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Sunday, May 26, 2024

Op/Ed: Time to phase out federal flood insurance

By Warren Cole Smith

Hurricane Ian has come and gone, but the consequences remain, and so does a re-energized discussion about whether climate change contributed to Ian’s devastation.

I hope Hurricane Ian will also prompt a renewed discussion of the National Flood Insurance Program (NFIP).

NFIP began in 1968. According to Politico, “As of 2016, the NFIP has over 5 million policies in force and saves policyholders around $3 billion annually.”

Perhaps, but the $3 billion it saves policyholders is actually far less than it costs taxpayers.  Since Politico wrote that story (“The Government’s Hidden Housing Subsidy For The Rich”), the program has gone through many more billions of dollars. The NFIP has about $30 billion in debt, and it would be more if Congress didn’t cancel more than $16 billion in 2017.

I would like to propose a common-sense adaptation to climate change that should please  both the left and the right: phase out the NFIP.

Multiple analyses of the program indicate that most of the money goes to affluent beach homeowners. Progressives who want to reduce financial subsidies for the wealthy could support such a move. Conservatives and libertarians who oppose wasteful spending and favor limiting government programs could also support this idea.

Eliminating a program that has been around for more than 50 years will not happen overnight. We might need interim steps, such as grandfathering those already in the program, and making new policy holders receive payouts contingent on re-building elsewhere.

It might even make sense to give some homeowners a one-time bonus to encourage them to leave. After all, not everyone who takes advantage of the NFIP are wealthy. Leaving what for some was their dream home, or land that was in their family for generations, is hard. But Ian’s ravages have turned some of those dreams into nightmares. Many people trying to put their lives back together in Ian’s aftermath might welcome the opportunity to start fresh…elsewhere.

For those who choose not to move, tell them that that after this obligation is honored, they are on their own. Their insurance – at least the government subsidized portion — will not be renewed. If they want to rebuild, they will have to assume the risk – along with private, non-government subsidized insurance. My guess is that many people would take the money and run.

Also, there’s this: over time, reforming or eliminating NFIP would likely have the additional benefit of returning thousands of acres of oceanfront land to an undeveloped state. That land would provide a buffer to sea level rise in some coastal areas.

And those who are wealthy enough to stay and incur the risk: Godspeed to you. The rest of us will welcome your periodic infusions of cash into the economy as you maintain, repair, and rebuild your storm ravaged properties.

The bottom-line is simple: The status quo in coastal areas is unsustainable. It simply doesn’t make sense to pay people to re-build on the same disaster-prone real estate over and over again. The behavior of the NFIP fits Einstein’s famous definition of insanity: “Doing the same thing over and over again, and expecting a different result.”

It’s time to do something different.

Charlotte’s Warren Cole Smith is the author of Clear Thinking About Climate Change, published by the Cornwall Alliance For The Stewardship of Creation.

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