Tag Archives: fema

More money for FEMA does not guarantee improved results

Before Congress passed $9.7 billion in Hurricane Sandy relief spending today, Governor Christie made headlines for his angry response to the House GOP’s delay in approving relief funds. The new spending will provide FEMA with money to pay out claims to those holding federal flood insurance. While the Hurricane Sandy relief effort gives political immediacy to FEMA funding, the Center for American Progress proposes a longer term strategy for dealing with natural disasters:

There must  be a dedicated source of revenue to fund predisaster mitigation programs that is not susceptible to budget cuts or political manipulation. Since the frequency and/or severity of extreme weather events will be exacerbated by climate change, it makes sense to raise revenue for resiliency from the fossil fuels whose combustion emits carbon pollution responsible for climate change.

The perspective that disaster recovery is a core responsibility of the federal government is widely shared, and voices as diverse as Governor Christie to the Center for American Progress express this opinion. However, the Mercatus Center’s Gulf Coast Recovery Project conducted in the wake of Hurricane Katrina demonstrates that funneling federal dollars toward disaster relief does not guarantee positive results for disaster victims. While the FEMA response to Hurricane Sandy went more smoothly than the Hurricane Katrina response, the federal government simply doesn’t have the capability to respond quickly and efficiently to individuals’ needs following a disaster, and channeling more resources to FEMA from any revenue source will not change the this fact.

As Pete Leeson and Russ Sobel write in a 2007 paper (pdf):

Following a natural disaster, on the one side there are “relief demanders”—individuals who desperately need disaster-relief supplies, including evacuation, food, shelter, medical attention, and so forth. On the other side, there are “relief suppliers”—individuals ready and willing to bring their supplies and expertise to bear in meeting the relief demanders’ needs. On both sides of this “market,” information is decentralized, local, and often inarticulate. Relief demanders know when relief is needed, what they need, and in what quantities, but they do not necessarily know who has the relief supplies they require or how to obtain them. Similarly, relief suppliers know what relief supplies they have and how they can help, but they may be largely unaware of whether relief is required and, if it is, what is needed, by whom, and in what locations and quantities.

[. . .]

Government’s informational deficit in the disaster-relief context is an unavoidable outcome of the centralization of disaster relief management when relief is provided by the state. Disaster-relief reforms that leave government as the primary manager of natural disasters are thus bound to fail. Correcting government’s information failure in the context of disaster relief requires eliminating its root cause: government involvement itself.

Researchers on the Gulf Coast Recovery Project found that non-profits, civic organizationsprivate firms, and individuals were more successful at providing the goods and services needed for recovery than the federal government.

Aside from the inherent challenges facing federal disaster response, funneling federal tax dollars to coastal areas prone to flooding leads to moral hazard. Because residents of flood-prone areas purchase federal insurance, taxpayers subsidize those who choose to live in these high-risk areas. Eli Lehrer of the R Street Institute explains this aspect of the Hurricane Sandy Relief Bill to Climate Wire:

“The mitigation piece of it is problematic,” said Eli Lehrer, president of the R Street Institute, a conservative organization that works with environmentalists and insurers to reduce subsidies in public insurance programs. “I think the bill should be drastically scaled back overall.”

He suggests that the disaster supplemental package could be cut in half. That would save taxpayer money, he says, now and in the future — by reducing incentives to develop coastlines. Lehrer also proposes cutting the federal share of post-disaster rebuilding costs to 50 percent. Currently, the government pays for 75 percent of recovery efforts, and Obama is asking Congress to increase that to 90 percent for Sandy survivors.

Politicians and activists who support a large role for the federal government in responding to disasters may have the best of intentions, but these intentions cannot circumvent the knowledge problems that government faces in disaster relief. By reducing the cost of developing in flood plains, greater reliance on the federal government for disaster mitigation and relief will be a costly effort unlikely to provide an adequate response when the next disaster strikes.

Hurricane Irene and Walmart’s staff meteorologist

A very interesting piece from NPR. Big-box retailers began their hurricane prep well before Hurricane Irene was predicted to make landfall. Home Depot’s Command Central, which looks, “much like NASA Mission Control during a shuttle launch” has been busy anticipating the storm’s effects along the East Cost. Walmart has its own staff meteorologist. This pre-hurricane prep – which actually begins before hurricane season – is why the shelves were stocked with emergency generators in Puerto Rico and available for customers when the electricity went out.

Economist Steven Horwitz studied the response of Walmart after Hurricane Katrina. His research – part of the Mercatus Center’s Hurricane Katrina project – shows that Walmart was able to respond more adeptly and quickly than FEMA and state emergency services, providing people with basic necessities including medicines (in some cases, local store managers gave supplies away to those in need). Not only are they on the ground and in the community, their very business is to respond to people’s needs and wants quickly and on a daily basis.

Since Katrina, FEMA has been studying ways to work more closely with the private sector. Interestingly, Horwitz found that the U.S. Coast Guard and local emergencies services were also able to respond more quickly than FEMA during Katrina for a similar reason: they are are decentralized and closer to the ground.

Here is Professor Horwitz discussing Walmart’s Katrina’ response:


Disaster Response and Foreclosure

According to the AP, FEMA is exploring how to use foreclosed homes to house people displaced by future natural disasters:

The federal government is exploring how to put Florida hurricane evacuees in foreclosed homes if a Katrina-like storm devastates the region and shelters, hotels and other housing options are full, The Associated Press has learned.

Officials told AP on Tuesday that it is an effort to find some benefit in the foreclosure crisis and keep people close to their homes and communities instead of scattering them around the country, which happened when Hurricane Katrina devastated New Orleans and other parts of coastal Louisiana and Mississippi almost four years ago. Thousands of victims who lost their homes in the storm moved to Houston, Atlanta and other cities, and many never returned.

Gaming the System

New Orleans’ sanitation director, Veronica White, has published a book entitled How to Maximize FEMA Funding After a Natural Disaster. According to the jacket, the book is a sort of memoir by White about her experiences during and after Hurricane Katrina: “Ms. White discovered firsthand how to cope with disaster in the aftermath of Katrina and how to navigate the Byzantine worlds of government agencies tasked with aiding in the recovery efforts in particular, FEMA.” The book was published by her husband.

It has been well received by other local officials, according to the New Orleans Times-Picayune:

White’s book contains blurbs by a couple of well-known locals, who offered up literary bouquets.

New Orleans Recovery Director Ed Blakely calls the book “the most valuable tool in your time of crisis. Read it; heed it.”

Chuck Carr Brown, former assistant secretary of the state Department of Environmental Quality, is also a fan: “Veronica White’s firsthand account is tried and true and the FEMA maze is unraveled,” Brown wrote.

If Dr. Blakely is correct — that the most valuable tool available to local officials during a crisis is a book about how to get federal grant money — then two things have gone extremely wrong. First is that local governments have become so dependent on external revenue sources that their first move during a disaster is to get on the horn with Washington to get the money flowing. And the second is that intergovernmental transfers have become such a maze that local officials have to read and write books that explain how to navigate the bureaucracy.

Photo of Matthew Lesko

Of course, none of this should be a surprise; people have been writing and selling books on how to get “free money” from Washington for years. But that we now have manuals being written by bureaucrats, for bureaucrats, on how to game dysfunctional bureaucracies, points to serious underlying problems with the current system.

Recently, three Mercatus Center scholars wrote about the economics of FEMA reorganization under DHS. Previously, Russ Sobel and Peter Leeson examined the impact of FEMA on local corruption.

Slow Motion Stimulus

The stimulus is premised on fast action. Hurricane Katrina relief was also premised on fast action. But, three and a half years later, FEMA records show two-thirds of $5.8 billion meant to repair flooded schools, libraries, sewers and roads is unspent.

Roadblocks and bottlenecks will likely be a feature of the stimulus. With so many different programs targeted to similar sounding goals, you can be certain that regulatory communication breakdowns between agencies and state and local governments will be frequent. Localities and states will have to become experts on regulatory details that govern the use of funds — and be careful not to assume they can combine funding streams for an identified project.

If Hurricane Katrina aid is a guide, the stimulus spending will be anything but immediate.