and a prognosis of 25 years of "super hurricanes," Congress may decide that now is the time for the Flood Insurance Program to do what it was created to do in 1968: encourage communities to guide new development away from the water's edge to save lives, money, and environmental resources.

Beth Millemann is Executive Director of the Coast Alliance, a national environmental group headquartered in Washington, DC. She is the author of Storm on the Horizon: The National Flood Insurance Program and America's Coasts (Coast Alliance: Washington, DC, 1989),
COPYRIGHT 1993 Woods Hole Oceanographic Institution
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Author:Millemann, Beth
Date:Mar 22, 1993
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