11 February 2019

The Effects of Adaptation Measures on Hurricane Induced Infrastructure/Property Losses

Spending on FEMA ex-ante mitigation and planning projects leads to greater reductions in property losses than spending on ex-post adaptation programs.

Science

Without empirical evidence, little can be said about how effective alternative hurricane adaptation measures are in terms of promoting local resilience. It is reasonable to assume that protective/adaptive measures should mitigate losses; however, their effectiveness might vary depending on the severity of hazard as well as the behavioral responses of private agents. Researchers under a multi-institutional Cooperative Agreement led by Stanford University compare the relative effectiveness of pre-disaster risk reduction activities and post-disaster response and recovery assistance by econometrically estimating a model of historical property damages comprising 651 counties along the Atlantic coast that have incurred hurricane-induced property losses at least once during the period 1989–2009.  

Impact

While recovery spending is effective overall, the marginal return per dollar of investment in recovery spending is almost half that of investing in long-term hurricane mitigation programs. Given that current FEMA spending on hurricane mitigation programs (planning, warning systems and improvement in structural mitigation) is smaller by an order of magnitude relative to spending on disaster response and clean-up programs, these results suggest that we would expect a significantly larger return on investment if more spending was redirected to ex-ante mitigation measures at the margin. 

Summary

The researchers constructed an empirical model to evaluate the relative effectiveness of FEMA expenditures on  hurricane induced property losses. Results show that spending on FEMA ex-ante mitigation and planning projects leads to greater reductions in property losses than spending on ex-post adaptation programs – specifically, a one percent increase in annual spending on ex-ante risk reduction and warning projects reduces damages by 0.21 percent while a one percent increase in ex-post recovery and clean-up spending reduces damages by 0.12. Although both types of program spending are effective, the results show that the marginal return from spending on programs that target long-term mitigation and risk management to be almost twice that of spending on ex-post recovery programs. These findings suggest there are important potential gains that could be realized from the further diversification of spending across project categories.

Contact
John Weyant
Stanford University
Publications
Davlasheridze, M, K Fisher-Vanden, and H Klaiber.  2017.  "The effects of adaptation measures on hurricane induced property losses: Which FEMA investments have the highest returns?"  Journal of Environmental Economics and Management 81: 93-114.  https://doi.org/10.1016/j.jeem.2016.09.005.