U.S. GAO Explores Limiting Nation’s Exposure To Extreme Weather Events

According to the United States Global Change Research Program, the costs and impacts of weather disasters resulting from floods, drought, and other events are expected to increase in significance as previously “rare” events become more common and intense.  While it is not possible to link any individual weather event to climate change, these events provide insight into the potential climate-related vulnerabilities faced by the United States.  These impacts pose financial risks to the federal government.  

After a February 2013 report entitled “Limiting the Federal Government’s Fiscal Exposure by Better Managing Climate Change Risks,” the U.S. Government Accountability Office (“GAO”) has focused on government operations it identifies as posing a “high risk” to the American taxpayer.  The nation’s exposure and resilience to extreme weather has been deemed as one of these risks.

Since 1980, the U.S. has experienced 151 weather disasters with damages exceeding $1 billion each.  In a report issued February 12, 2014, the GAO evaluated the following four areas where fiscal exposure might be reduced:

• Property and crop insurance.  The financial risks from two federal insurance programs-the National Flood Insurance Program (“NFIP”) administered by the Federal Emergency Management Agency (“FEMA”) and the Federal Crop Insurance Corporation (“FCIC”)-create a significant fiscal exposure.  In 2012, the NFIP had property coverage of over $1.2 trillion and the FCIC had crop coverage of almost $120 billion.  As of December 2013, FEMA’s debt from flood insurance payments totaled about $24 billion. For various reasons, FCIC’s costs more than doubled from $3.4 billion in fiscal year 2001 to $7.6 billion in fiscal year 2012.  In 2007, the GAO found that the agencies responsible for these programs needed to develop information on their long-term exposure to climate change.  The Biggert-Waters Flood Insurance Reform Act of 2012 requires FEMA to use information on future changes in sea levels and other factors in updating flood maps used to set insurance rates.  Private insurers are also studying how to include climate change in rate setting.  The GAO is currently examining the extent to which private and federal insurance programs address risks from climate change.

• Disaster aid.  The federal government does not fully budget for recovery activities after major disasters, thus creating a large fiscal exposure.  The GAO reported in 2012 that disaster declarations have increased to a record 98 in fiscal year 2011 compared with 65 in 2004.  Over that period, FEMA obligated over $80 billion for disaster aid.  The GAO’s past work recommended that FEMA address the federal fiscal exposure from disaster assistance.

• Owner and operator of infrastructure.  The federal government owns and operates hundreds of thousands of facilities that a changing climate could affect.  For example, in its 2010 Quadrennial Defense Review, the U.S. Department of Defense (“DOD”) recognized the risk to its facilities posed by climate change, noting that the department must assess the potential impacts and adapt.  The GAO plans to report later this year on DOD’s management of climate change risks at over 500,000 defense facilities.

• Provider of technical assistance to state and local governments.  The federal government invests billions of dollars annually in infrastructure projects that state and local governments prioritize, such as roads and bridges.  Total public spending on transportation and water infrastructure exceeds $300 billion annually, with about 25 percent coming from the federal government and the rest from state and local governments.  The GAO’s April 2013 report on infrastructure adaptation concluded that the federal government could help state and local efforts to increase their resilience by (1) improving access to and use of available climate-related information, (2) providing officials with improved access to local assistance, and (3) helping officials consider climate change in their planning processes.

To access this week’s GAO report, entitled “Limiting Federal Fiscal Exposure and Increasing the Nation’s Resilience,” click here.

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