Getting smart about how we finance disaster resilience

Across the country, individuals, communities, businesses, and governments are taking action to improve their ability to withstand and recover quickly from extreme weather events, rising sea levels, and other impacts of climate change.  Disaster mitigation activities include adopting stronger building codes, restoring floodplains and streams, and retrofitting roofs to hurricane-resistant standards -- all of which help to reduce the loss of life and property and enable communities to recover more quickly in the aftermath of a disaster.

Investing in disaster mitigation and resilience before an extreme event occurs can provide significant cost-savings for homeowners, local communities, the private sector, and the Federal government.  In 2005, a three-year, Congressionally-mandated independent study concluded that every $1 the Federal Emergency Management Agency spends on hazard mitigation saves society an average of $4. The 2016 National Preparedness Report estimated that the $8 million that the National Oceanic and Atmospheric Administration (NOAA) and The Nature Conservancy invested in the Fisher Slough Marsh restoration project will save that Washington State community up to $21 million over the next 50 years and reduce flooding on as many as 600 nearby acres.   The need for these investments is critical.  The U.S. has experienced a significant increase in billion-dollar disasters since 1980, and has already recorded eight billion-dollar disasters in the first six months of 2016.    

To advance disaster resilience and mitigation efforts, government and private-sector organizations are developing innovative financing mechanisms that reduce consumer costs and incentivize pre-disaster mitigation activities.  That’s why, today, the White House hosted a Forum on Smart Finance for Disaster Resilience to highlight innovations in disaster mitigation and resilience finance, including emerging public-private collaborations with banking, insurance, and financial services sectors.  These financial innovations are empowering communities across the country to mitigate against the current and future impacts of climate change, including wildfire, drought, extreme storms, and hurricanes.  

Participants in today’s event learned about programs that use tax credits, insurance rebates and premium reductions, resilience bonds, and other financial tools to help communities, businesses and families invest in resilience and reduce post-disaster recovery costs.  For example, Colorado homeowners can receive a tax credit for taking actions that reduce their risk from wildfire.   In Alabama, insurers provide discounts for coastal homes that are built, rebuilt, or retrofitted in accordance with hurricane-resistant standards. And in 2015, mayors of seven American cities and 18 international cities pledged 10 percent of their municipal budgets toward resilience goals. 

The Federal government supports these innovative finance strategies through direct investment, planning assistance, guidance, technical assistance, and other efforts.  Earlier this year, a group of Federal agencies responsible for coordinating Federal mitigation activities began development of a National Mitigation Investment Strategy, which will provide a framework to identify, prioritize, and guide investments in disaster resilience and hazard mitigation. Additional Federal data, resources, and information related to community resilience and finance strategies can be found in the U.S. Climate Resilience Toolkit and in recently released U.S. Department of Housing and Urban Development resource on innovative financing for high performance infrastructure. 

In support of today’s event, several trade associations released a Joint Statement on Public and Private Resilience Initiatives.  Signatories to the statement committed to helping the public better understand weather and climate-related risks and to take effective actions to reduce those risks. 

Going forward, the Nation must continue to leverage resources from both the public and private sectors and develop cooperative efforts to further encourage and incentivize investment in community resilience. 

Jainey Bavishi is the Associate Director for Climate Preparedness, Council on Environmental Quality; Alice C. Hill is the Special Assistant to the President and Senior Director for Resilience Policy at the National Security Council; and Dr. Tamara Dickinson is the Principal Assistant Director for Environment and Energy, Office of Science and Technology Policy