In recent years, the United States has faced a growing number of severe natural disasters,1 presenting a variety of challenges for the nation—spanning the spectrum from federal, state, and local levels of government to for-profit, nongovernmental, and philanthropic organizations—and its disaster response, relief, and recovery architecture. Over the past decade, the United States has experienced, on average, more than seven severe weather events per year exceeding $1 billion in damage apiece, compared to an annual average of only two such events throughout the 1980s.2
This increase in severe natural disasters in the United States correlates with a significant increase in the number of all natural disasters in the United State and worldwide.3 Figure 2.1 reveals that the number of natural disasters worldwide has more than doubled since the mid-1980s. According to the United Nations Office for Disaster Risk Reduction, the average number of storms, floods, and extreme temperature disasters have increased approximately two, three, and five and a half times the 1980s average, respectively.4
Man-made5 or technological disasters follow a trend similar to that of natural disasters. A recent report indicates that although the number has decreased since its peak in the decade between 2000 and 2009, the average number of man-made disasters has nearly tripled since the 1970s.6 Natural disasters can also trigger technological disasters, such as the March 2011 meltdown of the Fukushima Daiichi nuclear reactors after a tsunami in Japan.7 This evidence illustrates an even greater need to focus on the resilience of all vulnerable communities and infrastructure. Therefore, government and the private sector must prepare to withstand the losses associated with the growing threat of all types of disasters.
The rising costs of disasters have significantly affected the ability of all levels of government and the private sector to respond and provide relief to distressed communities. Increases in federal relief spending and insurance costs, small business closures, and disaster-related mental health issues all illustrate negative consequences of the upward trend in natural disasters.
MONETARY COSTS
While disasters have caused great losses of life and property for many years, Hurricane Andrew’s impact in South Florida in 1992 demonstrated the loss potential of catastrophic disasters in areas with high property values.8 As the number of severe natural disasters in the United States has increased since then, so too has the dollar amount of insured and uninsured losses. Total (insured and uninsured) losses from natural disasters in the United States have surpassed $50 billion five of the last ten years, a total never reached throughout the 1980s.9 Additionally, insured losses from thunderstorms alone have topped $10 billion in each of the last six years.10 The increase in losses places significant strain on public and private resources to provide disaster relief. A lack of resources to match the magnitude of the disaster can lead to the failure of communities and businesses to adequately respond to and recover from such events.
Insurance
Due in part to the increase in disaster losses, worldwide insurance premiums, including premiums on all types of insurance (i.e., not only disaster-related insurance), have increased steadily over the past few decades; net premiums have experienced growth in all but three years since 1971.11 Though the causes for rate increases are varied, data from the Insurance Information Institute (III) show that the percentage of private insurer losses resulting from catastrophic events12 has risen considerably in recent decades.13 Since insurance companies utilize risk-based modeling to determine insurance premiums, if the threat of natural disasters continues to rise, ceteris paribus, homeowners and businesses will likely see continued rate hikes.14 Furthermore, as computer-generated risk models become more complex and able to narrow the threat and vulnerability to specific geographic regions, certain communities may experience exponential rate increases.15 Rising premiums, especially for high-risk insurance (e.g., flood, earthquake, and landslide), can lead to tremendous financial strain for many people and may cause policyholders to opt out of coverage.
The United States has experienced this issue firsthand with the government’s National Flood Insurance Program (NFIP). When a recent recalculation of risk sent premiums skyrocketing in certain areas, constituents facing drastic rate increases pressured their congressional representatives to pass new legislation to ease the burden on home and business owners in flood-risk zones.16 Many questions still remain about the best methods for spreading risk and preventing drastic premium increases.
Federal Disaster Relief
Figure 2.2 shows that the president of the United States has, on average, issued a growing number of federal disaster declarations over the years. This increase is likely due, in part, to the increased severity and cost of natural disasters. Some experts also argue that the increase reflects greater reliance by states and municipalities on the federal government to fund disaster response and recovery.17
Because disaster declarations activate federal assistance programs and funds, changes in federal disaster relief spending correlate directly with the increase in declarations. A recent report indicates that from fiscal year (FY) 2011 to FY 2013, the U.S. federal government spent approximately $136 billion in response to severe weather events.18 This figure exceeds the Office of Management and Budget’s estimate of federal spending on all such events from 2000–2009, which includes the most expensive natural disaster in U.S. history, Hurricane Katrina.19 Although debate exists over the exact inputs to determine federal relief spending, the recent increase remains noteworthy.20 The reason for this surge in costs is a subject of debate among experts, with a rise in urbanization, property values, and the amount of vulnerable infrastructure often cited as contributing factors, in addition to the overall increase in the number and severity of meteorological and climatological disasters.21
COMMUNITIES
The growing frequency and costs of natural disasters have taken a toll on communities across the United States. As a result of Hurricane Katrina in 2005, nearly 2,000 people lost their lives and more than one million were displaced from their homes.22 In Louisiana alone, damage forced 92,000 families to temporarily live in mobile homes and left nearly one million in need of housing and personal property replacement assistance.23 Natural disasters have a negative impact not only on lives and homes but also on critical infrastructure, businesses, and the health of communities.
Critical Infrastructure
Natural disasters can cause damage and destruction to every element of a community’s infrastructure. In total, the Department of Homeland Security (DHS) outlines 16 different critical infrastructure sectors in its current National Infrastructure Protection Plan (NIPP), including transportation, communications, energy, public health, agriculture, and commercial and government facilities.24 Due to the interconnectedness among sectors, damage to one can render others in effective. For example, within one day of Hurricane Sandy’s landfall in the northeastern United States in 2012, over eight million facilities, businesses, and homes lost power, which directly affected the functioning of, among other industries, fuel distribution.25 The disruption of fuel supply networks affected the capabilities of first responders as well as the average citizen’s ability to refuel his or her automobile. Damage to critical infrastructure often slows the response and recovery process and imposes steep economic costs to industries and communities. An inability to quickly and effectively recuperate from such impacts can lead to irrecoverable losses.
Small Businesses
Due to the impact of natural disasters on functionality and profit, some businesses prove unable to bear the costs, and ultimately, they fail to recover. Small businesses suffer disproportionately from natural disasters because of their concentration of assets and supplies, loss of staff and customer base, insufficient insurance coverage, and a lack of participation in risk-mitigation programs.26 According to a 2010 National Federation of Independent Businesses study, 30 percent of small businesses close permanently following a presidentially declared disaster.27 This fact is particularly daunting, considering that the economies of many communities rely heavily on small businesses. The failure of small businesses in the wake of a disaster can have a devastating impact on a community’s economic drive, greatly diminishing resilience.
Health
Natural disasters place immense pressure on health care and public health industries. Beyond the immediate injuries they create, they can intensify the potential for the spread of disease from overcrowding and contaminated sources of nutrition. Clean water, safe sanitation facilities, adequate shelter, and basic health care services are essential to prevent further injury and to avert the potential development and spread of communicable diseases.28 Since disasters can often displace many individuals and families, the assurance of these services is vital for the health and stability of affected populations.
In addition to health effects of injury and disease, disasters can also exacerbate behavioral/mental health issues. These issues include, but are not limited to, anxiety, depression, and post-traumatic stress disorder (PTSD).29 The resolution of these problems often requires the help of mental health professionals. Yet after Hurricane Ike in 2008, one study found that although 40 percent of the affected population reported mental health service need, only about one third of those obtained service.30 Ensuring sufficient mental health capacity and responsiveness is likely to remain a significant concern in many communities.
Preparing for and responding to disasters requires not only a “whole of government” approach that coordinates federal organizations and agencies, but a “whole of community” approach that involves all levels of government as well as the private sector.31 The involvement of federal executive branch authorities, Congress, and the private sector, along with state and local partners, can help communities withstand the devastating impact of natural disasters. However, the interplay of these actors can create complex and sometimes counterproductive efforts for community resilience. Each major “player” has its own structure, methods of operation, and goals. Effective preparation, response, and recovery warrant fluid communication, cooperation, and support within and among entities. The following sections offer brief descriptions of each of the major players examined for this report.
EXECUTIVE BRANCH AUTHORITIES
The preparation and response efforts for natural disasters depend on the size and scope of the threat. Local governments and first responders provide the frontline defense for most disasters. States, through their emergency management agencies, routinely support local response efforts with additional resources. Each state has unique standard operating procedures, but if a disaster causes, or is foreseen to cause, sufficient damage and destruction, governors have the ability to request federal assistance. With the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (hereafter referred to as the Stafford Act; P.L. 93-288), which was signed into law on November 23, 1989, the president may declare an emergency or major disaster for the designated states, municipalities, and tribal territories to provide the requested federal resources for response and recovery.32
The Federal Emergency Management Agency (FEMA), a DHS component, administers the majority of federal disaster relief efforts.33 Communication between the states and the federal government for disaster declarations travels through FEMA’s ten regional offices across the United States. FEMA also administers federal grants for states, urban areas, and tribal lands to improve their capability to prepare for and mitigate against disasters.
Depending on the type of disaster and the capabilities required, there are several other federal departments and agencies that can provide assistance and support. These other entities can provide short and/or long-term relief through disaster-only or general assistance programs.34 Table 2.1 lists some of the federal departments and agencies that provide disaster relief support to local communities.35
The Stafford Act
The Stafford Act authorizes federal assistance to supplement state and local relief efforts. Before the president can make federal assistance available, a gubernatorial request and a subsequent presidential declaration for such assistance must be made.
The scope of the law has greatly expanded since its inception. Amendments over the past 40 years have increased administrative requirements, expanded available assistance and eligibility, and improved coordination with other federal agencies.
See McCarthy, “Federal Stafford Act Disaster Assistance,” 2–6.
LEGISLATIVE BRANCH AUTHORITIES
By providing for vital public debate on ways in which the nation approaches natural disasters and by demonstrating resolve and commitment to addressing gaps and challenges in recovery and resilience through legislative action, Congress can play a remarkable role in fostering resilience. Congress authorizes and oversees the departments and agencies in charge of disaster relief. The Stafford Act represents the flagship legislation for disaster response. In addition to authorizing presidential disaster declarations, it provides the architecture for the assistance programs and funding criteria for each type of declaration. Since its original conception as the 1974 Disaster Relief Act, gaps and shortfalls revealed by major catastrophes have led to amendments through subsequent legislation, including, most recently, the Post-Katrina Emergency Management Reform Act of 2006 (PKEMRA; P.L. 109-295) and the Sandy Recovery Improvement Act of 2013 (SRIA; part of the Disaster Relief Appropriations Act, 2013).36
Congress also appropriates the requisite funding for the Disaster Relief Fund (DRF), from which the vast majority of all federal disaster assistance is drawn.37 Furthermore, it sets the maximum monetary liability level for private companies involved in certain man-made disasters through such legislation as the Oil Pollution Act of 1990 (OPA 90; P.L. 101-380). Additionally, it oversees disaster management through numerous committees and subcommittees and holds hearings to determine the effectiveness of different executive branch programs.
PRIVATE SECTOR
Although executive and legislative branch actions are vital, a “whole of community” approach to improving resilience also requires active participation from the private sector. Businesses, NGOs, and philanthropic organizations all help remove some of the pressure from the public sector while contributing unique resources and capabilities that can serve to supplement and support government efforts. For example, Walmart maintains nine disaster distribution centers across the country and utilizes its sophisticated supply chain to restock stores in affected communities with crucial supplies during and after a disaster.38 In addition to making charitable donations and volunteering services to affected communities, nonprofit organizations can help coordinate response and recovery efforts. The Center for Disaster Philanthropy (CDP), for instance, works to coordinate donor efforts and direct charitable resources.39 Additionally, companies and organizations form PPPs with different levels of government in order to ensure coordinated management of communications and resource deployment throughout the emergency management cycle.40 The American Red Cross (Red Cross) and Volunteer Organizations Active in Disasters (VOAD) represent private organizations explicitly mentioned in DHS’s strategic and operational documents.41 These partnerships are key to quickly closing the needs-capabilities gap after a disaster by avoiding bureaucratic hurdles that can slow the response.
Given the growing frequency and cost of disasters, the United States should take steps now to enhance the nation’s disaster resilience. By emphasizing planning, partnerships, and capabilities development, the United States can mitigate some of the effects and costs of natural disasters.42 Meaningful progress will require reform at several levels, including but not limited to changes to federal executive branch policy, legislative action by the U.S. Congress, and closer partnerships and cooperation between the public and private sectors.
1. For the purposes of this report, the term “severe natural disaster” means a a disaster inflicting at least $1 billion in damage.
2. Adam B. Smith and Richard W. Katz, “U.S. Billion-Dollar Weather and Climate Disasters: Data Sources, Trends, Accuracy, and Biases,” Natural Hazards 67, no. 2 (June 2013): 388, http://www1.ncdc.noaa.gov/pub/data/papers/smith-and-katz-2013.pdf; National Climatic Data Center, “Billion-Dollar Weather/Climate Disasters: Table of Events,” 2013, https://www.ncdc.noaa.gov/billions/events.
3. Munich Reinsurance Company, Geo Risks Research, NatCatSER VICE, “2013 Natural Catastrophe Year in Review,” January 7, 2014, 7, 18, http://www.iii.org/sites/default/files/docs/pdf/MunichRe-010714.pdf.
4. UN Office for Disaster Risk Reduction (UNISDR), “Number of Climate-Related Disasters around the World (1980–2011),” June 13, 2012, http://www.preventionweb.net/files/20120613_ClimateDisaster1980-2011.pdf.
5. For the purposes of this report, man-made disasters include major fires and explosions, aviation and space disasters, shipping disasters, rail disasters, mining accidents, collapse of buildings/bridges, and miscellaneous events (including terrorism) but exclude war, civil war, and warlike events. Swiss Re, “Natural Catastrophes and Man-Made Disasters in 2013,” sigma 1 (2014): 45, http://media.swissre.com/documents/sigma1_2014_en.pdf.
6. Ibid., 2.
7. Mark Holt, Richard J. Campbell, and Mary Beth Nikitin, “Fukushima Nuclear Disaster,” Congressional Research Service, January 18, 2012, 1, http://www.fas.org/sgp/crs/nuke/R41694.pdf.
8. Munich Reinsurance Company, “Severe Weather in North America: Perils-Risks-Insurance: Executive Summary,” 2012, 5, http://www.munichreamerica.com/site/mram/get/documents_E1449378742/mram/assetpool.mr_america/PDFs/3_Publications/ks_severe_weather_na_exec_summary.pdf.
9. Munich Re, “2013 Natural Catastrophe Year in Review,” 8.
10. Ibid., 13.
11. Ibid., 39.
12. Events resulting in more than $25 million in direct insured losses to property.
13. Munich Re, “2013 Natural Catastrophe Year in Review,” 37.
14. Insurance Information Institute (III), “Catastrophes: Insurance Issues,” April 2014, http://www.iii.org/issues_updates/catastrophes-insurance-issues.html.
15. Ibid.
16. Federal Emergency Management Agency (FEMA), “Flood Insurance Reform,” last updated July 24, 2014, http://www.fema.gov/flood-insurance-reform.
17. J. David Cummins, Michael Suher, and George Zanjani, “Federal Financial Exposure to Natural Catastrophe Risk,” in Measuring and Managing Federal Financial Risk, ed. Deborah Lucas (Chicago: University of Chicago Press, 2010), 62.
18. Daniel W. Weiss and Jackie Weidman, “Disastrous Spending: Federal Disaster-Relief Expenditures Rise amid More Extreme Weather” (Washington, DC: Center for American Progress, 2013), www.americanprogress.org/issues/green/report/2013/04/29/61633/disastrous-spending-federal-disaster-relief-expenditures-rise-amid-more-extreme-weather/.
19. Office of Management and Budget (OMB), “OMB Report on Disaster Relief Funding to the Committees on Appropriations and the Budget of the U.S. House of Representatives and the Senate,” September 1, 2011, 3, http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/disaster_relief_report_sept2011.pdf.
20. Weiss and Weidman, “Disastrous Spending.”
21. Munich Re, “Severe Weather in North America: Executive Summary,” 2–6.
22. FEMA, “Louisiana Recovery Office,” last updated July 24, 2014, http://www.fema.gov/louisiana-recovery-office.
23. Ibid.
24. DHS, “NIPP 2013: Partnering for Critical Infrastructure Security and Resilience,” http://www.dhs.gov/sites/default/files/publications/NIPP%202013_Partnering%20for%20Critical%20Infrastructure%20Security%20and%20Resilience_508_0.pdf.
25. David Sandalow, “Hurricane Sandy and Our Energy Infrastructure,” remarks delivered at the Columbia University Energy Symposium (Washington, DC: U.S. Department of Energy, 2012), http://energy.gov/articles/hurricane-sandy-and-our-energy-infrastructure.
26. UNISDR, “Small Businesses: Impact of Disasters and Building Resilience” (Geneva: UN Development Programme, Crisis Prevention and Recovery, 2013), 5–8, http://www.preventionweb.net/english/hyogo/gar/2013/en/bgdocs/UNDP,%202013.pdf.
27. Albert Sligh, Jr., “Written Statement of Associate Administrator Albert Sligh, Jr., Federal Emergency Management Agency, before the Senate Committee on Small Business and Entrepreneurship, ‘Disaster Recovery: Evaluating the Role of America’s Small Business in Rebuilding Their Communities’ ” (Washington, DC: FEMA, 2011), www.dhs.gov/news/2011/09/29/written-testimony-associate-fema-senate-committee-small-business-and.
28. John T. Watson, Michelle Gayer, and Maire A. Connolly, “Epidemics after Natural Disasters,” Emerging Infectious Diseases 13, no. 1 (January 2007): 4. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2725828/pdf/06-0779.pdf.
29. National Center for PTSD, “Mental Health Effects following Disaster: Risk and Resilience Factors,” last updated November 4, 2013, http://www.ptsd.va.gov/professional/pages/effects-disasters-mental-health.asp.
30. Sandro Galea, “Stigma and Barriers to Care: Caring for Those Exposed to War, Disaster, and Terrorism—Conference Report” (Bethesda, MD: Center for the Study of Traumatic Stress, 2011), 32–33, http://www.cstsonline.org/wp-content/resources/CSTS_report_stigma_2012.pdf.
31. FEMA, “Whole Community,” last updated July 24, 2014, http://www.fema.gov/whole-community.
32. Francis X. McCarthy, “Federal Stafford Act Disaster Assistance: Presidential Declarations, Eligible Activities, and Funding,” Congressional Research Service, June 7, 2011, 1–2, https://www.fas.org/sgp/crs/homesec/RL33053.pdf.
33. Ibid., Summary.
34. Carolyn V. Torsell, “Federal Disaster Recovery Programs: Brief Summaries,” Congressional Research Service, August 10, 2012, https://www.fas.org/sgp/crs/homesec/RL31734.pdf.
35. Table 2.1 is not a comprehensive list of all federal departments and agencies involved with disaster relief. The National Guard also plays a large role in disaster relief but principally operates under state control in Title 32 status.
36. McCarthy, “Federal Stafford Act Disaster Assistance,” 2–3.
37. Ibid., Summary.
38. Walmart, “Walmart Logistics,” http://corporate.walmart.com/our-story/our-business/logistics.
39. Center for Disaster Philanthropy (CDP), “Services,” http://disasterphilanthropy.org/what-we-provide/.
40. Ibid.
41. DHS, “National Response Framework,” May 2013, http://www.fema.gov/media-library-data/20130726-1914-25045-1246/final_national_response_framework_20130501.pdf.
42. Weiss and Weidman, “Disastrous Spending.”