Last Saturday, the 2013 Atlantic hurricane season came to a close, not with a bang but with a whimper. While in the Philippines, Typhoon Haiyan was responsible for over 5,000 deaths and broke records for its size and intensity, in the Atlantic we only saw two hurricanes and thirteen named storms.
The calm Atlantic hurricane season was a blessing for taxpayers, because both state and federal governments have taken on a large share of financial liability for hurricanes and other natural disasters. In Florida, the state-run Citizens Property Insurance Corporation has a half-trillion dollars of liabilities on its books. In Louisiana alone, the federally backed National Flood Insurance Program has over $100 billion in exposure.
Indeed, even if every taxpayer-backstopped insurance program were to meet its obligations without taking a penny of general revenues, virtually any storm will require billions of taxpayer dollars to pay for infrastructure repair, short-term relief, and overtime for first responders.
And while some efforts have been made to move government insurance programs towards a sounder financial footing, progress has been fleeting, and risk borne by taxpayers remains mammoth.
But with the RESTORE Act, a law passed in 2012 with strong bipartisan support, there exists an opportunity to begin reversing this trend.
Formally called the "Resources and Ecosystems Sustainability, Tourist Opportunity and Revived Economics of the Gulf States Act," the RESTORE Act devotes 80 percent of the civil and administrative fines from the 2010 Deepwater Horizon oil spill to measures supporting environmental and economic restoration across the Gulf coast.
Among other things, the RESTORE Act provides funding for "flood protection and related infrastructure," which allows states to build or improve infrastructure that increases resiliency to future disasters. This provides an opportunity for states to invest in infrastructure and storm damage mitigation projects that will reduce risk—and future costs to taxpayers.
There are a number of ways that states can use RESTORE Act funds to develop infrastructure to reduce the costs of future disasters.
First among these is the redevelopment of wetlands and barrier islands that help attenuate storm surges and reduce the power of hurricanes. The Louisiana Coastal Protection and Restoration Authority calculates that continued loss of barrier islands, swamps, and marshes along the state's coast will cause annual flooding damages to increase by tenfold by 2061, from $2.4 billion a year to $23.4 billion annually.
Wetland and barrier island restoration is precisely the kind of investment the RESTORE Act is ideally suited to address. This kind of “green infrastructure” can absorb storm surge and reduce the effects of storms, saving both taxpayers and the private sector considerable money. Moreover, having natural barriers in place strengthens local economies, and also helps protect the natural environment. That's why these types of projects should be at the front of the line for funding.
Additionally, states can invest in traditional flood protection infrastructure such as levees, floodgates, and drainage infrastructure. Contrary to what many people think, the majority of flood works in the United States are the responsibility of state and local governments. Of the almost 15,000 miles of levees in the US Army Corps of Engineers' National Levee Database, about 85 percent are operated by state and local governments—and the database represents only a fraction of the estimated 100,000 miles of levees across the country. State and local governments must take a larger role in flood protection.
Third, states can use RESTORE Act funding to create incentives for homeowners and commercial building owners to make their properties more resilient to natural disasters. Property owners can strengthen their buildings and reduce the costs of floods and hurricane through many simple improvements such as roof tie-downs, hurricane shutters, and elevated electrical systems. Using RESTORE Act funds to encourage such mitigations may be appropriate in some areas along the Gulf Coast.
Given that reality, the RESTORE Act provides an opportunity to strengthen coastal economies and environments and making them more resilient to future disasters, whether natural or manmade.
Rothschild is a senior fellow and director of state projects at the R Street Institute, a free market think tank.