Underwater and Under Review: Stakeholders comment on the environmental impacts of the National Flood Insurance Program

Nashville flood of 2010, by Mark Tucker

What is the NFIP - Created in 1968, the goal of the program was to reduce the risk of flooding to life and property by discouraging new development in flood-prone areas. To achieve this goal, the program provides low-cost flood insurance to communities in exchange for implementing minimum floodplain management standards. The NFIP consists of three basic components: floodplain mapping, floodplain management and flood insurance and is administered by the Federal Emergency Management Agency (FEMA).

Assessing the impacts of the NFIP - FEMA is updating the PEIS on the NFIP, which was last done in 1976. The need to update the PEIS stems from new information on the program's impacts. A new PEIS will also provide appropriate review and permitting of potential changes to the program. FEMA initiated the process and took formal scoping comments from interested parties in May of 2012. Thirty-five comments were received from stakeholders representing a wide range of interests including flood management agencies, conservation groups, tribal interests and associations for realtors and homebuilders. While stakeholders somewhat differed in what they saw as high-priority issues, all seemed to agree that reforms were needed that go beyond incremental change.

A program in need of reform - The comments addressed a broad range of issues that included the NFIP's financial insolvency, facilitation of floodplain development, effects of climate change and impacts to wildlife habitat.

• Failure to discourage floodplain development: First, providing subsidized insurance that masks the true cost of living in a floodplain has made it possible for more development to occur. Second, the NFIP fosters the construction of levees and the filling of floodplains so that properties can be technically mapped out of the regulatory flood zone. The construction of levees often induces even higher density floodplain development. Third, the NFIP supports rebuilding in flood-prone areas. Many frequently flooded properties are rebuilt with NFIP funds. The Delaware Riverkeeper Network raised these concerns and concluded these practices encourage development that is uneconomic and unsustainable.

• Inaccurate flood maps: The Center for Climate Change Law at Columbia Law School and others raised a broad concern that many floodplain maps are erroneous because they are out of date and even new maps may be inaccurate because they are created using old data that does not reflect current conditions. NRDC raised this point in comments on new flood maps for New York and New Jersey that FEMA proposed a little over a year after Superstorm Sandy. Plus, future development will intensify runoff and increase peak flood flows. The Nature Conservancy raised further concerns about the how the impacts of climate change will undermine the accuracy of the maps by increasing the frequency, intensity and consequences of future flood events. Several commenters also highlighted the need to incorporate sea level rise in flood mapping to better protect coastal areas.

• Harm to fish and wildlife: Concerns about the impacts of permissible floodplain development on fish and wildlife were raised by a number of conservation groups including Pacific Rivers CouncilNational Wildlife Federation and American Rivers. A 2008 biological opinion by the National Marine Fisheries Service found that the NFIP fostered floodplain development and by doing so harmed the habitat of wildlife including endangered species. Many stakeholders emphasized how preserving naturally functioning floodplains with riparian buffers actually offers flood protection for communities. Floodplains are of considerable economic, social, and environmental value because they reduce flood damage through flood storage and erosion control, improve water quality, recharge groundwater, and provide critical habitat for fish and wildlife.

• Insolvency: The same shortcomings identified above that contribute to bad environmental outcomes also lead to bad financial outcomes. Given the NFIP's staggeringly large debt, almost all stakeholders including the National Association of Flood & Stormwater Management Agencies and the Center for Biological Diversity were concerned with the insolvency of the program. Insurance premiums do not reflect true flood risk and cost of damages. Therefore the NFIP payouts exceed revenue from premiums. The economic burden falls on all taxpayers, regardless of whether they live in the floodplain regulated by the NFIP or not. The Biggert-Waters Flood Insurance Reform Act of 2012 attempted to address some of the problem by phasing out subsidies for non-primary residences, properties that have experienced severe or repeated flooding, and non-residential properties in the 100-year floodplain. However, closing the fiscal gap will clearly require greater steps including increasing premiums to reflect the true flood risk and implementing programs to buy out frequently flooded properties.

Time for a change - Clearly the issues identified in stakeholder comments illustrate the need for a assessment of NFIP impacts as part of the on-going PEIS. Furthermore the PEIS should be used to advance NFIP reforms to adjust premiums to reflect true flood risk, prevent development in flood-prone areas, buy out frequently flooded properties, prioritize natural approaches to flood management over structural flood controls, restore damaged floodplains, and account for climate change. Moreover, the NFIP should do more to encourage property owners to move out of harm's way -- NRDC has developed a proposal to do just that.

What Comes Next - The next step in the process is for FEMA to complete development of the Draft PEIS and release it to the public, hopefully sometime this year. FEMA will then consider public comments on the publication before issuing the final PEIS. With so much of the nation impacted by the current situation, FEMA seems to be moving forward but too slowly for such an important issue.