In the aftermath of Hurricane Harvey's hit on Texas, and with Hurricane Irma threatening Florida, let's all acknowledge one reason for the vulnerability of Americans who live in low-lying coastal regions of the Sunbelt: The federal government has been paying people to locate there.
Not explicitly, of course. But an abundance of inexpensive housing is a big attraction. And a big factor in the low cost of housing in the Houston area is that developers are free to build almost anywhere, including marshy, low-lying areas where land is cheap.
The chance of being swamped deters some people, but the government offers flood insurance to pay for repairing and rebuilding. The owners of a Houston home that flooded 16 times in 18 years got more than $800,000 in payments--for a house worth just $115,000.
The folly of the government's flood insurance program has been evident for decades, and some Midwestern communities have been in on the action. We've written about how federal flood insurance has serially benefited many of those who refuse to move from river floodplains, sometimes to a fault. After the Mississippi River flood of 1993, one Grafton, Ill., resident explained to a reporter that he had collected $24,000 in federal insurance for damage to his small house from floods in 1979, 1982, 1986 and 1992. For '93, he expected another $32,000. His total insurance premiums since buying the house in 1975: $6,000.
Thanks to past storms, the flood insurance program has a $25 billion deficit. The Congressional Budget Office found that coastal counties at risk from tropical storms make up just 10 percent of all the counties with federal flood insurance policies--but generate 75 percent of the claims and most of the deficit.
So why is the public subsidizing the risk in these places? Because the people living there, the politicians they elect, the businesses they patronize and various interest groups (such as home builders and the real estate industry) have strong stakes in preserving this program.
In 2012, Congress passed a modest package of sensible changes that would have raised costs to the flood-prone. But two years later, feeling the political heat, lawmakers backtracked.
Homeowners located in areas that are expected to flood every 100 years are required to buy flood insurance if they want federal insured mortgages. But they pay rates far lower than the risks warrant.
Editorial on 09/09/2017