## Invited Paper Prepared for Publication in the 

## Annals of the American Academy of Political and Social Science, March 2006

## 

## Hurricane Katrina and the Paradoxes of 

## Government Disaster Policy

**Bringing about Wise Governmental**

**Decisions for Hazardous Areas**

## 

## Contact Information:

## Raymond J. Burby, Ph.D., FAICP

## Professor of City and Regional Planning

## Department of City and Regional Planning

Campus Box 3140, New East Hall

## University of North Carolina at Chapel Hill

## Chapel Hill, NC 27599-3140

## Tel. 919-96204774 Fax: 919-962-5206

## Email: [***burby@email.unc.edu***](mailto:burby@email.unc.edu)

**Biographical Sketch**

> Raymond J. Burby is a professor of city and regional planning at the
> University of North Carolina at Chapel Hill. He is an associate editor
> of the *Natural Hazards Review* and former co-editor of the *Journal
> of the American Planning Association.* Burby is the editor of
> *Cooperating with Nature* (Joseph Henry Press, 1998), and co-author of
> *Making Governments Plan* (Johns Hopkins University Press, 1997) and
> *Environmental Governance* (Routledge, 1996). He is a member of the
> College of Fellows of the American Institute of Certified Planners.
> From 1992-2000 he was a Distinguished Professor of City and Regional
> Planning and held the DeBlois Chair in Urban and Public Affairs at the
> University of New Orleans.

**Keywords**

> Hurricane Katrina, Disasters, Public Policy, Hazard Mitigation,
> Comprehensive Plans, Building Codes, State Planning Mandate, National
> Flood Insurance Program

## Abstract

> *The unprecedented losses from Hurricane Katrina can be explained by
> two paradoxes. The safe development paradox is that in trying to make
> hazardous areas safer the federal government has in fact substantially
> increased the potential for catastrophic property damages and economic
> loss. The local government paradox is that while their citizens bear
> the brunt of human suffering and financial loss in disasters, local
> officials pay insufficient attention to policies to limit
> vulnerability. I demonstrate in this article that in spite of the two
> paradoxes disaster losses can be blunted if local governments prepare
> comprehensive plans that pay attention to hazard mitigation. The
> federal government can take steps to increase local government
> commitment to planning and hazard mitigation by making relatively
> small adjustments to the Disaster Mitigation Act of 2000 and the Flood
> Insurance Act. However, to be more certain of achieving a reduction in
> disaster losses I suggest that a major reorientation of the National
> Flood Insurance Program from insuring individuals to insuring
> communities is likely to be needed.*
>
> \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Economic losses from Hurricane Katrina, estimated to be over \$200
billion, are the largest for any disaster in U.S. history. Katrina
captured national and world attention, but it is just the most recent in
a series of increasingly severe catastrophic events (Cutter and Emrich,
2005). The 460 presidential disaster declarations of the 1990s were
double the number of the previous decade. That trend has continued
during the present decade, with 299 disaster declarations through
September 2005 (Federal Emergency Management Agency, 2005a, 2005b,
2005c). Of the 62 weather-related disasters that have resulted in \$1
billion or more in damages over the twenty-five years between 1980 and
2004, a quarter have occurred since 2000 (U.S. Department of Commerce,
2005).

In this article, I argue that the extensive damage in New Orleans and
the trend in increasing numbers and severity of disasters are the wholly
predictable (in fact, predicted) outcomes of well-intentioned, but
short-sighted, public policy decisions at all levels of government.
These decisions create two paradoxes. One I term the safe development
paradox, since I show that in trying to make hazardous areas safe for
development government policies instead have made them targets for
catastrophes. The second I term the local government paradox, since I
show that while citizens bear the brunt of losses in disasters, local
public officials often fail to take actions necessary to protect them.
The consequences of each paradox reinforce the other and in combination
lead to a never ending cycle of ever more unsafe urban development and
ever larger, ever more catastrophic losses from natural hazards.

The political considerations of the President and Congress that create
the safe development paradox are not likely to change. Federal
assistance following disasters is likely to increase with increasingly
severe disasters as will federal efforts to make places at risk safer
communities in which to live and work. What can change, I argue, is
uninformed local government decision-making about urban development that
results in millions of households and businesses occupying at-risk
structures in vulnerable locations. The vehicles for bringing this about
are federal policies that (1) require local governments to prepare
comprehensive plans that give due consideration to natural hazards and
(2) require local governments to assume greater financial responsibility
for the consequences of their urban development decision-making. Using
data on National Flood Insurance Program claims and payments in coastal
counties over a twenty-five year period, I show that comprehensive
planning requirements adopted by state governments already have resulted
in lower per capita losses from flooding. But, less than half of the
states require local governments to prepare plans and less than ten
states require that plans pay attention to natural hazards.

In the wake of Hurricane Katrina there is an opportunity for the federal
government to use the public concern created by the disaster to spur
more local governments to prepare comprehensive plans that address
hazard mitigation. In addition, if the government reorients the National
Flood Insurance Program so that more of the burden of responsibility for
insurance coverage is borne by local governments, local officials may
become more committed to limiting development in hazardous areas and to
mitigating the hazard to existing development at risk (see Burby and
May, 1998). This article points out several ways the government can
accomplish these ends and in doing so erase yet another paradox, noted
by Platt (1999, xvii), "On the one hand, the federal government is
called upon to assume a major share of state, local and private economic
costs of disasters...But on the other hand, the government at all levels
is increasingly impotent to demand...that local governments and
individuals assume the political and financial burdens of curtailing
unwise development in hazardous locations."

The article is organized as follows. In the next two sections, I
describe the two paradoxes and illustrate them with evidence from policy
choices made by federal, state, and local agencies in the New Orleans
area over the decades prior to Hurricane Katrina. Next I examine state
requirements for local government planning and building code enforcement
as a means of dealing with the adverse consequences of the paradoxes and
present empirical evidence on their effects in reducing disaster losses.
The article concludes with a brief look at various ways the federal
government can increase local government commitment to reducing
vulnerability to hazards by (1) requiring that they prepare
comprehensive plans with hazard mitigation elements and (2) requiring
that they assume more responsibility for insuring private and public
property at risk from hazards.

**Safe Development Paradox**

For most of this century, the federal government has pursued a policy
toward the use of hazardous areas that I term safe development. The
basic idea is that land exposed to natural hazards can be profitably
used if steps are taken to make it safe for human occupancy. The means
of achieving this have evolved over time but they basically include
measures to mitigate the likelihood of damage and measures to deal with
residual financial risk (see Platt, 1999; King 2005). To minimize
damage, they include federal financial support for flood and hurricane
protection works and beach nourishment, federal requirements through the
National Flood Insurance Program for safe building practices such as
elevation of construction in flood hazard areas, and federal incentives
for local government mitigation efforts through provisions of the
Disaster Mitigation Act of 2000 and National Flood Insurance Reform Acts
of 1994 and 2004. To minimize the adverse financial consequences for
individuals and businesses when steps to make development safe from
hazards fail (known technically as residual risk), the federal
government has provided generous disaster relief, particularly for
homeowners, low-cost loans to ease business recovery, income tax
deductions for uninsured disaster losses, and subsidized flood
insurance. The costs of these policies to the federal government were
estimated conservatively by Conrad et al. (1998, 5) at \$9.5 billion a
year (adjusted to 2005 dollars; this amount does not include the cost of
lost revenue through tax write offs and the cost of insurance
subsidies).^1^ The development stimulus of these policies is further
augmented by federal aid that reduces the cost to localities of
providing infrastructure in hazardous areas, such as water and sewerage
service and highway access (for further discussion of federal incentives
for the use of hazardous areas see H. John Heinz III Center, 2000).

The New Orleans metropolitan area's two largest parishes (Jefferson and
Orleans) provide examples of federal safe development policies in
action. This region is extremely susceptible to floods and hurricanes.
Over the 23-year period between 1978 and 2000, the two parishes were
exposed to 19 damaging flood events and 18 hurricane events, almost one
per year (Hazards Research Lab, 2005). Given this high level of risk,
Congress, following devastating hurricane losses in 1947, authorized
federal assistance for levees that would make it possible to convert
9,600 acres from wetland to "productive use." Following even larger
flood losses from Hurricane Betsy in 1965 (America's first billion
dollar hurricane) Congress authorized construction of the Lake
Pontchartrain and Vicinity, Louisiana, Hurricane Protection Project,
which sought to protect virtually all of Orleans Parish and the northern
(east bank) portion of Jefferson Parish from storm surge flooding from
hurricanes up to a 1 in 200-year recurrence interval (equivalent to a
category 3 hurricane). It proposed to do this by raising existing levees
and constructing new levees along much of the southern shore of the
lake. These levees would help prevent a recurrence of the losses
experienced from Hurricane Betsy, and, more importantly, they would
facilitate continued urbanization of this very hazardous region. In
fact, protection of *existing development* accounted for only 21% of the
benefits needed to justify the project. An extraordinary 79% were to
come from *new development* that would now be feasible with the added
protection provided by the improved levee system (Comptroller of the
Currency, 1976).^2^ At about the same time the Corps of Engineers was
formulating an improved hurricane protection system, Congress in 1968
passed the National Flood Insurance Act to enable households and
businesses to insure their property from flood damages, which most
commercial insurance companies refused to cover in standard property
insurance policies. This newly available insurance provided another
important federal underpinning for continued conversion of wetlands in
the parishes to urban uses.

Federal safe development policies had their *intended* effect in easing
development of hazardous areas in Jefferson and Orleans parishes. During
the decade after Congress authorized the Lake Pontchartrain hurricane
protection project and launched the National Flood Insurance Program,
Jefferson Parish added 47,000 housing units and Orleans Parish added
29,000. According to Lewis (2003, 76), "the metropolitan area ... simply
exploded into the swamps---first toward the East Bank section of
Jefferson Parish; more recently into the eastern reaches of Orleans
Parish and beyond." He goes on to note that "most of the newly developed
land is built on muck and is sinking at various rates. Much of the land
is subject to extremely dangerous flooding" (pg. 77). Although Hurricane
Betsy revealed the potential for widespread flooding of the low-lying
areas of both parishes, the construction of improved hurricane
protection works and availability of flood insurance evidently persuaded
thousands of households that the region was reasonably safe.

The development of the area east of the Industrial Canal, which contains
50% of the land area in the City of New Orleans, is a case in point. In
1960, before the new levee plan, eastern New Orleans consisted mostly of
wetlands with a few scattered highway commercial activities and
subdivisions along Downman Road and the Chef Menteur Highway (U.S. 90),
which linked New Orleans to the Mississippi Gulf Coast. With the pending
construction of the I-10 Twin Span across the east end of Lake
Pontchartrain and extension of the interstate through the heart of the
area and the decision to extend the city's hurricane protection levee
system to the east, the New Orleans City Planning Commission adopted a
plan in 1966 calling for intensive urban development in what later
became known as Planning District 9. The *New Century New Orleans Plan*
notes:

> Full scale development ensued ...and concurrent expenditures for
> streets, parks, schools, and sewerage and drainage was the largest
> single factor to change the land use profile ... as well as make the
> area a significant growth area for the future development of the
> Metropolitan area...the area continued to grow from 1975 to 1985. New
> subdivisions were developed at a rapid pace...(and) major commercial
> centers developed and prospered (City Planning Commission, 1999, 188).

Further to the east in Planning District 10, the 1970s saw the
development of NASA's 830-acre Michoud rocket assembly facility, which
is a major employer in the region, and an attempt to build a major new
community (Pontchartrain New Town-In town Plan) with support from the
federal new communities program. When the federal program was shut down
in 1975, these projects, renamed Orlandia and New Orleans East,
proceeded as wholly private ventures that hoped to provide housing for
an estimated 250,000 residents. Even though the pace of development
slowed after 1985, between 1970 and 2000 this area of former marshes and
swamps saw more than 22,000 new housing units built and the city wanted
more. In its 1999 *New Century New Orleans Land Use Plan*, the city
planning commission argued,

> Moreover, there are extensive opportunities for future development of
> the vacant parcels that range from single vacant lots to
> multi-thousand acre tracts. Long term, these development opportunities
> represent not only population increases but also significant potential
> employment for the city (City Planning Commission, 1999, 201).

Ironically, just six years later, the entire area of urban growth the
city had been promoting and the Corps protecting for forty years was
entirely under water.

As the experience of New Orleans illustrates, federal policy has had its
*intended* effect of facilitating and sustaining development in
hazardous areas. The paradox is that in trying to make the most
hazardous parts of New Orleans safe for urban expansion it had the
*unintended effect* of contributing directly to the devastation of
Hurricane Katrina. It did that by increasing the amount of development
possible in low-lying, flood-prone areas such as New Orleans East; and,
some contend, by providing levee protection and new drainage works to
that area of suburban growth, the Corps and city diverted resources that
could have been used to improve drainage, pumping capacity and levees in
older areas of the city (see Drew, 1984, 1, 10).

Supposedly safe development in New Orleans (and elsewhere) has proven to
be unsafe for several reasons including limitations of flood and
hurricane protection works and limitations of the National Flood
Insurance Program's efforts to control losses through floodplain mapping
and regulation of construction practices. Flood control and hurricane
protection measures have serious limitations, most of which are not
recognized by households and businesses who put themselves at risk by
locating in potentially hazardous areas. These limitations include: (1)
design limits that can lead to levees being overtopped by flood and
hurricane events that are larger than they were designed for and (2)
design flaws and construction and maintenance shortcomings that lead to
protective works being breached when they cannot stand up to the forces
exerted by large flood and hurricane events. Both apparently contributed
to the levee failures along three New Orleans canals that flooded the
city (Carter, 2005). This occurrence is not unique inasmuch as FEMA
estimated in 1987 that levee overtopping or failure was involved in
approximately one third of all flood disasters. Concern about them is
also not recent. Noted geographer Gilbert White observed in 1975 that
flood control works "...will be of little value if the reduction in
damages that they accomplish is more than offset by new damage potential
resulting from additional development in floodplains" (White, 1975,
xviii). This potential was demonstrated by Burby and French (1985), who
studied more than 1,200 communities with flood hazards and found a
positive correlation between the degree to which communities used flood
control works to limit their vulnerability to flooding and the amount of
new development taking place in their flood hazard areas *after* the
flood control works were completed.

The National Flood Insurance Program tries to limit flood losses by
imposing construction standards that reduce the likelihood of newly
constructed buildings being flooded. These standards, which must be
adopted and enforced by local governments as a condition for
participation in the program, include elevation or floodproofing to the
level of floods with a 1 in 100 chance of occurring in any given year.
For a variety of reasons, that level of protection is not achieved in
some cases and even when achieved may not be adequate (see Burby, 2002
for a fuller elaboration of these issues). For one, accurate estimation
of flood risk is a critical ingredient in regulating the elevation of
new development, but the program has had difficulty doing that because
it has been unable to update in a timely manner flood insurance rate
maps to take into account increased flood risk from sea-level rise,
subsidence, coastal erosion, or increased runoff as watersheds develop
in urban areas. Flood insurance is available, but buildings are not
required to be elevated in areas at risk from dam and levee failure,
areas with localized stormwater drainage flooding, or in small
watersheds of less than one square mile. As a consequence of these
problems, the NFIP has regularly not been able to cover its costs from
premiums and has had to borrow from the Treasury. According to Pasterick
(1998) operating losses occurred annually between1972 and 1980 and in
the years 1983, 1984, 1989, 1990, 1992, 1993, 1995 and 1996. An
operating loss also occurred in 2004, and with more than \$22 billion in
expected claims from Hurricanes Katrina, Rita, and Wilma in 2005, the
program will require an infusion of money from the Treasury that it will
not be able to repay from future premium income (Crenshaw, 2005, A8). To
the degree the program fails to adequately reflect risk in rates and
operates at a loss, it subsidizes the occupancy of hazardous areas and
facilitates more development than is economically rational.

Furthermore, the basic standard of protection used by the NFIP---the
100-year flood event---may be ill-advised, since most flood losses in
the U.S. stem from less frequent flood events. One early study reported
that 66% of losses in floods come from events with recurrence intervals
less frequent than the 100-year flood (Sheaffer et al., 1976). Another
study reported that 83% of losses from hurricane winds and flooding come
from Category 3, 4 and 5 storms, which have recurrence intervals lower
than the 100-year event (Pielke and Landsea, 1997). Tropical Storm
Allison in 2001 flooded 45,000 buildings in the Houston area, but only
7,000 were located within 100-year floodplains. In recognition of the
limitation of the 100-year flood standard, the Association of State
Floodplain Managers (2000) recommends that the 500-year flood be used in
regulating the elevation of new urban development.

In addition to limitations in its ability to limit losses to new
development, by subsidizing rates for existing development, the program
provides little incentive for property owners to take steps on their own
to reduce flood vulnerability. Household surveys by Burby et al. (1988)
and Laska (1991) found that less than 15% of property owners took action
to improve their buildings prior to experiencing flood losses. There are
a variety of reasons, in addition to subsidized flood insurance, for
this inaction, including misperception and underestimation of the risk
of flooding, inability to recover investments in mitigation investments
through higher resale values, budget constraints, and expectations that
federal disaster relief will cover losses. For the NFIP, the
consequences have been dire since repetitively flooded properties (which
account for about 2% of all NFIP policies) account for more than 25% of
claims payments made (see Anderson, 2000).

In summary, federal policies have sought to make areas at risk from
natural hazards safe places for urban development by reducing the degree
of hazard and by shielding hazard-area occupants from financial risks of
loss. Over time, these policies have facilitated the development of
these areas, as illustrated by urban growth in New Orleans, but they
have increased the potential for catastrophic losses in large disasters.
In this sense, Hurricane Katrina and the flooding of New Orleans could
be viewed as an expected consequence of federal policy rather than an
aberration that is unlikely to be repeated.

**Local Government Paradox**

Mileti (1999, 66) scrutinized the \$500 billion in losses from natural
disasters in the United States between 1975 and 1994. He found that a
relatively small proportion was covered by federal disaster relief, and
that most losses were not insured. Instead, "losses were borne by
victims." Given that the incidence of disaster losses is primarily borne
by local residents and businesses, one would expect that avoidance of
losses would be a high priority for local officials. The paradox is that
this is typically not the case.

Prior to being coerced into adopting floodplain management regulations
by the National Flood Insurance Act in 1968, virtually no local
governments in the U.S. had adopted building or zoning regulations to
minimize flood losses (e.g., see Murphy, 1958). Although thousands of
governments subsequently adopted the minimum building standards needed
to participate, many did not enforce them seriously or take other
actions to deal with flood and hurricane risks. In South Carolina, for
example, building code violations were found to be an important cause of
damages from Hurricane Hugo in 1989 (All-Industry Research Advisory
Council \[AIRAC\], 1989). In south Florida, a quarter of the \$16
billion in insured losses from Hurricane Andrew in 1992 were attributed
to Dade County's failure to enforce its building code (Building
Performance Assessment Team, 1992). A study by the Southern Building
Code Congress International, Inc. (1992) found that more than half of
local building officials surveyed on the Gulf Coast did not understand
or enforce the provisions of the Southern building code related to
hurricane wind damage.

Three examples of decision-making in the New Orleans area illustrate a
lack of local government concern about hazards. Grunwald and Glasser
(2005) in an article in the *Washington Post* on the New Orleans levee
systems wrote, "Local officials often resisted proposals to protect
their communities from storms because they did not want to pay their
share of federal projects." Decisions recounted to support this
contention include the following. The Orleans Parish Levee Board lobbied
the Corps of Engineers for protection to the level of a 100-year, rather
than 200-year, hurricane after the local share of the cost of the Lake
Pontchartrain and Vicinity Project had escalated many times beyond
original estimates. The levee district also opposed hurricane protection
floodgates at the mouths of the city's drainage canals, which led to the
construction of the walls along the canals that failed in Katrina. As
another example of low priority for flood protection, in the early 1980s
the Federal Insurance Administration launched a subrogation suit for
over \$100 million against Jefferson, Orleans, and St. Bernard parishes
(subrogation occurs when an insurance entity which pays its insured
client for losses then sues the party it contends caused the damages).
The FIA contended the parishes caused it to pay excessive flood
insurance claims by failing to maintain levees and failing to enforce
elevation requirements for new construction, which then led to buildings
being flooded and their owners to seek compensation from the federal
flood insurance program. The courts ruled in the FIA's favor and ordered
the parishes to improve their levee maintenance and enforcement
practices (see Malone, 1990). As a third example, the City of New
Orleans did not update its 1970 comprehensive plan for almost thirty
years. When it got around to this in 1999, its *New Century New Orleans
Land Use Plan* made absolutely no mention of the extreme flood hazard
facing the city, ways of mitigating the hazard through land use or
building regulations, or how the city might recover from an event such
as Hurricane Katrina.

There are many reasons for the local government paradox. In his national
assessment of natural hazards in the U.S., Mileti (1999, 160) touched on
several of them.

> Few local governments are willing to reduce natural hazards by
> managing development. It is not so much that they oppose land use
> measures (although some do), but rather that, like individuals, they
> tend to view natural hazards as a minor problem that can take a back
> seat to more pressing local concerns such as unemployment, crime,
> housing, and education. Also, the costs of mitigation are immediate
> while the benefits are uncertain, may not occur during the tenure of
> current elected officials, and are not visible (like roads or a new
> library).

May (1991) notes that these local political factors stem in part from
the lack of citizen concern about hazards, which he believes creates a
"policies without publics" dilemma that stifles local policy
initiatives. In addition, other scholars believe federal encouragement
of the intensive use of areas exposed to natural hazards has created a
form of "moral hazard" that discourages local governments (and
individuals) from taking actions to reduce the risk of loss.

Moral hazard is an insurance term that refers to cases where the
availability of insurance protection lowers an insured party's incentive
to avoid risk. Insurance companies try to counter this through the use
of deductibles and the threat of canceling policies if claims are too
frequent. The potential for moral hazard in the federal approach to
natural hazards was first noted by the Interagency Floodplain Management
Review Committee (1994, 180) following disastrous floods in the upper
Midwest in 1993. In commenting on the potential for federal programs to
create a form of moral hazard the committee observed, "...through
provision of disaster assistance and, in some cases, enhanced flood
protection, the government may in fact be reducing incentives for local
governments and individuals to be more prudent in their actions." Also
written in 1994, the House Bipartisan Natural Disasters Task Force
stated, "If state and local governments believe that the federal
government will meet their needs in every disaster, they have less
incentive to spend scarce state and local resources on disaster
preparedness, mitigation, response and recovery...(and) people are
encouraged to take risks they think they will not have to pay for"
(quoted in Platt, 1999, 39). Finally, Mileti (1999, 7) has argued that a
"scattershot approach, as well as the federal and state trend to cut
risk and assume liability, has undermined the responsibility of local
governments for using land-use management techniques to reduce exposures
to hazards." ^3^

By the 1990s, various federal programs were being adjusted to deal with
the moral hazard issue. The Stafford Act in 1988 and more recent
Disaster Mitigation Act of 2000 both provide federal assistance for the
preparation of state and local hazard mitigation plans and
implementation of disaster mitigation projects. Although the Stafford
Act has been found to be ineffective in many cases (see Godschalk et
al., 1998), some of the problems identified may be countered by the more
recent DMA 2000 legislation. A similar effort has been made to counter
the potential of the National Flood Insurance Program to foster local
complacency toward flood hazards. The Flood Insurance Reform Act of 1994
established incentives for the preparation of floodplain management
plans and other flood mitigation measures, and the Flood Insurance
Reform Act of 2004 provided tools for dealing with repeatedly flooded
properties. However, the degree to which any of these efforts have had
an effect on local government commitment to dealing with hazards is not
known at this time.

**Avoiding the Two Paradoxes**

The paradoxes that contributed to the flooding of New Orleans are coming
to be widely recognized. An October 2005 analysis by the Brookings
Institution Metropolitan Program notes,

> Federal policies and investments in flood protection facilitated
> development in dangerous locations...and failed to discourage
> floodplain development...(T)he traditional federal deference to state
> and local land-use planning has meant that federal spending on levees
> and other protections has been unaccompanied by sensible restrictions
> on subsequent construction...At the same time, the availability of
> subsidized federal flood insurance for new development in flood
> plains...also represents a failure of Washington to take the lead in
> discouraging communities from building in harm's way. (Brookings
> Institution Metropolitan Program, 2005, 23, 25)

It seems obvious that unless the two paradoxes discussed here are
addressed directly in federal policy, the devastation brought about by
Katrina will be repeated continuously across the United States.

Having noted this, it seems to me unlikely that the pork barrel politics
that sustain federal investments in flood and hurricane protection,
federal disaster relief, and federal insurance subsidies are likely to
change even though policy analysts increasingly recognize their adverse
effects. What can change is how local governments manage the development
and redevelopment of areas at risk. A series of studies supported by the
National Science Foundation has shown that through appropriate land-use
planning and oversight of development, risk and damages from hazards can
be significantly reduced (see Burby et al., 1998; Olshansky, 2001;
Nelson and French, 2002; Burby, 2005).^4^ The difficulty, given the
local government paradox, is how to bring this about.

One approach state governments have used is to formulate state building
codes and planning policies and to mandate that local governments
enforce the codes and prepare comprehensive plans that are consistent
with the policies. To determine whether these state requirements are
having an effect on loss reduction, I examined the distribution of flood
insurance claims and amount of claims payments made by the National
Flood Insurance Program in coastal counties of the Atlantic, Gulf, and
Pacific states over the twenty-five year period from January 1, 1978
through December 31, 2002. These states differed significantly in their
requirements regarding local enforcement of building codes and local
planning for urban development and redevelopment, as shown in Table 1.
Six coastal states, including each of those hit by Katrina, required
*neither* local code enforcement nor local comprehensive plans. Eight
states required local governments to enforce codes or to develop plans,
but not both; and ten states required both local code enforcement and
local formulation and adoption of comprehensive plans. Most of the
states that required both code enforcement and planning also required
that plans address natural hazards.

The number of NFIP insurance claims per capita for compensation of flood
damages and the per capita dollar amount of payments made to settle
claims were *highest* in states that did not require responsible
behavior---neither building code enforcement nor comprehensive
plans---from their local governments. They were lowest in states that
required one or both from their local governments, as shown in Table 2.
The three states hardest hit by Hurricane Katrina left decisions about
code enforcement and planning for urban development and redevelopment
wholly to local discretion. The consequences for them and the nation
have been calamitous. Among all coastal counties, the NFIP experienced
13 flood-loss claims per thousand residents between 1978 and 2002. In
Louisiana the rate was 55 claims per thousand residents of coastal
counties, while it was 31 and 32 in Alabama and Mississippi
respectively. Dollar losses per capita were \$133 among all coastal
counties. They were \$530 per capita in Louisiana, \$337 per capita in
Alabama, and \$277 per capita in Mississippi.

The statistical association between state requirements for the
preparation of local comprehensive plans and lower per capita NFIP
claims and payments continues when adjustments are made for a number of
other factors that affect the likelihood of suffering flood damages,
including the number of severe weather events experienced over the
twenty-five year period, population size and density, population growth,
and the value of homes at risk.^5^ However, when these other factors are
statistically controlled in multivariate analyses, the impact of
planning mandates is lower (a reduction in losses of about 1%) and the
existence of a building code enforcement mandate is no longer
statistically significant. These results are shown in the appendix.

Also revealing is a comparison of Florida and Texas, two states that
escaped damage from Hurricane Katrina but are similar in other ways in
terms of coastal urbanization and storm history. Texas has chosen to
leave decisions about building code enforcement and planning wholly to
the discretion of local governments. Florida mandates local code
enforcement, and since 1975, it has required the preparation of local
comprehensive plans. Florida, but not Texas, requires that comprehensive
plans develop and implement objectives for hazard mitigation (see Deyle
et al., 2005). Flood insurance claims from coastal residents between
1978 and 2002 were 1 per thousand residents in Florida, but 21 per
thousand residents in Texas. Flood insurance payments per capita were
\$71 in Florida but \$325 in Texas.

Table 1. State Requirements for Local Government Building Code
Enforcement and Comprehensive Plans in Atlantic, Gulf and Pacific States

  -------------------------------------- --------------------------------
  State Requirements for Local           States (number of coastal
  Government Building Code Enforcement   counties/parishes)
  and Comprehensive Plans                

  No state local government building     6 states with 58 counties:
  code enforcement or comprehensive plan Alabama (2), Louisiana (25),
  requirements                           Mississippi (3), New Hampshire
                                         (2), Pennsylvania (3), Texas
                                         (23)

  State local government building code   3 states with 37 counties:
  enforcement requirement but not        Connecticut (4), New Jersey
  comprehensive plan requirement         (17), New York (16)

  State local government comprehensive   5 states with 33 counties:
  plan requirement but not building code Delaware (3), Georgia (6),
  requirement                            Hawaii (5), Maine (10), South
                                         Carolina (9)

  Both state local government building   10 states with 236 counties:
  code and comprehensive plan            Alaska (19), California (22),
  requirement^a^                         Florida (67), Maryland (17),
                                         Massachusetts (9) (plan
                                         requirement for larger cities
                                         and towns), North Carolina (20),
                                         Oregon (13), Rhode Island (5),
                                         Virginia (46) ^b^, Washington
                                         (17) (plan requirement for high
                                         growth counties only)
  -------------------------------------- --------------------------------

Notes:

> ^a^Local governments in seven of these ten states (California,
> Florida, Maine, Maryland, North Carolina, Oregon, South Carolina) are
> also required to include a hazards element in the comprehensive plan.
>
> ^b^Includes independent cities as well as counties.
>
> Source: Schwab, 2002.

**Sharing the Burden**

In this article, I've argued that two paradoxes help explain the
devastation caused by Hurricane Katrina in New Orleans and can be
expected to contribute to similar disasters in the future. The *safe
development paradox* occurs when federal efforts to make inherently
hazardous areas safe for development in fact make them highly
susceptible to disasters of catastrophic proportions. In New Orleans
these federal efforts consisted primarily of funding hurricane
protection levees and other flood control works to promote urban
development in the "protected" areas and the provision of flood
insurance at subsidized rates. The *local government paradox* occurs
when local governments, whose citizens bear the brunt of human suffering
and financial loss when disasters occur, give insufficient attention to
threats posed by hazards when they allow the intensive development of
hazardous areas. In New Orleans, this paradox is illustrated by the
city's facilitation of development in eastern New Orleans and by the
Orleans Parish Levee

Table 2. Mean per Capita NFIP Claims and Payments, 1978-2002, in Coastal
Counties by Presence or Absence of State Building Code Enforcement and
Comprehensive Planning Mandates

+---------------------------------+-----------------+-----------------+
| State Requirement               | Mean Per 000    | Mean Per Capita |
|                                 | Capita          |                 |
|                                 |                 | (std error)     |
|                                 | (std error)     |                 |
+---------------------------------+-----------------+-----------------+
| Neither code enforcement nor    | 30              | \$299           |
| plan mandate (n=58)             |                 |                 |
|                                 | \(4\)           | (\$46)          |
+---------------------------------+-----------------+-----------------+
| Code enforcement but not plan   | 11              | 79              |
| mandate (n=33)                  |                 |                 |
|                                 | \(5\)           | \(31\)          |
+---------------------------------+-----------------+-----------------+
| Plan but not code enforcement   | 9               | 137             |
| mandate (n=32)                  |                 |                 |
|                                 | \(3\)           | \(55\)          |
+---------------------------------+-----------------+-----------------+
| Both code enforcement and       | 10              | 99              |
| planning mandated (n=224)       |                 |                 |
|                                 | \(2\)           | \(16\)          |
+---------------------------------+-----------------+-----------------+
| Statistical sig. (one tail p)   | .007            | .001            |
|                                 |                 |                 |
| Code mandate                    | .001            | .03             |
|                                 |                 |                 |
| Plan mandate                    | .003            | .009            |
|                                 |                 |                 |
| Code mandate\* plan mandate     |                 |                 |
+---------------------------------+-----------------+-----------------+

Board's unwillingness to help underwrite the costs of higher levels of
flood and hurricane protection.

The two paradoxes help account for the upward spiral in the frequency
and magnitude of natural disasters. If this trend is to be slowed or
reversed, I believe it will be necessary for local governments to share
more of the burden of disasters through careful planning and management
of development in hazardous areas and by assuming more of the financial
responsibility for development at risk. I've shown that where states
have required local governments to prepare and implement comprehensive
plans for urban development, losses from flooding are lower than they
are when states leave these matters solely to local governments'
discretion. State requirements for building code enforcement also may
have some effect, although it could not be confirmed in multivariate
analyses. Not surprisingly, the states of Alabama, Louisiana, and
Mississippi have been noteworthy for their reluctance to interfere in
local land-use and development decision-making. In contrast, equally
flood- and hurricane-prone Florida has demanded local action, and as a
result per capita flood losses over twenty-five years have been much
lower there.

There are two relatively easy-to-accomplish steps the federal government
could take to encourage local governments to prepare comprehensive
plans. First, the Disaster Mitigation Act of 2000 could be amended to
require that regular mitigation plan updates mandated by the legislation
be integrated into local comprehensive plans, where they exist. Without
this step, the mitigation plans are likely to be ignored in local
government decision-making because of the lack of commitment to hazard
mitigation activities noted earlier. Many states require that local
government land-use and infrastructure decisions be consistent with
comprehensive plans. Thus, by incorporating mitigation plans into
comprehensive plans, the mitigation plans to some extent would be
self-enforcing in the sense that local officials would have to pay
attention to them as they make decisions about public investments and
development permits. In addition, this would provide a stimulus to
broaden the scope of mitigation plans beyond narrow safe development and
emergency management considerations.

Second, the Flood Insurance Act could be amended to add the preparation
of local comprehensive plans with hazard mitigation provisions as a
condition for continued participation in the program. At present,
participation in the program is conditioned on local governments'
agreement to adopt and enforce building regulations to reduce the
likelihood of flood damage. Previous research has shown that local
governments with plans are more likely than those without plans to use
land-use regulations, in addition to the building regulations, to reduce
vulnerability to flooding (Burby and Dalton, 1994). Financial assistance
could be provided to the states to encourage them to facilitate this
through parallel state legislation and to also provide technical
assistance to localities.

The two policy changes suggested above would be beneficial, but given
the lack of concern for hazard mitigation revealed by the local
government paradox, I believe a sea change in government policy is
likely to be needed before the trend in increasing disaster losses can
be halted. The major change in approach I have in mind would involve
amendment of the Flood Insurance Act to shift the program from insuring
individuals and businesses for flood losses to insuring communities (and
all of their dwellings and commercial/governmental buildings). With this
new approach, flood insurance coverage and premiums would be based on
the degree of exposure to loss in jurisdictions (i.e., the aggregate of
the current number of dwellings and other buildings located within the
500-year floodplain and other areas at risk of flooding localities
wished to insure plus some set coverage for personal property). Local
governments could pay the premiums from general fund revenues,
raising tax revenue from all citizens or businesses, but, most likely,
they would set up special assessment districts or stormwater/flood
insurance utilities to raise the required funds from properties that
benefit from the flood insurance coverage. Stormwater utilities are
being used increasingly by localities to fund stormwater management
activities required by the U.S. Environmental Protection Agency to curb
nonpoint source pollution. In cases where local governments refuse to
participate, which might be the case when they have few properties at
risk or cannot raise the revenue needed to pay flood insurance premiums,
state governments could take responsibility for acquiring needed
insurance and requiring that both local governments and property owners
take steps to reduce their risk of flood loss.

This revolutionary change to the flood insurance program might have a
number of benefits:

1.  If a community chose to participate in the program, *all* of its
    flood-prone dwellings and businesses would be covered, which would
    avoid the problem of a high proportion of properties without
    insurance as has been the case in many flood disasters. For
    communities with any degree of flood risk, there would obviously be
    tremendous political pressure to participate in the program.

2.  Incentives for community participation, such as the withholding of
    disaster relief benefits for the amount of losses that would have
    been paid by flood insurance if the community were participating in
    the program, could be created and, with adequate political will,
    enforced.

3.  The cost of insurance coverage could create incentives for state and
    local governments to reduce the risk of flood loss and the size of
    the insurance premiums they pay. They also might think more
    carefully about plans for development and redevelopment of flood
    hazard areas and be less willing to approve new development in these
    areas. If communities use some version of a stormwater utility to
    fund insurance premiums, there would be a direct link between flood
    insurance and local land use and water resources management.

4.  The change from an individual- to a community-based program would
    also make it possible for the NFIP (or private insurance companies)
    to more precisely align premium amounts with risk and allow the
    creation of stronger incentives for risk reduction. It could
    encourage local governments to take steps to reduce risk through
    retrofit or relocation of properties most at risk of flooding. In
    addition, it might be possible to begin insuring infrastructure at
    risk in flood hazard areas, as called for by Platt (1999, 291).

There could be significant political opposition and government costs
involved in the transition from the current flood insurance program to
this new one. But, I suspect that the advantages of wider flood
insurance coverage and the benefits in reduced federal flood insurance
and disaster assistance costs would outweigh them. In addition,
potential state and local opposition might be muted if Congress passes
the Safe Communities Act of 2005 (HR 3524, 109^th^ Congress, 1^st^
Session), which authorizes significant financial assistance to help
communities integrate hazard mitigation into their on-going
comprehensive planning and urban development decision-making. Similar
legislation to the Safe Communities Act was recommended by the
Interagency Floodplain Management Review Committee (1994, xi) following
the 1993 Midwest floods.

**Concluding Note**

Obviously, before they could be seriously considered, the policy
initiatives suggested here would require additional examination of the
procedural changes that would be needed to bring them about and in-depth
analysis of their benefits and costs and potential for unintended
consequences. Nevertheless, there are several reasons for thinking them
worth that effort. The policies proposed are cooperative in nature. They
are designed to increase local government commitment to hazard
mitigation primarily through the creation of new, more powerful
incentives. Although they would increase government costs in the short
run, that would be counterbalanced by improved financial security for
both citizens and local governments. As local officials take steps to
improve safety from hazards costs would decline over time. In addition,
federal financial assistance to meet insurance costs could be provided
to particularly poor communities, so that budgetary considerations do
not preclude them from insuring their residents. By providing a means to
extend flood insurance to *all* local residents and businesses at risk,
the suggested policies promise to speed recovery when disasters occur.
By strengthening incentives for states and localities to do what they
should already be doing on their own initiative---paying systematic
attention through existing local planning mechanisms to finding ways to
reduce hazards vulnerability---they promise to halt and possibly reverse
the trend in increasingly serious natural catastrophes.

**Acknowledgements**

I would like acknowledge the assistance of University of North Carolina
at Chapel Hill research assistants Anna Davis, Leanna Hush, and Mary
Margaret Shaw in assembling the data used in the statistical analyses of
NFIP claims and payments reported here. The article benefited greatly
from comments on an earlier draft provided by Philip Berke, Nan Burby,
Thomas Campanella, Peter May, Anthony Mumphrey, and Mary Margaret Shaw.
I am also grateful for assistance provided by the National Science
Foundation through research grant CMS-0100012 to the University of North
Carolina at Chapel Hill. Of course, the findings and opinions presented
here are not necessarily endorsed by the National Science Foundation or
those who provided assistance with the research.

**Endnotes**

^1^ This estimate was derived from calculations of the average annual
costs of federal disaster preparedness, response,
recovery/reconstruction, and mitigation programs of the following
federal departments and agencies: Agriculture, Commerce, Corps of
Engineers, Education, FEMA, Interior, and Transportation. It does not
include costs borne by state and local governments or private
individuals and businesses.

^2^ Subsequent to authorization of the Lake Pontchartrain project,
Congress has authorized the Corps to construct four additional hurricane
projection projects, including one to add to and strengthen levees
protecting the west bank sections of Jefferson and Orleans parishes
(Carter, 2005). However, the Lake Pontchartrain Hurricane Protection
Project fell behind its construction schedule, in part because by the
1980s costs of the project had escalated more than 1,000 percent. In
addition, according to Grunwald and Glasser (2005, 5), "Local officials
resisted the goal of Category 3 protection for their communities as
overly extravagant. In 1982, the Orleans Levee District urged the Corps
to 'lower its design standards to provide more realistic hurricane
protection' and argued that 100-year protection would be fine."

^3^ The potential for moral hazard to undercut local officials' interest
in hazard mitigation is based primarily on anecdotes and the opinions of
various disaster experts. I am unaware of any systematic empirical
studies that have demonstrated a link between the provision of disaster
relief and a lower degree of local government hazard mitigation
activities. In fact, Burby et al. (1991, 109) studied the effects of
local government receipt of public assistance funds following disasters
and found that governments that had received federal disaster aid were
more, rather than less, likely to take steps to mitigate flood hazards
in comparison with governments that had not received federal disaster
assistance. They found no effect either way on local government
attention to earthquake hazards.

^4^ The expectation that plans will contribute to a reduction in
vulnerability to natural hazards is based on eight considerations: (1)
plans provide a systematic way to gather facts about hazards and
increase public awareness of them; (2) plans provide a way to
systematically examine the adequacy of existing hazard mitigation
measures being used; (3) plans enable citizens and local officials to
create a vision of hazard resilience and formulate specific policy goals
and objectives; (4) plans help to develop consensus about the need to
take action to reduce vulnerability and to find courses of action that
are politically acceptable; (5) plans improve the likelihood that
communities will investigate and use a variety of approaches to hazard
mitigation; (6) plans provide guidance to the day-to-day decisions of
local officials in approving or disapproving development proposals; (7)
plans help coordinate the actions of various local government
departments that affect vulnerability; and (8) plans provide the
rational nexus between the public interest and governmental actions that
is critical in defending them against legal attack. For further
elaboration of these benefits of planning, see Burby (2005).

^5^ Similar findings to these have been reported by Burby (2005) for the
impacts of state planning mandates in reducing private property
insurance claims. Also, May and Birkland (1994) and May and Feeley
(2000) have shown that state building code enforcement mandates spur
responsible local building code enforcement.

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Appendix. Factors Associated with Variation in National Flood Insurance
Program Claims in Coastal Counties, 1978-2002: OLS Multiple Regression
Models

+--------------------+--------+-----+-------+---------+-----+--------+
|                    | Number |     |       | Dollar  |     |        |
|                    | of     |     |       | Amount  |     |        |
|                    | NFIP   |     |       | of NFIP |     |        |
|                    | Claim  |     |       | Claim   |     |        |
|                    | Pa     |     |       | P       |     |        |
|                    | yments |     |       | ayments |     |        |
|                    | per    |     |       | per     |     |        |
|                    | C      |     |       | Capita, |     |        |
|                    | apita, |     |       | 19      |     |        |
|                    | 197    |     |       | 78-2002 |     |        |
|                    | 8-2002 |     |       | ^a^     |     |        |
|                    | ^a^    |     |       |         |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
|                    | B^b^   | Std | t-    | B^b^    | Std | t      |
|                    |        | B   | value |         | B   | -value |
|                    | (S.E.) |     |       | (S.E.)  |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| (Constant)         | -3.040 |     | -     | -1.198  |     | 0.449  |
|                    |        |     | 1.385 |         |     |        |
|                    | (      |     |       | (2.666) |     |        |
|                    | 2.195) |     |       |         |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| State building     | .355   | .09 | 1.239 | .396    | .09 | 0.943  |
| code enforcement   |        |     |       |         |     |        |
| mandate            | (.345) |     |       | (.419)  |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| State              | -.859  | -   | -2.60 | -1.111  | -   | -2.7   |
| comprehensive plan |        | .22 | 4\*\* |         | .25 | 70\*\* |
| mandate            | (.330) |     |       | (.401)  |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Interaction of     | -.409  | -   | -     | -.106   | -   | -0.200 |
| code enforcement   |        | .11 | 0.934 |         | .03 |        |
|                    | (.438) |     |       | (.532)  |     |        |
| and comprehensive  |        |     |       |         |     |        |
| plan mandate       |        |     |       |         |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| *Control           |        |     |       |         |     |        |
| variables*         |        |     |       |         |     |        |
|                    |        |     |       |         |     |        |
| Number of severe   |        |     |       |         |     |        |
| weather events     |        |     |       |         |     |        |
| 1978-2000^c^       |        |     |       |         |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Coastal storms     | \<.000 | .   | 0.046 | .003    | .02 | 0.264  |
|                    |        | 002 |       |         |     |        |
|                    | (.011) |     |       | (.013)  |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Floods             | .039   | .19 | 3     | .052    | .22 | 3.384  |
|                    |        |     | .142\ |         |     | \*\*\* |
|                    | (.013) |     | *\*\* | (.015)  |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Hurricanes         | .217   | .60 | 10    | .234    | .57 | 9.287  |
|                    |        |     | .455\ |         |     | \*\*\* |
|                    | (.021) |     | *\*\* | (.025)  |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Tornadoes          | -.005  | -   | -     | -.015   | -   | -1.109 |
|                    |        | .03 | 0.454 |         | .07 |        |
|                    | (.011) |     |       | (.013)  |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Thunderstorms      | -.007  | -   | -.548 | -.009   | -   | -0.637 |
|                    |        | .03 |       |         | .03 |        |
|                    | (.012) |     |       | (.015)  |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Property at risk   |        |     |       |         |     |        |
| (proxy variables): |        |     |       |         |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Population, 1980   | -.233  | -   | -2.75 | -.065   | -   | -0.631 |
| (log)              |        | .22 | 0\*\* |         | .05 |        |
|                    | (.085) |     |       | (.103)  |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Population change, | .015   | .03 | 0.640 | .025    | .04 | 0.850  |
| 1980-2000          |        |     |       |         |     |        |
|                    | (.024) |     |       | (.029)  |     |        |
| (log)              |        |     |       |         |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Median home value, | .535   | .16 | 2.61  | .434    | .12 | 1      |
| 1990               |        |     | 0\*\* |         |     | .742\* |
|                    | (.205) |     |       | (.249)  |     |        |
| (log)              |        |     |       |         |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Population         | -.015  | -   | -.256 | -.177   | -   | -2.4   |
| density, 1997      |        | .02 |       |         | .19 | 35\*\* |
| (log)              | (.060) |     |       | (.073)  |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Adjusted R ^2^     | .47    |     |       | .39     |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| F-Value            | 39.75  |     |       | 19.14   |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Significanee       | .000   |     |       | .000    |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+
| Number of cases    | 345    |     |       | 340     |     |        |
+--------------------+--------+-----+-------+---------+-----+--------+

> Notes:
>
> \*p\< 05, \*\*p\<.01, \*\*\*p\<.001 (one-tail test)
>
> ^a^ Natural log values of dependent variables.
>
> ^b^ B-values are unstandardized coefficients; (S.E.) are standard
> errors

^c^ Weather events that resulted in \$50,000+ in property damage.
Source: Hazards

Research Lab, 2005.