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S. HRG. 112–181 

FEDERAL DISASTER ASSISTANCE BUDGETING: ARE 

WE WEATHER-READY? 

HEARING 

BEFORE A

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

SPECIAL HEARING 

JULY 28, 2011—WASHINGTON, DC 

Printed for the use of the Committee on Appropriations 

( 

Available via the World Wide Web: http://www.gpo.gov/fdsys/browse/ 

committee.action?chamber=senate&committee=appropriations 
(II) 

COMMITTEE ON APPROPRIATIONS 

DANIEL K. INOUYE, Hawaii, Chairman 

PATRICK J. LEAHY, Vermont 

TOM HARKIN, Iowa 

BARBARA A. MIKULSKI, Maryland 

HERB KOHL, Wisconsin 

PATTY MURRAY, Washington 

DIANNE FEINSTEIN, California 

RICHARD J. DURBIN, Illinois 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

JACK REED, Rhode Island 

FRANK R. LAUTENBERG, New Jersey 

BEN NELSON, Nebraska 

MARK PRYOR, Arkansas 

JON TESTER, Montana 

SHERROD BROWN, Ohio 

THAD COCHRAN, Mississippi, Ranking 

MITCH MCCONNELL, Kentucky 

RICHARD C. SHELBY, Alabama 

KAY BAILEY HUTCHISON, Texas 

LAMAR ALEXANDER, Tennessee 

SUSAN COLLINS, Maine 

LISA MURKOWSKI, Alaska 

LINDSEY GRAHAM, South Carolina 

MARK KIRK, Illinois 

DANIEL COATS, Indiana 

ROY BLUNT, Missouri 

JERRY MORAN, Kansas 

JOHN HOEVEN, North Dakota 

RON JOHNSON, Wisconsin 

CHARLES J. HOUY, Staff Director 

BRUCE EVANS, Minority Staff Director 

SUBCOMMITTEE ON FINANCIAL SERVICES AND GENERAL GOVERNMENT

RICHARD J. DURBIN, Illinois, Chairman 

FRANK R. LAUTENBERG, New Jersey 

BEN NELSON, Nebraska 

DANIEL K. INOUYE, Hawaii (ex officio) 

JERRY MORAN, Kansas 

MARK KIRK, Illinois 

THAD COCHRAN, Mississippi (ex officio) 

Professional Staff 

MARIANNE UPTON

DIANA GOURLAY HAMILTON

MELISSA Z. PETERSEN

DALE CABANISS (Minority) 

ELLEN BEARES (Minority) 

LASHAWNDA SMITH (Minority) 

Administrative Support 

NORA MARTIN
(III) 

C O N T E N T S 

Page 

Opening Statement of Senator Richard J. Durbin ................................................ 1 

Prepared Statement of ..................................................................................... 5 

Prepared Statement of Howard Kunreuther and Erwann Michel-Kerjan .......... 6 

Natural Disasters Impose Severe Economic Losses .............................................. 6 

Why Are Disaster Losses Increasing? .................................................................... 6 

Increasing Role of Federal Disaster Assistance .................................................... 7 

Reducing Exposure to Losses From Disasters ....................................................... 7 

Why Individuals do not Protect Themselves Against Potential Disasters .......... 8 

The Key Role of Insurance ...................................................................................... 9 

Our Proposal: A Multi-year Insurance-Risk Reduction Loan Program ............... 10 

Lessons From an Energy Efficiency Program ....................................................... 10 

We Need To Act Now ............................................................................................... 11 

Catastrophe Modeling and the Exceedance Probability Curve ............................ 11 

Usefulness of the EP Curve .................................................................................... 12 

About RMS ............................................................................................................... 13 

Insuring Flood Risk ................................................................................................. 13 

Devastating Losses Require Better Insurance ...................................................... 14 

Limits of the NFIP as Currently Designed ........................................................... 14 

Better Tools for Disaster Financing ....................................................................... 15 

Letter From the Center for American Progress Action Fund .............................. 16 

Statement of Senator Jerry Moran ........................................................................ 19 

Statement of David C. Trimble, Director, Natural Resources and Environment, Government Accountability Office ........................................................... 20 

Prepared Statement of ..................................................................................... 21 

Climate Change Adaptation .................................................................................... 21 

Federal, State, and Local Authorities are Beginning To Take Steps To Adapt 

to Climate Change ............................................................................................... 22 

Why the GAO Did This Study ................................................................................ 28 

What GAO Found .................................................................................................... 28 

Statement of Kathryn D. Sullivan, Ph.D., Assistant Secretary of Commerce 

for Environmental Observation and Prediction, National Oceanic and Atmospheric Administration, Department of Commerce ...................................... 29 

Prepared Statement of ..................................................................................... 31 

Depiction of Gulf of Mexico Hypoxia Zone Image................................................. 33, 64 

What it Means ......................................................................................................... 33 

The Various Roles of NOAA ................................................................................... 34 

Achieving a Weather- and Water-ready Nation .................................................... 36 

Statement of James Rivera, Associate Administrator, Office of Disaster Assistance, Small Business Administration ........................................................... 38 

Prepared Statement of ..................................................................................... 40 

The SBA’s Role in Responding to a Disaster ......................................................... 41 

Budget Formulation Subsidy Estimates ................................................................ 41 

Additional Resources ............................................................................................... 41 

Significant Improvements Since Hurricane Katrina ............................................ 42 

Statement of Dr. Donald J. Wuebbles, The Harry E. Preble Professor of 

Atmospheric Sciences, University of Illinois-Urbana, Illinois .......................... 43 

Prepared Statement of ..................................................................................... 45 

Statement of Franklin W. Nutter, President, Reinsurance Association of 

America ................................................................................................................. 50 

Prepared Statement of ..................................................................................... 52 

Questions Submitted by Senator Richard J. Durbin ............................................ 68 

Questions Submitted to Kathryn D. Sullivan, Ph.D. ............................................ 68 
Page

IV 

Questions Submitted to David C. Trimble ............................................................ 72 

Dangers and Drawbacks of Fragmented Management ........................................ 72 

Addressing Government Challenges by Adapting Private Sector Tools ............. 73 
(1) 

FEDERAL DISASTER ASSISTANCE 

BUDGETING: ARE WE WEATHER-READY? 

THURSDAY, JULY 28, 2011 

U.S. SENATE, SUBCOMMITTEE ON FINANCIAL SERVICES

AND GENERAL GOVERNMENT, COMMITTEE ON APPROPRIATIONS, Washington, DC. 

The subcommittee met at 2 p.m., in room SD–138, Dirksen Senate Office Building, Hon. Richard Durbin (chairman), presiding. 

Present: Senators Durbin and Moran. 

OPENING STATEMENT OF SENATOR RICHARD J. DURBIN

Senator DURBIN. I’m pleased to convene this hearing to investigate the Federal Government’s responsibilities in terms of dealing 

with long-term planning to mitigate the economic impact of severe 

weather events. I welcome my distinguished ranking member, Senator Jerry Moran of Kansas. Other colleagues may join us on the 

dais today. And they will be invited to send in written questions 

if they’re not in attendance personally. 

Joining us today to contribute to the conversation are public officials and experts in disaster relief and catastrophe modeling from 

the Government, business, and scientific realm. 

Our first witness is going to be David C. Trimble, Director of the 

Natural Resources and Environmental Group with the Government 

Accountability Office (GAO). 

Our second witness is Kathryn D. Sullivan, Ph.D., Deputy Administrator and Assistant Secretary of Commerce for Environmental Observation and Prediction at the National Oceanographic 

and Atmospheric Administration (NOAA). Incidentally, Dr. Sullivan was the first woman to walk in space and previously served 

as the NOAA’s chief scientist. 

Our next witness is James Rivera, associate administrator for 

the Office of Disaster Assistance at the SBA. 

Our fourth witness is Dr. Donald J. Wuebbles. He is an endowed 

professor at the University of Illinois and recipient of the 2007 

Nobel Prize for his work with the intergovernmental panel on climate change. On a prouder note, Dr. Wuebbles is an Illinois native, 

son of a farmer, raised in Clinton County, Carlyle, Illinois. Glad 

that you’re here. 

Our final witness is Franklin W. Nutter, president of the Reinsurance Association of America. 

A famous political philosopher named Robert Allen Zimmerman, 

a.k.a. Bob Dylan, once said, you don’t have to be a weatherman to 
2 

know which way the wind is blowing. And we are going to discuss 

today how the wind is blowing in terms of weather events and 

whether we’re prepared for it. 

According to the NOAA’s National Climate Data Center (NCDC), 

the United States has already experienced eight natural disasters, 

with damages totaling more than $1 billion this year—eight. The 

previous record for weather-related disasters of this magnitude was 

nine in one year. We’re almost at that point and it’s only July. 

[The information follows:] 

NATURAL DISATSER LOSSES IN THE UNITED STATES—FIRST SIX MONTHS OF 2011 

[Dollars in millions] 

Event (As of July 6, 2011) Number of 

events Fatalities Estimated overall losses 

Estimated 

insured losses 

Severe thunderstorm ..................................................... 43 593 $23,573 $16,350 

Winter storm ................................................................. 8 15 1,900 1,425 

Flood .............................................................................. 8 15 2,100 ( 1 ) 

Earthquake .................................................................... 2 1 105 ( 1 ) 

Tropical cyclone ............................................................ ........................ ........................ ........................ ........................

Wildfire .......................................................................... 37 7 125 50 

1 In progress. 

SOURCE.—MR NatCatSERVICE. 

I fly home to Illinois every weekend. I can tell you that, during 

the last 6 months, I’ve seen it all. Chicago and Illinois have experienced blizzards, tornadoes, blistering heat, and severe flooding. 

In February, just a few months back now, Chicago—the thirdlargest city in the United States—was shut down with 2 feet of 

snow overnight, 60 mile-per-hour winds that hammered the city. 

That blizzard caused 36 deaths and more than $3.9 billion in damage. This spring, tornadoes damaged homes and businesses 

throughout our State. 

In May, flooding along the Ohio River was so severe, the Army 

Corps of Engineers was forced to blow a levy in Missouri to prevent 

homes in Cairo, Illinois, from being completely destroyed. 

Last Friday night, as I was telling Senator Moran, I was awakened by what I thought was a storm. It sure was. It dumped almost 

7 inches of rain in a little more than an hour, the largest single 

1-day rainfall in the history of recorded weather in the city of Chicago. The Metropolitan Water Reclamation District was forced to 

release untreated sewage into Lake Michigan. The system was 

overwhelmed. 

Last night, several parts of Illinois suffered severe rainstorms 

that caused the evacuation of hundreds of people and two fatalities. 

July is now the wettest month in the 122 years of Chicago’s recorded history. 

Illinois is not alone in these notable weather events. We’ve seen 

droughts in Texas, wildfires in Arizona and New Mexico, flooding 

in Tennessee, and according to Senator Moran, both drought and 

flooding in his State. 

Today, there are excessive heat warnings in more than 20 communities throughout Kansas, Senator Moran’s home State, and 

flood warnings along the Missouri River. 

In 2011 alone, almost $28 billion in damages have already been 

caused by catastrophic events, and hurricane season is just start-
3 

ing. The economic impact of severe weather events is only projected 

to grow in future years as the frequency and intensity of weather 

events continues to grow. 

As this chart will show you, the weather is getting worse and 

more violent; catastrophic, in fact. The Federal Government needs 

to do more to be ready to protect Federal assets and to provide disaster assistance on an increasing frequency. 

SOURCE.—MR NatCatSERVICE. 

Are we ready? Well, the private insurance industry is. I was surprised, Mr. Nutter, in visiting some of the leaders in your business, 

a year or two ago, and realizing how closely they follow weather 

and weather patterns, principally if they’re in the property and casualty realm. And they make business decisions about risk, and 

whether or not the risks are going to increase to the point where 

premiums have to go up or they stop writing insurance. And they 

make those decisions on a regular basis. 

You’re thinking ahead. I’m not sure the Federal Government is 

thinking ahead when it comes to our preparedness for disasters. 

Private insurers handled $89 billion in losses, sustained by 5.5 million policyholders, in the 2004 and 2005 hurricane seasons without 

any significant setbacks. 

Given the industry’s success, I want to see if there are budgeting 

practices the Federal Government could adapt from the private sector to better forecast how we budget for disaster assistance efforts. 

Another chart we can put up here, the SBA’s Disaster Loan Program provides a good example of the sporadic Federal budgeting 

associated with natural disasters. Historically, loan volumes under 

the program average $1 billion a year. 
4 

However, the actual amount fluctuates greatly from year to year 

and often differs significantly from the long-term average. In years 

with multiple catastrophic events, we are left scrambling to fund 

relief programs in the short term. In the meantime, we’re not focusing strategically on the long-term Federal budgetary impact of 

what we know is happening, increasingly severe weather events. 

With the potential for more severe disasters occurring with 

greater frequency, I have called this hearing to explore the Federal 

Government’s planning for spending on disaster relief. I don’t know 

that other committees are considering this, but because of our appropriations responsibility, with at least one of the agencies affected, I’ve tried to coordinate other Federal agencies in this conversation. 

PREPARED STATEMENTS

The cumulative expected exposure of the U.S. Government to 

weather-related disasters over the next 75 years could reach $7 

trillion with inflation. If we hope to put this country on a sustainable fiscal path, we need to be prepared to manage this increase 

in natural catastrophe. We can learn from the private sector how 

to better prepare. 

I ask unanimous consent that the submitted testimonies of Howard Kunreuther and Erwann Michel-Kerjan, and Risk Management 

Solutions, as well as a copy of an article entitled Redesigning Flood 

Insurance that appeared in Science magazine on July 22 be part 
5 

of the permanent record of this hearing. At this point, I’d like to 

turn it over to my colleague and friend, Senator Moran. 

[The statements follow:] 

PREPARED STATEMENT OF SENATOR RICHARD J. DURBIN

Good afternoon. I am pleased to convene this hearing to investigate how the Federal Government could improve its long-term planning to mitigate the economic impacts of severe weather events. 

I welcome my distinguished ranking member, Senator Jerry Moran, other colleagues who have joined me on the dais today, and others who may arrive during 

the course of these proceedings. 

Joining us today to contribute to this conversation are public officials and experts 

in disaster relief and catastrophe modeling from the government and scientific 

realms. 

Our first witness is David C. Trimble, Director of the Natural Resources and Environment Group at the Government Accountability Office. 

Our second witness is Kathryn D. Sullivan, Ph.D., Deputy Administrator and Assistant Secretary of Commerce for Environmental Observation and Prediction at the 

National Oceanic and Atmospheric Administration (NOAA). 

Dr. Sullivan was the first woman to walk in space and previously served as 

NOAA’s chief scientist. 

Our next witness is James Rivera, Associate Administrator for the Office of Disaster Assistance at the Small Business Administration (SBA). 

Our fourth witness is Dr. Donald J. Wuebbles. He is an endowed professor at the 

University of Illinois and recipient of the 2007 Nobel Peace Prize for his work with 

the Intergovernmental Panel on Climate Change. 

And—I am proud to note—Professor Wuebbles in an Illinois native. He is the son 

of a farmer and was raised in Carlyle, Illinois. 

Our final witness is Franklin W. Nutter, President of the Reinsurance Association 

of America. 

According to the NOAA’s National Climate Data Center, the United States has 

already experienced eight natural disasters with damages totaling more than $1 billion this year. 

The previous record for weather-related disaster of this magnitude was nine in 

one year. We are almost at that point, and it is only July. 

I fly home to Illinois almost every weekend. I can tell you that during the last 

6 months, Illinois has experienced blizzards, tornados, blistering heat and severe 

flooding. 

In February, Chicago—the third-largest city in the United States—was shut down 

as 2 feet of snow fell overnight and 60 mile per hour winds hammered the city. 

The blizzard caused 36 deaths and more than $3.9 billion in damage. 

This spring, tornados damaged homes and businesses throughout Illinois. 

In May, flooding along the Ohio River was so severe that the Army Corps of Engineers was forced to demolish a levee to prevent homes in Cairo, Illinois, from being 

completely destroyed. 

This past weekend, 7 inches of rain fell on Chicago in 1 day, the largest recorded 

single-day rainfall in history. The Metropolitan Water Reclamation District was 

forced to release untreated sewage into Lake Michigan and to close nearby beaches. 

And last night, several parts of Illinois suffered severe rainstorms that caused the 

evacuation of hundreds of people and two fatalities. 

July is now the wettest month in the 122 years of Chicago’s recorded history. 

And Illinois is not alone. We’ve seen drought in Texas, wildfires in Arizona, and 

flooding in Tennessee. 

Today, there are excessive heat warnings in more than 20 communities throughout Kansas—Senator Moran’s home State—and flood warnings along the Missouri 

River. 

In 2011 alone, almost $28 billion in damages have already been caused by catastrophic events—and hurricane season is just beginning. 

And the economic impact of severe weather events is only projected to grow in 

future years as the frequency and intensity of weather events continues to grow. 

The weather is getting worse, catastrophic in fact. The Federal Government needs 

to do more to be ready to protect Federal assets and provide disaster assistance on 

an increasing frequency. 

Is the Federal Government prepared for this? 

The private insurance industry is. 
6 

1Data from Munich Re and Swiss Re. 

2 NOAA hurricane outlook indicates an above-normal Atlantic season (2011). Available at: 

http://www.noaanews.noaa.gov/stories2011/20110519latlantichurricaneoutlook.html. May 19, 

2011. 

These companies have stayed financially stable despite a dramatic increase in 

property losses in recent years. 

Private insurers handled $89 billion in losses sustained by 5.5 million policyholders in the 2004 and 2005 hurricane seasons without any significant setbacks. 

Given the industry’s success, I’d like to see whether there are any budgeting practices that the Federal Government could adapt from the private sector to better forecast how we budget for disaster assistance efforts. 

The SBA’s Disaster Loan Program provides a good example of the sporadic Federal budgeting associated with natural disasters. 

Historically, loan volumes under the program average $1 billion a year. However, 

the actual amount fluctuates greatly from year-to-year and often differs significantly 

from the long-term average. 

In years with multiple catastrophic events, we are left scrambling to fund relief 

programs in the short term. 

But, in the meantime, we’re not focusing strategically on the long-term budgetary 

impacts of what we know is happening—increasingly severe weather events. 

With the potential for more severe disasters occurring with greater frequency in 

the future, I have called this hearing to explore the Federal Government’s planning 

for spending on disaster relief. 

The cumulative expected exposure of the U.S. Government to weather-related disasters over the next 75 years could reach $7 trillion, with inflation. 

If we hope to put this country on a sustainable fiscal path, we need to be prepared 

to manage this increase in natural catastrophes. 

We can learn from the private sector how to better prepare for the economic impact of severe weather. 

PREPARED STATEMENT OF HOWARD KUNREUTHER AND ERWANN MICHEL-KERJAN

Chairman Durbin and Ranking Member Moran: We are very pleased that you are 

holding this hearing to examine the costs to the Federal Government associated 

with natural disasters and steps that could be taken to reduce those costs. We agree 

that this is an increasingly important subject to understand and address. We, Howard Kunreuther and Erwann Michel-Kerjan, have conducted considerable research 

in these areas at the Center for Risk Management and Decision Processes of The 

Wharton School at the University of Pennsylvania. It is a pleasure to share our observations and recommendations with you. 

NATURAL DISASTERS IMPOSE SEVERE ECONOMIC LOSSES

In recent years we have witnessed a dramatic increase in the economic cost and 

death toll from hurricanes, earthquakes, floods, and other natural disasters worldwide. Economic losses from these catastrophic events increased from $528 billion 

(1981–1990) to more than $1.2 trillion over the period 2001–2010.1

Although we are only halfway through 2011, an exceptional number of very severe 

natural catastrophes, notably the Japanese earthquake and tsunami, makes 2011 

the highest economic loss year on record. In the United States, the Southern and 

Midwestern States were hit by an exceptionally severe series of tornadoes in April 

and May. Around this time, heavy snowmelt, saturated soils, and more than 20 

inches of rain in a month led to the worst flooding of the lower Mississippi River 

since 1927 with extensive agricultural damage, property, and inland marine losses. 

The U.S. National Hurricane Center at the National Oceanic and Atmospheric Administration forecast in May that the 2011 hurricane season would have above-average activity in the Atlantic basin.2

Given the increasing losses from natural disasters in recent years, it is surprising 

how few property owners in hazard-prone areas have invested in loss reduction 

measures. We propose a program that will address this issue directly and hence reduce the need for Federal disaster assistance in the future. 

WHY ARE DISASTER LOSSES INCREASING?

There are at least two principal socio-economic factors that directly influence the 

level of economic losses due to catastrophe events: exposed population and value at 

risk. The economic development of Florida highlights this point. According to the 
7 

3P.C.D. Milly, Julio Betancourt, Malin Falkenmark, Robert M. Hirsch, Zbigniew W. 

Kundzewicz, Dennis P. Lettenmaier, and Ronald J. Stouffer, Science 319, 573 (2008); Knutson, 

T., J. McBride, J. Chan, K. Emanuel, G. Holland, C. Landsea, I. Held, J. Kossin, A.K. Srivastava 

and M. Sugi. Tropical Cyclones and Climate Change. Nature Geoscience 3, 157–163. (2010). 4See H. Kunreuther and E. Michel-Kerjan (2009), At War with the Weather MIT Press, for 

a detailed analysis. 5 E. Michel-Kerjan and H. Kunreuther (2011). Reforming Flood Insurance. Science 333, 408– 

409, July 22. 6The figure does not include the $17 billion paid by the NFIP for flood insurance claims for 

Hurricane Katrina, most of which had to be borrowed from the U.S. Treasury. 7 E. Michel-Kerjan and J. Volkman-Wise (2011). The Risk of Ever-Growing Disaster Relief Expectations. Wharton Risk Center Working Paper #2011–09. Available at http:// 

opim.wharton.upenn.edu/risk/papers.php 

U.S. Bureau of the Census, the population of that State has increased significantly 

over the past 50 years: 2.8 million inhabitants in 1950, 6.8 million in 1970, 13 million in 1990, and 18.8 million population in 2010 (almost a 570 percent increase 

since 1950). A significant portion of that population increase lives in high hazard 

areas of the coast. There is thus an increased likelihood of severe economic and insured losses in Florida unless cost-effective mitigation measures are implemented. 

Recent climate studies indicate we should also expect more extreme weather-related 

events in the future.3 The questions that need to be addressed directly by the Congress and other interested parties are: 

—Who will pay for these massive losses? 

—What actions need to be taken now so our country is more resilient when these 

disasters occur (as they will) in the future? 

INCREASING ROLE OF FEDERAL DISASTER ASSISTANCE

Not surprisingly, the disasters that occurred in now much more populated areas 

of the United States have led to historical levels of insurance claim payments 4 as 

well as a surge in the number of Presidential disaster declarations. In an article 

published last week in Science about reforming the federally run National Flood Insurance Program (NFIP), we showed that the number of major disaster declarations 

increased from 252 during the period 1981–1990, to 476 (1991–2000) and 597 during 

the period 2001–2010. In 2010 alone, there were 81 such major disaster declarations.5

American taxpayers paid $89 billion in relief in the aftermath of the 2005 hurricane season (2010 prices). This figure was actually greater than the combined 

amount that private insurers and reinsurers paid for wind-related insured losses 

due to Hurricanes Katrina, Rita, and Wilma.6 This more pronounced role of the Federal Government in assisting disaster victims can also be seen by examining several 

major disasters that occurred in the past 50 years as shown in the table below.7

Disaster Federal aid as a percentage 

of total damage 

Hurricane Ike (2008) ............................................................................................................................ 69 

Hurricane Katrina (2005) ..................................................................................................................... 50 

Hurricane Hugo (1989) ........................................................................................................................ 23 

Hurricane Diane (1955) ....................................................................................................................... 6 

Each new massive Government disaster relief program creates a precedent. As a 

result, not only are there expectations when a disaster strikes that governmental 

assistance is on the way, but in order to gain politically from their actions, Members 

of Congress are likely to support bills that authorize more aid than for past disasters. If residents of hazard-prone areas expect more Federal relief following future 

disasters, they then have less economic incentive to reduce their own exposure and/ 

or purchase insurance. 

REDUCING EXPOSURE TO LOSSES FROM DISASTERS

Today, we can more accurately estimate the risks that different communities and 

regions face from natural hazards. We are able to reduce potential disaster losses 

through mitigation measures and know that insurance can provide financial protection to those in harm’s way, thus lowering the financial burden on taxpayers and 

increasing personal responsibility. Yet many residents in hazard-prone areas are 

still unprotected against earthquakes, floods, hurricanes, and tornados. 
8 

8The material in this section is based on Kunreuther and Michel-Kerjan (2010) ‘‘Overcoming 

Myopia’’ Milken Review, Fourth Quarter, pp. 48–57. More detail on these behavioral biases appears in Kunreuther, Meyer and Michel-Kerjan (in press). ‘‘Overcoming Decision Biases to Reduce Losses from Natural Catastrophes’’. In E. Shafir (ed.) Behavioral Foundations of Policy. Princeton, NJ: Princeton University Press. 

We address the following question: How do we reduce the exposure of property 

to losses from natural disasters and hence reduce the need for disaster assistance 

following future catastrophes? 

We first focus on why many residents in hazard-prone areas do not protect themselves against disasters (which often starts with their moving to high-risk areas— 

a behavioral perspective). We then propose a course of action that overcomes these 

challenges (a policy perspective). Specifically, we believe that multi-year disaster insurance contracts tied to the property and combined with risk reduction loans will 

lead many more individuals to invest in protection and thus be in a much better 

financial position to recover on their own following the next disaster. The proposed 

program should thus reduce the need for disaster assistance and be a win-win situation for all the relevant stakeholders compared to the status quo. Current energy 

efficiency programs can serve as a model for our proposal. 

WHY INDIVIDUALS DO NOT PROTECT THEMSELVES AGAINST POTENTIAL DISASTERS 8

There is growing empirical evidence from psychology and behavioral economics 

that many decisionmakers ignore the potential consequences of large-scale disasters 

for the following reasons: 

Misperceptions of the Risk.—We often underestimate the likelihood of natural 

disasters by treating them as below our threshold level of concern. By failing 

to create scenarios in which a flood or earthquake may plausibly occur, there 

is no interest in undertaking protective actions such as purchasing insurance 

or investing in loss reduction measures. 

Ambiguity of Experts.—There are sometimes differences in experts’ estimates 

of the likelihood and consequences of low-probability events caused by limited 

historical data, scientific uncertainty, changing environmental conditions due to 

increased development and/or the use of different risk models. The variance in 

risk estimates creates confusion by the general public, Government entities, and 

businesses as to whether one needs to pay attention to this risk. In fact, decisionmakers often utilize estimates from their favorite experts that provide justifications for their proposed actions. 

Short Horizons for Valuing Protective Measures.—Many businesses and 

households project only a few years ahead (if not just months) when deciding 

whether to spend money on loss-reduction measures such as anchoring their 

roofs to reduce hurricane damage. By focusing on the short-term returns, they 

fail to invest in risk-reducing measures that could be justified financially when 

comparing costs and expected returns over the expected life of the property. In 

other words, cost-effective mitigation measures are often disregarded due to myopic behavior. 

Procrastination.—If given an option to postpone an investment for 1 month 

or 1 year, there will be a tendency to delay the outlay of funds. When viewed 

from a temporal distance the investment will always seem worthwhile, but 

when it comes time to undertaking the work, the prospect of a slight delay always seems more attractive. Moreover, the less certain one is about a correct 

course of positive action, the more likely one is to choose inaction. There is a 

tendency to favor the status quo—to not change whatever one is doing now. 

Mistakenly Treating Insurance as an Investment.—Individuals often do not 

buy insurance until after a disaster occurs and then cancel their policies several 

years later because they have not collected on their policy. They perceive insurance to be a bad investment by not appreciating the adage that the ‘‘best return 

on an insurance policy is no return at all.’’ 

Failure To Learn From Past Disasters.—There is a tendency to discount past 

unpleasant experiences. Emotions run high after experiencing a catastrophic 

event or even viewing it on TV or the Internet. But those feelings fade rapidly, 

making it difficult to recapture these concerns about the event as time passes. 

Mimetic Blindness.—Decisionmakers often imitate the behavior of others 

without analyzing whether the action is appropriate for them. By looking at 

what other firms do in their industry, or pursuing the actions of their friends 

and neighbors, decisionmakers can avoid having to think independently. 

In addition to these behavioral biases, there are economically rational reasons as 

to why firms and individuals in hazard-prone areas do not undertake risk-reduction 

measures voluntarily. Consider the hypothetical Safelee firm in an industry in 
9 

9More details on these principles appear in H. Kunreuther and E. Michel-Kerjan, At War with 

the Weather (MIT Press), (2009). 

which its competitors do not invest in loss prevention measures. Safelee might understand the investment can be justified when considering how it reduces the risks 

and consequences of a future disaster. However, during normal times, the firm 

might be at a competitive disadvantage because it cannot match the cost structure 

of its competitors. The behavior of many banks in the years preceding the financial 

crisis of 2008–2009 is illustrative of such a dynamic. 

Families considering whether to invest in disaster prevention may also find the 

investment to be unattractive financially if they plan on moving in a few years and 

if they believe that potential buyers will not take into account the lower risk of a 

disaster loss when deciding how much they are willing to pay for the property. More 

generally, families might have other rational reasons for not purchasing disaster 

coverage or investing in risk-reduction measures when this expense competes with 

other needs that have to be satisfied with a limited budget (living expenses, education, taxes, other insurance coverage, etc.). This aspect has more significance 

today given the current economic situation the country faces and the high level of 

unemployment. 

THE KEY ROLE OF INSURANCE

Our proposed program for reducing disaster losses and the need for the Government to provide assistance to the affected communities directly addresses these behavioral concerns by providing incentives for people and firms to become more resilient. Insurance can play a central role by doing three things. First, if priced appropriately, insurance provides a signal of the risk an individual or a firm faces in their 

current location. Second, insurance can encourage property owners in hazard-prone 

areas to invest in mitigation measures by providing them with premium reductions 

to reflect the expected reduction in losses from future disasters. Third, insurance 

supports economic resiliency: following a disaster an insured individual or firm can 

make a claim to obtain funds to help pay for the loss caused by the catastrophe and 

get back on their feet much more quickly than if they were forced to rely on Federal 

disaster assistance. 

For insurance to play this role, in combination with other programs involving the 

public and private sectors, we feel it is important that the following two guiding 

principles 9 be adhered to: 

Principle 1.—Premiums should reflect risk. Insurance premiums should be 

based on risk in order to provide signals to individuals about the hazards they 

face and to encourage them to engage in cost-effective mitigation measures that 

reduce their vulnerability to catastrophes. Risk-based premiums should also reflect the cost of capital that insurers must integrate into their pricing in order 

to meet solvency requirement from rating agencies and insurance regulators, 

and to also assure adequate return to their investors. 

Risk-based premiums will provide a clear signal of likely damage to those currently residing in hazard-prone areas as well as those considering locating 

there. Risk-based premiums also enable insurers to provide discounts to homeowners and businesses that invest in cost-effective mitigation measures. If insurance premiums are not risk-based, insurers are unlikely to offer any premium discounts for those who adopt mitigation measures. In fact, they often 

prefer not to offer coverage to these property owners because it will be a losing 

proposition in the long run. 

Principle 2.—Equity and affordability issues should be addressed. This principle reflects a concern for some residents in high-hazard areas who will be 

faced with large premium increases based on Principle 1. However, any special 

treatment given to homeowners currently residing in hazard-prone areas (e.g., 

low-income uninsured or inadequately insured homeowners) should be funded 

through an insurance voucher not through premium subsidies (as is often done 

today). 

The offer of insurance vouchers applies only to needy individuals who currently reside in a hazard-prone area. Those deciding to move into the area in 

the future should be charged premiums that reflect the risk. If they were provided with financial assistance to purchase insurance, this would encourage development in hazard-prone areas and exacerbate the potential for catastrophic 

losses from future disasters. 
10 

10 U.S. Government Accountability Office (GAO) (2007), Natural Disasters: Public Policy Options for Changing the Federal Role in Natural Catastrophe Insurance, Washington, DC: GAO, 

November. GAO–08–7. 11 E. Michel-Kerjan, S. Lemoyne and H. Kunreuther (in press). Policy Tenure under the National Flood Insurance Program. Risk Analysis: An International Journal. 

OUR PROPOSAL: A MULTI-YEAR INSURANCE-RISK REDUCTION LOAN PROGRAM

Given the behavioral biases and budget constraints individuals face, we propose 

that insurance and other protective measures be tied to the property rather than 

the property owner. We recommend the following five features of such a program 

using the two guiding principles for insurance as a basis for its design: 

Multi-year Insurance Tied to Property.—When an individual or businesses 

purchases a piece of property, they should have an opportunity to purchase a 

multi-year insurance contract (for example, 5 years) at a fixed annual premium 

that reflects the risk. At the end of the multi-year contract, the premium could 

be revised to reflect changes in the risk (higher or lower). 

Vouchers for Those Needing Special Treatment.—We recommend a new disaster insurance voucher program to address issues of equity and affordability 

to complement the strategy of risk-based premiums for all. Property owners currently residing in a risky area who require special treatment would receive a 

voucher by the Federal Emergency Management Agency or the U.S. Department of Housing and Urban Development (HUD) as part of its budget or 

through special appropriation. This program would be similar to the Supplemental Nutrition Assistance Program (‘‘food stamps’’) and the Low Income 

Home Energy Assistance Program, which in the United States enables millions 

of low-income households to meet their food and energy needs every year. The 

size of the voucher will be determined through a means-test in much the way 

that distribution of food stamps is determined today. 

Required Insurance.—Since individuals tend to treat insurance as an investment rather than a protective mechanism, it may have to be a requirement for 

property located in hazard-prone areas, given the large number of individuals 

who do not have coverage today. 

There is empirical evidence supporting the third feature of the proposed program. Data from HUD reveal that 41 percent of damaged homes from the 2005 

hurricanes were uninsured or underinsured. Of the 60,196 owner-occupied 

homes with severe wind damage from these hurricanes, 23,000 did not have insurance against wind loss.10 We recently undertook an analysis of all new flood 

insurance policies issued by the NFIP during the period January 1, 2001 to December 31, 2009 and found that the median length of time before these new 

policies lapsed is 3 to 4 years. On average, only 74 percent of new policies were 

still in force 1 year after they were purchased; after 5 years, only 36 percent 

were still in place. The lapse rate is still high after correcting for migration and 

does not vary much across flood zones.11

Multi-year Loans for Mitigation.—To encourage adoption of loss reduction 

measures, State, Federal Government, or commercial banks could issue property improvement loans so as to spread the costs over time. For instance, a 

property owner may be reluctant to incur an upfront cost of $1,500 for making 

his home more disaster resistant but would be willing to pay the $145 annual 

cost of a 20-year loan (calculated here at a high 10 percent annual interest 

rate). In many cases the reduction in the insurance premium due to lower losses 

from disasters will be greater than the loan cost making this investment financially attractive. 

Well-enforced Building Codes.—Given the reluctance of property owners to invest in mitigation measures voluntarily, building codes should be designed to 

reduce future disaster losses and be well-enforced through third-party inspections or audits. 

LESSONS FROM AN ENERGY EFFICIENCY PROGRAM

As we think about developing incentives for disaster reduction, the Property Assessed Clean Energy (PACE) program that has been adopted by 27 States for promoting energy efficiency has features that can provide insights into designing the 

above program. 

PACE provides long-term funding from private capital markets at low cost and 

needs no Government subsidies or taxes. It raises property values by making heating and cooling less expensive, and it enjoys broad bipartisan support nationwide 

at State and local levels. Here are the features of the program that encourage property owners to take measures today to make their home more energy efficient in 
11 

12The White House (2007). Economic Report of the President. Washington, DC. 13 E. Michel-Kerjan and H. Kunreuther (2011). Reforming Flood Insurance. Science 333, 408– 

409, July 22. 1Main excerpts from Chapter 2 of Catastrophe Modeling: A New Approach to Managing Risk 

(Grossi and Kunreuther, eds., 2005). 

ways that mirrors how property owners would want to make their homes more disaster resistant: 

Multi-year Financing.—Interested property owners opt-in to receive financing 

for improvements that is repaid through an assessment on their property taxes 

for up to 20 years. PACE financing spreads the cost of energy improvements 

such as weather sealing, insulation, energy efficient boilers and cooling systems, 

new windows, and solar installations over the expected life of these measures 

and allows for the repayment obligation to transfer automatically to the next 

property owner if the property is sold. PACE solves two key barriers to increased adoption of energy efficiency and small-scale renewable energy: high upfront costs and fear that project costs won’t be recovered prior to a future sale 

of the property. 

Annual Savings.—Because basic energy efficiency measures can cut energy 

costs by up to 35 percent, annual energy savings will typically exceed the cost 

of PACE assessments. The upfront cost barrier actually turns into improved 

cash flow for owners in much the same way that the reduction of annual insurance premiums could exceed the annual loan costs. 

Transfer to new Property Owner.—Like all property-based assessments, PACE 

assessments stay with a property upon sale, until they are fully repaid by future owners who continue to benefit from the improvement measures. 

WE NEED TO ACT NOW

Our country has entered a new era of catastrophes.12 Our exposure is growing 

and the damage from disasters over the next few years is likely to be more devastating than what we have experienced during this past decade. When the next catastrophe occurs, the Federal Government will very likely come to the rescue, again. 

If the public sector’s response to recent disasters is an indicator of their future behavior, new records will be set with respect to Federal assistance. 

In order to avoid this outcome we recommend that the appropriate government 

bodies undertake an economic analysis of the benefits and costs of the proposed 

multi-year insurance-risk reduction loan program in relation to the current system 

of private and public insurance and Federal disaster assistance. 

We have recently proposed a program along the above lines in the context of the 

reform of the NFIP which is set to expire by September 30, 2011.13

We applaud the U.S. Senate for conducting this hearing on long-term exposure 

of the Federal Government to weather-related risks. We look forward to continuing 

to work with key stakeholders on these critical issues. 

RISK MANAGEMENT SOLUTIONS (RMS) 

CATASTROPHE MODELING AND THE EXCEEDANCE PROBABILITY CURVE 1

A catastrophe model is employed to assess catastrophe risk (e.g., the risk to property from natural hazards, such as earthquakes, floods, hurricanes, and tornado outbreaks) and make corresponding risk management decisions. The model output on 

quantified losses is presented in a way that is useful to a particular stakeholder 

(where stakeholders include property owners, insurers, reinsurers, capital markets, 

government officials). Once these metrics are in hand, appropriate risk management 

strategies (e.g. mitigation, the use of risk transfer instruments, the accumulation of 

reserves) can be assessed. 

Currently insurers and reinsurers are the stakeholders with the most widespread 

and integrated use of catastrophe models. The capital markets have also been eager 

adopters of this technology to accurately price catastrophe bonds. Property owners 

are less likely to use catastrophe models themselves, but their decision processes are 

directly or indirectly influenced by the outcomes. At the governmental level, catastrophe modeling can present the means whereby regulators, emergency management agencies, and those in charge of government catastrophe budgets, can gain an 

appropriate perspective on risk. 
12 

USEFULNESS OF THE EP CURVE

The main output from a catastrophe model is the exceedance probability (EP) 

curve, plotting loss against annual probability. An annual probability of 0.1 reflects 

an event that is expected to happen on average once every 10 years. The EP curve 

is a graphical representation of the probability that a certain level of loss will be 

surpassed in a given time period. The loss could be that experience by a specific 

insurance portfolio, or the whole of a nation’s economy. The EP curve is strongly 

skewed—with a long tail extending out to the right displaying the potential for very 

large losses but at very low probabilities. Figure 1 depicts an EP curve for an insurer with a portfolio of residential earthquake policies in Long Beach, California. 

FIGURE 1. An exceedance probability curve for a portfolio of residential risks in Long 

Beach, California. 

An EP curve is particularly valuable for insurers and reinsurers to determine the 

size and distribution of their potential losses. They will use the EP curve to determine how to develop their portfolio of insured properties, so as to keep the probability of insolvency at an acceptable level. They will also use their loss EP curve 

to determine what proportion of their risk needs to be transferred to either a reinsurer and/or the capital markets. 

However, a loss EP curve could also be employed by a government agency to determine an appropriate perspective on its expected liabilities in the face of a range 

of potential catastrophe events. The curve can provide planners with the average 

annualized loss—the amount that would need to be set aside each year to pay for 

the losses that would accumulate over time. At the same time a government also 

needs to be aware of what it can infrequently be expected to have to pay out—recognizing that, for example, payments with a 1 percent annual probability (sometimes 

termed the ‘‘one in one hundred year loss’’) may be many times the payment at a 

10 percent annual probability (i.e. the ‘‘one in 10 year’’ payment). For insurers, as 

for governments, it is tempting to believe that a few years of low level losses, implies that losses will remain low, but the EP curve of expected catastrophe losses 

illustrates the potential for very large levels at low probabilities, and governments 

should be planning for the contingency of having to handle very significant catastrophe loss events. 

The loss EP curve relevant for a particular problem has to be generated through 

the application of a catastrophe loss model. These models apply a particular hazard, 

such as earthquake, hurricane, or tornado, to the particular exposures: buildings, 

infrastructure, goods, and even people. The models use appropriately tuned vulnerability functions to reflect the way that loss is generated, e.g. determining how 

much damage would occur to a specific building type at a specific wind speed. For 
13 

1 Improved knowledge from a range of disciplines ll be needed to price the much-needed financial products appropriately. 2 Author for correspondence. E-mail: erwannmk@wharton.upenn.edu. 

3We acknowledge support from the NSF, U.S. Department of Homeland Security, and the 

Wharton School’s Risk Management and Decision Processes Center. 4K. Froot, Ed., The Financing of Catastrophe Risk (Chicago Univ. Press, Chicago, 1999). 5 H. Kunreuther, E. Michel-Kerjan, At War with the Weather (MIT Press, Cambridge, MA, 

2009). 6D. Cummins, O. Mahul, Catastrophe Risk Financing in Developing Countries (World Bank, 

Washington, DC, 2009). 7D.A. King, Science 303, 176 (2004). 8P.C.D. Milly, et al., Science 319, 573 (2008). 9T. Knutson et al., Nat. Geosci. 3, 157 (2010). 10D. Cummins, M. Suher, G. Zanjani, in Measuring and Managing Federal Financial Risk, 

D. Lucas, Ed. (National Bureau of Economic Research, Univ. of Chicago Press, Chicago 2010), 

pp. 61–96. 11 N. Pinter, Science 308, 207 (2005). 12The White House, Economic Report of the President (White House, Washington, DC, 2007). 

a government concerned with evaluating the EP curve of potential payments anticipated after catastrophes, the vulnerability functions need to be tuned and calibrated 

using the actual experience of how payments have had to be made after previous 

catastrophes. 

ABOUT RMS

RMS is the world’s leading provider of products, services, and expertise for the 

quantification and management of catastrophe risk. More than 400 leading insurers, 

reinsurers, trading companies, and other financial institutions rely on RMS models 

to quantify, manage, and transfer risk. As an established provider of risk modeling 

to companies across all market segments, RMS provides solutions that can be trusted as reliable benchmarks for strategic pricing, risk management, and risk transfer 

decisions. 

[From Science] 

DISASTER MANAGEMENT: REDESIGNING FLOOD INSURANCE 1

(By Erwann Michel-Kerjan 2 and Howard Kunreuther 3) 

Insurance and government assistance play central roles in ensuring economic and 

social resilience in the aftermath ofcatastrophes in developed countries. Around the 

globe in the past decade, disasters have led to unprecedented claims payments to 

insured victims, and government relief to aid the uninsured and the affected communities has risen to historic levels.456 Increases in population, property values, 

and concentration of assets in hazard-prone areas are primary causes.5 Recent climate studies indicate we should also expect more extreme weather-related events 

in the future.789

The cumulative expected exposure of the U.S. government to catastrophes over 

the next 75 years could reach $7 trillion.10

We propose routes to improve flood insurance coverage through the U.S. National 

Flood Insurance Program (NFIP), one of the largest government disaster-insurance 

programs in the world. The U.S. Congress is discussing options for continuing the 

NFIP, which now operates under a 1-year extension, set to expire on 30 September 

2011. The Federal Emergency Management Agency (FEMA), which is responsible 

for the NFIP, is reanalyzing the program. We argue that a new strategy for managing floods can increase personal responsibility, decrease risk, and lower government exposure. Improved scientific knowledge from a range of disciplines will be 

needed to price the proposed financial products appropriately. If successful in the 

United States, the approach could be explored by other countries. 

INSURING FLOOD RISK

Floods are one of the most destructive hazards.11 In the United States, floods account for nearly two-thirds of all presidential disaster declarations over the period 

1953–2010 (see supporting online material). Hurricanes Katrina, Rita, and Wilma 

and their resulting storm surge in 2005 cost over $180 billion (2011 prices).12 In the 

summer of 2010, one of the worst floodings in Pakistan’s history affected more than 

20 million people and inflicted $8 billion to $10 billion in recovery and reconstruc-
14 

13The World Bank, Pakistan Floods 2010: Preliminary Damage and Needs Assessment (World 

Bank, Washington, DC, 2010).— 14Guy Carpenter and Co., China Floods Report (Guy Carpenter and Co., New York, 2010); 

www.gccapitalideas.com/2010/12/20/china%E2%80%99s-costly-floods-in-2010-likely-to-have-limited-impact/. 15 H. Kunreuther et al., Disaster Insurance Protection: Public Policy Lessons (Wiley, New York, 

1978). 16 E. Michel-Kerjan, J. Econ. Perspect. 24, 165 (2010). 17 E. Michel-Kerjan, C. Kousky, J. Risk Insur. 77, 369 (2010). 

tion costs.13 China also experienced the worst floods in a decade, which cost $50 billion.14 In December 2010, Australia suffered historical flooding. 

DEVASTATING LOSSES REQUIRE BETTER INSURANCE

Low-income countries typically rely on government and international aid to cope 

with major floods. As countries reach a higher level of economic development, insurance mechanisms are used more broadly. Flood insurance can be private, as in Germany and the United Kingdom. In the United States, residents purchase flood insurance mostly through the federally run NFIP, established in 1968 as a result of 

increased federal relief triggered by disasters in the 1960s and the insurance industry’s refusal to cover this hazard because of their inability to accurately assess the 

risk.15 The NFIP covers $1.2 trillion of property today (mainly in coastal states), 

over three times what was covered 20 years ago.16 17

NFIP premiums are established by the federal government. A homeowner can 

purchase building and contents coverage up to $250,000 and $100,000, respectively, 

but only if the community that he or she lives in participates in the program. This 

requires that a flood-risk map has been completed and that the appropriate public 

body has adopted adequate floodplain management regulations. Homeowners in 

high-risk areas (defined as ‘‘100-year’’ or ‘‘base’’ levels, expected to be flooded at 

least once every 100 years) are required to purchase coverage if they hold a federally backed mortgage. 

LIMITS OF THE NFIP AS CURRENTLY DESIGNED

The absence of a large reserve has forced the NFIP into debt, as it has borrowed 

over $19 billion from the U.S. Treasury to cover losses caused by the 2005 and 2008 
15 

18F. Wetmore et al., An Evaluation of the National Flood Insurance Program: Final Report 

(American Institutes for Research, Washington, DC, 2006). 19 Congressional Budget Office (CBO), Value of Properties in the National Flood Insurance 

Program (CBO, Washington, DC, 2007). 20Government Accountability Office (GAO), Flood Insurance: Public Policy Goals Provide a 

Framework for Reform (GAO–11–670T, GAO, Washington, DC, 2011). 21W. Kriesel, C. Landry, J. Risk Insur. 71, 405 (2004). 22L. Dixon, N. Clancy, S. A. Seabury, A. Overton, The National Flood Insurance Program’s 

Market Penetration Rate: Estimates and Policy Implications (RAND Corp., Santa Monica, CA, 

2006). 23 A. H. Thieken et al., Risk Anal. 26, 383 (2006). 24 E. Michel-Kerjan, S. Lemoyne de Forges, H. Kunreuther, Risk Anal. (doi 10.1111/j539- 

6924.2011.01671.x; http://opim.wharton.upenn.edu/risk/library/2011-06.pdf. 25 C. Sunstein, Yale Law J. 112, 61 (2002). 26 H. Kunreuther, R. Meyer, E. Michel-Kerjan, in The Behavioral Foundations of Policy, E. 

Shaffir, Ed. (Princeton Univ. Press, Princeton, NJ, in press); http://opim.wharton.upenn.edu/risk/ 

library/2009-08.pdf. 

hurricanes and floods.16 Subsidized insurance is part of the problem: Buildings that 

are near or below base flood elevation but that were in place before community 

flood-risk maps were completed are still charged rates that are considerably below 

the actuarial risk. This was done originally to maintain property values. About onefourth of insured properties are still subsidized that way.18 19 And even properties 

constructed after flood mapping are charged premiums based only on an average 

historical loss year.20

The NFIP has not been able to enroll and retain many homeowners exposed to 

flood risk. Recent studies show that insurance penetration in flood-prone areas remains only at about 50 percent.21 22 This lack of coverage is likely to increase the 

need for disaster relief after major floods. This situation is not specific to the United 

States. In Germany, flood insurance penetration is only 10 percent for single-family 

homes.23 After the major 2002 Elbe floods, the German government provided the 

largest amount of public funds ever paid in the country’s history to compensate uninsured flood victims. In China, only 1 percent to 2 percent of the $50 billion losses 

of last year’s floods were insured.14

Do a large proportion of homeowners never buy coverage, or do many who once 

purchased insurance let their policies lapse? To answer this question, we analyzed 

all new policies issued by the NFIP over the period 1 January 2001 to 31 December 

2009 (n= 8.9 million).24 The median length of time before these new policies lapsed 

is 3 to 4 years. On average, only 74 percent of new policies were still in force 1 year 

after they were purchased; after 5 years, only 36 percent were still in place. The 

lapse rate is high even after correcting for migration and does not vary much across 

flood zones.25

Behavioral research can shed light on the underinsurance problem. As the probability of flood in a given year is low, individuals often treat these potential disasters as below their threshold level of concern. Studies on risk perception show that 

individuals do not understand low probabilities well and often simply ignore likelihood information when making decisions.25 26 The language used to communicate 

risks is also a problem. Scientists often talk about a ‘‘100-year return flood,’’ but 

many individuals do not understand what that means. Some who have suffered a 

flood believe that they will not have another flood for 100 years. Homeowners are 

often myopic: If they paid insurance premiums for a few years but have not collected 

on their policy, they often view insurance as a bad investment and cancel their policy.15 Finally, there might be rational reasons for not purchasing coverage when this 

expense competes with other needs that have to be satisfied with a limited budget. 

BETTER TOOLS FOR DISASTER FINANCING

Our proposal for redesigning flood insurance has five prongs, to be implemented 

simultaneously because they complement each other. First, to account for myopic behavior, we recommend that flood insurance be sold not as 1-year contracts but as 

multiyear contracts (e.g., 5 or 10 years) that would be attached directly to the property at risk rather than to the homeowner (as is currently done). We propose that 

this be made mandatory for all homeowners in high-risk areas. To ensure that the 

requirement is enforced, FEMA could be empowered by Congress to monitor both 

existing and new construction in those areas. This reform will generate several benefits. It would avoid cancellation of insurance after just a few years. If a homeowner 

were to move to another location, the contract would be transferred to the new 

owner. As a result, many more properties will be covered and remain so over time. 

This should also increase the diversification of the NFIP’s portfolio. 
16 

27 R. J. Burby, Global Environ. Change B Environ. Hazards 3, 111 (2001). 28 Reinsurance is coverage purchased by one insurer from another. Catastrophe bonds would 

transfer part of the NFIP exposure directly to institutional investors. If no catastrophe occurs 

(as defined in the contract), investors would receive their capital back plus a return on their 

investment and a premium from NFIP. If a predefined catastrophe occurs, the NFIP would use 

investor payments to cover a portion of the claims. As of December 2010, there were about $13 

billion invested in such bonds to cover losses from future disasters in the Americas, Asia, and 

Europe. 29 R. King, Mandatory Flood Insurance Purchase in Remapped Residual Risk Areas Behind 

Levees (Report 7–5700, Congressional Research Service, Washington, DC, 2010). 

Second, premiums must be risk-based for all, so that homeowners will be informed of the true exposure of their residence to potential flood damage. 

Third, such insurance contracts could be complemented with multiyear home-improvement loans provided by the government or commercial banks to encourage investment in cost-effective risk-reduction measures, such as flood-proofing one’s 

house; the reduction in insurance premiums could offset the annual cost of the loan. 

The benefits of mitigation may also become more apparent over a 5- or 10-year period. 

Fourth, we recommend a new flood insurance voucher program to address issues 

of equity and affordability to complement the strategy of risk-based premiums for 

all. Property owners currently residing in a high-risk zone who require special treatment would receive a voucher by the NFIP as part of its budget or through special 

appropriations. This program would be similar to the Supplemental Nutrition Assistance Program (‘‘food stamps’’) and the Low Income Home Energy Assistance Program, which in the United States assist millions of low-income households meet food 

and energy needs every year. 

This proposal will require that building vulnerability be updated at policy renewal 

(every 5 or 10 years) and be reflected in the new premiums. Reevaluation of the 

flood hazard across the country will be needed over time to reflect hydrological 

changes due to factors such as additional runoffs caused by new construction, loss 

of wetlands, and possible effects of a changing climate.27

Fifth, given the current level of U.S. public debt and the desire to lower taxpayers’ 

financial liability, we propose that the NFIP reduce its catastrophe exposure by purchasing private reinsurance and catastrophe bonds.16 28 We recommend a four-layer 

approach. After the NFIP determines how much risk to retain, private reinsurers 

would provide coverage for a second layer of losses. Investors would then provide 

capital through catastrophe bonds to cover a third layer of losses. For truly exceptional events, the NFIP would utilize its borrowing capacity from the U.S. Treasury 

(fourth layer). Determination of these layers will be based on their price and how 

much exposure the program opts to retain or transfer. 

Transparent measurement of risk exposure is critical. Sophisticated catastrophemodeling techniques must be used to determine average annual loss, standard deviation, probable maximum loss, and other features that enter into the pricing of disaster risk-financing instruments. Catastrophe models developed by the scientific 

community can be used to update U.S. flood maps, as about half of the NFIP’s 

roughly 106,000 maps were more than 15 years old in April 2008.29 Some steps have 

already been taken to address this problem. FEMA has begun to digitize flood maps 

using geographic information systems so that they are easier to update. After the 

failure of the New Orleans’ levee system in 2005, the U.S. Army Corps of Engineers 

began reevaluating levees throughout the United States using data from hydrology, 

climatology, soil science, and engineering. These studies have helped determine 

which levees no longer meet the standards for which they had been designed. These 

developments in assessing risk more accurately could be useful in determining costs 

and benefits of the proposed redesign of flood insurance. 

For additional reading, please see: http://www.sciencemag.org/content/327/5964/ 

454.abstract. 

LETTER FROM THE CENTER FOR AMERICAN PROGRESS ACTION FUND

AUGUST 4, 2011. 

Hon. RICHARD J. DURBIN, 

Chair, Subcommittee on Financial Services and General Government, 

Washington, DC. 

DEAR CHAIRMAN DURBIN: We would like to submit the attached Center for American Progress report, ‘‘The Year of Living Dangerously: 2010 Extreme Weather Cost 
17 

1Daniel J. Weiss, Valeri Vasquez, and Ben Kaldunski, ‘‘The year of living dangerously’’ 

(Washington: Center for American Progress, 2010), available at http:// 

www.americanprogress.org/ issues/2011/04/extremelweather.html. 2 ‘‘Federal Emergency Management Agency’’, available at http://www.fema.gov/. 3 ‘‘FEMA: Declared disasters by year or state’’ available at http://www.fema.gov/news/disasterltotalslannual.fema. 4Munich RE, ‘‘Two months to Cancun climate summit/large number of weather extremes as 

strong indication of climate change’’, Press release September 27, 2010, available at http:// 

www.munichre.com/en/medialrelations/presslreleases/2010/2010l09l27lpresslrelease. 

aspx. 5 ‘‘National Center for Atmospheric Research’’ available at http://ncar.ucar.edu/about-ncar. 6 ‘‘Promoting climate information and communication of climate change’’ available at http:// 

ams.confex.com/ams/91Annual/webprogram/Paper180230.html. 7 Justin Gillis, ‘‘In weather chaos, a case for global warming’’, The New York Times, August 

14, 2010, available at http://www.nytimes.com/2010/08/15/science/earth/15climate.html? 

pagewanted=print. 8Daniel J. Weiss, Valeri Vasquez, and Ben Kaldunski, ‘‘The year of living dangerously’’ 

(Washington: Center for American Progress, 2010), available at http:// 

www.americanprogress.org/ issues/2011/04/extremelweather.html. 9 Ibid. 10 Ibid. 

Lives, Health, Economy’’ for the record of the July 28, 2011 hearing on ‘‘Federal Disaster Assistance Budgeting.’’ 1

This analysis by the Center for American Progress documents the human and economic impact of the extreme weather events in the United States in 2010. Last 

year, unprecedented extreme weather led to a record number of disaster declarations by the Federal Emergency Management Agency. The United States and the 

world were swept by flooding, severe winter storms, heat waves, droughts, hurricanes, and heavy rain storms. These are the types of events that scientists predict 

will occur with more frequency and/or severity as the planet warms due to unchecked emissions of carbon dioxide and other climate pollutants. 

The extreme weather of 2010 exacted a huge human and economic toll as well. 

The CAP analysis found that more than 380 people died and 1,700 were injured due 

to weather events in the United States throughout the year. And the magnitude of 

these events forced the Federal Emergency Management Agency,2 or FEMA, to declare 81 disasters last year. For nearly 60 years, the annual average has been 33.3

In 2010, total damages exceeded a whopping $6.7 billion. As of April 2011, FEMA 

had dedicated more than $2.2 billion in financial assistance to those harmed by extreme weather in 2010. 

It is difficult, of course, to link or ‘‘attribute’’ individual extreme weather events 

in a single year to global warming. Climate factors-including human influencesshape weather patterns. 

According to Munich Re, one of the world’s largest reinsurers, ‘‘the only plausible 

explanation for the rise in weather-related catastrophes is climate change.’’ 4

Kevin Trenberth, Sc.D., head of the Climate Analysis Section at the National Center for Atmospheric Research,5 explained at the American Meteorological Society’s 

January 2011 meeting, ‘‘Given that global warming is unequivocal, the null hypothesis should be that all weather events are affected by global warming rather than 

the inane statements along the lines of ‘of course we cannot attribute any particular 

weather event to global warming.’’ 6

In other words, says Trenberth, ‘‘it’s not the right question to ask if this storm 

or that storm is due to global warming, or is it natural variability. Nowadays, 

there’s always an element of both.’’ 7

Atmospheric concentrations of carbon dioxide and other greenhouse gas pollutants 

are turning up the heat on our planet. Scientists agree that the string of disastrous 

weather extremes this past year are the types of severe weather that will become 

more frequent or ferocious as the planet continues to warm. For instance, in the 

‘‘first major paper of its kind’’ tracking global climatic trends from 1951 to 1999, 

Scottish and Canadian researchers used sophisticated computer models to confirm 

a human contribution to more intense precipitation extremes with very high confidence.8

This analysis is supported by a 2010 Duke University-led study 9 that found, 

‘‘Global warming is driving increased frequency of extreme wet or dry summer 

weather in southeast, so droughts and deluges are likely to get worse.’’ 10
18 

11 Christidis, Nikolaos, Peter A. Stott, Simon J. Brown, 2011: The Role of Human Activity in 

the Recent Warming of Extremely Warm Daytime Temperatures. J. Climate, 24, 1922–1930. 12 ‘‘Record high temperatures far outpace record lows across U.S.’’, available at http:// 

www2.ucar.edu/news/1036/record-high-temperatures-far-outpace-record-lows-across-us. 13 US Climate Change Science Program, ‘‘Weather and Climate Extremes in a Changing Climate’’ (2008). 14 ‘‘The Weather Channel’’ available at http://www.weather.com/outlook/weather-news/news/articles/april-severe-scorecardl2011–04–18. 15Daniel J. Weiss, Valeri Vasquez, and Ben Kaldunski, ‘‘The year of living dangerously’’ 

(Washington: Center for American Progress, 2010), available at http:// 

www.americanprogress.org/ issues/2011/04/extremelweather.html. 16 ‘‘Record April: Severe weather scorecard’’ available at http://www.weather.com/outlook/ 

weather-news/news/articles/a pril-severe-scorecardl2011–04–18?page=11. 17Daniel J. Weiss, Valeri Vasquez, and Ben Kaldunski, ‘‘The year of living dangerously’’ 

(Washington: Center for American Progress, 2010), available at http:// 

www.americanprogress.org/ issues/2011/04/extremelweather.html. 18 Ibid. 19Louis BURDEAU, ‘‘Mississippi River Floods 2011: Deep South Braces For Surge Of Water 

Not Seen Since 1927’’, The Huff Post Green, April 28, 2011, available at http:// 

www.huffingtonpost.com/2011/04/28/mississippi-river-flood-2011lnl855242.html. 20 ‘‘Durbin: Federal Government Unprepared for growing number of extreme weather events’’, 

available at http://durbin.senate.gov/public/index.cfm/pressreleases?ID=fd009756–5e33–48d7- 

be3e-9ee0160f1789. 

A study published in the 2011 Journal of Climate presents ‘‘evidence of a significant human influence on the increasing severity of extremely warm nights and decreasing severity of extremely cold days and nights.’’ 11

Likewise, a report by the National Center for Atmospheric Research,12 Climate 

Central, The Weather Channel, and the National Oceanic and Atmospheric Administration shows that ‘‘if temperatures were not warming, the number of record daily 

highs and lows being set each year would be approximately even. 

Instead... record high temperatures far outpace record lows across the U.S.’’ 

The recent extreme weather should not be a surprise. In 1999, Trenberth projected that global warming would lead to severe precipitation. 

‘‘An increase in heavy precipitation events should be a primary manifestation of 

the climate change that accompanies increases in greenhouse gases in the atmosphere.’’ 

Nine years later, the U.S. Climate Change Program under President George W. 

Bush came to a very similar conclusion. ‘‘Heavy downpours have become more frequent and intense. Droughts are becoming more severe in some regions.’’ 13 These 

are some of the extreme weather events we experienced this April, and in 2010. 

Because we have not brought carbon pollution under control, the weather events 

of 2010 will continue to revisit us—with a vengeance as they have in 2011. We must 

act quickly and unequivocally to address climate change before the threat becomes 

insurmountable. This includes recognizing that global warming is already affecting 

us both domestically and internationally. There are indications that human and economic losses from extreme weather will continue to grow as the oceans and planet 

warms. 

In April 2011, for instance, the United States was struck by various extreme 

weather events. The Weather Channel observed that: 

‘‘It’s been a truly awful, record-setting, tornadic April. We’ve had 11 major severe 

weather events, some lasting multiple days.’’ 14

These April 2011 extreme events included ‘‘supercell thunderstorms’’ 15 in Iowa, 

severe drought and record wildfires in Texas,16 and heavy rains 17 across the United 

States. The April southeastern storms and tornados took at least 297 lives across 

eight States.18 And heavy rains in the Mississippi River Valley during April and 

May caused some of the most severe, damaging floods there this century.19

Many States continue to be plagued by extreme weather, including droughts in 

Texas and Oklahoma, record heat waves in the Midwest, mid-Atlantic and the 

northeast, and the hottest July on record. 

The July 27 hearing was very timely. We share your concern that: 

‘‘We are not prepared. Our weather events are getting worse, catastrophic in 

fact . . . The Federal government is ignoring the obvious. We need to do more to 

protect Federal assets and respond to growing demands for disaster assistance on 

an increasing frequency.’’ 20
19 

We agree with you that the Federal Government must better prepare to provide 

damaged communities with the resources they need to recover after extreme weather events. 

The old saying that ‘‘an ounce of prevention is worth a pound of cure’’ certainly 

applies to extreme weather. The cure—ensuring that future budgets include adequate funds to help communities, businesses and families recover—is necessary but 

not sufficient. It will require budgeting billions of dollars annually to assist areas 

assaulted by extreme weather events. This will be a challenge at a time when some 

in the Congress seek deep and lasting reductions in discretionary spending. 

In addition, we must also attempt to prevent the rise in extreme weather events 

and the associated loss of life, injuries, and damages. The most cost effective step 

would be the reduction of the carbon dioxide pollution responsible for climate change 

and linked to the growth in deadly and expensive extreme weather events. 

Thank you for your leadership in this area, and the opportunity to submit these 

remarks and the Center for American Progress’ report, ‘‘The Year of Living Dangerously,’’ for the record of this hearing. 

Sincerely, 

DANIEL J. WEISS, 

Senior Fellow and Director of Climate Strategy. 

VALERI VASQUEZ, 

Special Assistant, Energy Program. 

For further information, please see: http://www.americanprogress.org/issues/2011/ 

04/extremelweather.html 

STATEMENT OF SENATOR JERRY MORAN

Senator MORAN. Mr. Chairman, this hearing today will examine 

the role of the Federal Government in addressing the economic impact of severe weather events through long-term budgetary planning, something that this Congress ought to spend more time on, 

the budget as well as budgetary planning. 

Numerous agencies have significant roles to play in regards to 

responding to natural disasters. As a member of the Senate Small 

Business Committee, as well as the ranking member of this subcommittee, I’m very familiar with the assistance that the Small 

Business Administration (SBA) provides in regard to the disaster 

loan programs to businesses and families impacted by disasters. 

I’ve experienced that and their services in my own home State on 

many occasions. 

Given our Federal Government’s fiscal constraints, I believe we 

must carefully review all Federal funding to ensure that we are 

budgeting for critical needs appropriately. Reviewing how the Government plans for disasters is an important part of that process 

and can help ensure that we assist families and businesses in need 

in a fiscally responsible way. 

This critical issue is one that I look forward to hearing witnesses’ 

testimony concerning, and I want to make certain that we have the 

ability to pursue the opportunity to improve our Government’s ability to respond to these matters, and I look forward to hearing from 

the witnesses. 

Senator DURBIN [presiding]. Thank you, Senator Moran. We will 

start with each witness. You each have 5 minutes. Your written 

testimony will be part of the permanent and total record of the 

hearing. And then Senator Moran and others who might show up 

will ask a few questions. Mr. Trimble, please lead off. 
20 

STATEMENT OF DAVID C. TRIMBLE, DIRECTOR, NATURAL RESOURCES 

AND ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. TRIMBLE. Chairman Durbin, Ranking Member Moran, I’m 

pleased to be here today to discuss the extent to which Federal 

long-term budget planning contemplates changes in the frequency 

and severity of weather events that may occur as a result of 

changes in the climate. 

Recent assessments of the potential impacts of climate change in 

the United States have found, among other things, that many types 

of extreme weather events, such as heat waves and regional 

droughts, have become more frequent and intense during the past 

40 to 50 years. 

Further increases in the frequency and severity of such damaging weather events are projected to affect water resources, agriculture, coastal areas, and infrastructure. The Department of Defense recently noted that climate change may also act as an 

accelerant of instability or conflict around the world. 

Policymakers are increasingly viewing adaptation, defined as adjustments to natural and human systems in response to actual or 

expected climate change, as a risk management strategy to protect 

vulnerable sectors and communities that might be affected by 

changes in the climate. It may be costly to raise river or coastal 

dikes to protect communities and resources from sea level rise, 

build higher bridges, or improve stormwater systems, but there’s a 

growing recognition that the cost of inaction could be greater. 

Over the years, the GAO has reported on many climate changerelated issues, including recent reports on adaptation and Federal 

funding for climate change programs and activities. Four key 

points stand out from these reports. 

First, climate change adaptation has begun to receive more attention and resources because the greenhouse gases (GHG) already 

in the atmosphere are expected to continue altering the climate 

system into the future, regardless of efforts to control emissions. 

Further, there is a growing recognition that past practices for 

making decisions may no longer be reliable. According to the National Research Council (NRC), many decision rules for such things 

as building bridges or establishing zoning rules assume a continuation of past climate conditions, with similar patterns of variation 

and the same probabilities of extreme events. 

According to the NRC, that assumption, fundamental to the way 

people and organizations make their choices, is no longer valid. A 

2007 GAO report on Federal insurance programs highlights this 

point. We found, at that time, unlike the private sector, neither the 

National Flood Insurance Program (NFIP) nor the Federal Crop Insurance Corporation had analyzed the potential impacts of an increase in the frequency or severity of weather events. 

Second, Federal, State, and local authorities on the front line of 

early adaptation efforts face numerous challenges, including insufficient site-specific data such as local projections of expected climate changes. The lack of such data makes it hard for these officials to understand or quantify the potential impacts of climate 

change, and difficult to justify the cost of adaptation efforts, since 

projections of future benefits are less certain than current costs. 
21 

1 USGCRP coordinates and integrates Federal research on changes in the global environment—including climate change—and their implications for society. According to a simplified 

National Aeronautics and Space Administration description, ‘‘Weather is what conditions of the 

atmosphere are over a short period of time, and climate is how the atmosphere ‘behaves’ over 

relatively long periods of time. When we talk about climate change, we talk about changes in 

long-term averages of daily weather.’’ 

Third, to be effective, Federal efforts to address these challenges 

must be coordinated and directed toward a common goal. In 2009, 

we recommended the development of a national strategic plan for 

adaptation. The recent Interagency Climate Change Adaptation 

Task Force is a positive step and responsive to our recommendation, but much work remains. 

Fourth and finally, adaptation will require making policy and 

management decisions that cut across traditional sectors, issues, 

and jurisdictional boundaries. Many Federal entities, executive offices, and organizations manage programs and activities related to 

climate change. However, getting these entities to work toward a 

common goal is complicated. 

PREPARED STATEMENT

According to our May 2011 report, Federal funding for climate change programs and activities totaled nearly $9 billion in 2010, 

with another $7 billion in related tax expenditures. This report 

found that agencies did not consistently interpret methods for defining and reporting the funding of climate change activities and 

that there is no consolidated set of strategic priorities that integrates climate change programs and activities across the Federal 

Government. As more Federal, State, and local agencies focus attention on incorporating climate change into their planning and decisionmaking, the challenges facing these decisionmakers will become increasingly prominent. 

Improved accounting over the billions currently spent on climate 

change-related activities, establishing clear strategic priorities, and 

aligning funding with priorities will help the Congress address 

these challenges, and hopefully minimize the economic toll of future severe weather events. That concludes my statement. I’ll, of 

course, be happy to answer any questions. 

[The statement follows:] 

PREPARED STATEMENT OF DAVID C. TRIMBLE

CLIMATE CHANGE ADAPTATION

Aligning Funding With Strategic Priorities 

Chairman Durbin, Ranking Member Moran, and members of the subcommittee: 

I am pleased to be here today to discuss the extent to which Federal long-term 

budget planning contemplates changes in the frequency and severity of weather 

events that may occur as a result of changes in the climate. A 2009 assessment by 

the United States Global Change Research Program (USGCRP) found that many 

types of extreme weather events, such as heat waves and regional droughts, have 

become more frequent and intense during the past 40 to 50 years and that changes 

in these kinds of extreme weather and climate events are among the most serious 

challenges to our Nation in coping with a changing climate.1 According to the assessment, changes in extreme weather and climate events will affect human health, 

water supply, agriculture, coastal areas, and many other aspects of society and the 

natural environment. 

Federal, State, and local agencies are tasked with a wide array of responsibilities, 

such as managing natural resources, that will be affected by a changing climate. 

Climate change also has implications for the fiscal health of the Federal Govern-
22 

2 According to the DOD, the Quadrennial Defense Review (QDR) is to set a long-term course 

for DOD as it assesses the threats and challenges that the Nation faces and re-balances DOD’s 

strategies, capabilities, and forces to address today’s conflicts and tomorrow’s threats. As required by law, the most recent QDR examined the capabilities of the armed forces to respond 

to the consequences of climate change, in particular, preparedness for natural disasters from 

extreme weather events and other missions the armed forces may be asked to support inside 

the United States and overseas. 3GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain Collaboration among Federal Agencies, GAO–06–15 (Washington, D.C.: October 21, 2005), and Managing for Results: Barriers to Interagency Coordination, GAO/GGD–00–106 (Washington, D.C.: 

March 29, 2000). 4GAO, Climate Change Adaptation: Strategic Federal Planning Could Help Government Officials Make More Informed Decisions, GAO–10–113, (Washington, D.C.: October 7, 2009), and 

Climate Change: Improvements Needed to Clarify National Priorities and Better Align Them 

with Federal Funding Decisions, GAO–11–317, (Washington, D.C.: May 20, 2011). 5See GAO–10–113 and GAO–1 109317. For a list of Federal adaptation efforts by agency as 

of 2009, see Climate Change Adaptation: Information on Selected Federal Efforts to Adapt To 

a Changing Climate (GAO–10–11 4SP, October 7, 2009), an E-supplement to GAO–10–113, 

GAO–10–114SP, (Washington, D.C.: October 2009). 6For more information about the Interagency Climate Change Adaptation Task Force, see http://www.whitehouse.gov/administration/eop/ceq/initiatives/adaptation. 

ment, affecting Federal crop and flood insurance programs, and placing new stresses 

on infrastructure. Further, in February 2010 the Department of Defense (DOD) 

issued its Quadrennial Defense Review report.2 That report noted that: 

‘‘. . . while climate change alone does not cause conflict, it may act as an 

accelerant of instability or conflict, placing a burden to respond on civilian institutions and militaries around the world. In addition, extreme weather events may lead 

to increased demands for defense support to civil authorities for humanitarian assistance or disaster response both within the United States and overseas.’’ 

In recent years, climate change adaptation—defined as adjustments to natural or 

human systems in response to actual or expected climate change—has begun to receive more attention because the greenhouse gases already in the atmosphere are 

expected to continue altering the climate system into the future, regardless of efforts 

to control emissions. According to the National Research Council, however, individuals and institutions whose futures will be affected by climate change are unprepared both conceptually and practically for meeting the challenges and opportunities 

it presents. In this context, adapting to climate change requires making policy and 

management decisions that cut across traditional economic sectors, jurisdictional 

boundaries, and levels of government. We have previously reported that when agencies do not collaborate well when addressing a complicated, interdisciplinary issue 

like climate change, they may carry out programs in a fragmented, uncoordinated 

way, resulting in a patchwork of programs that can limit the overall effectiveness 

of the Federal effort.3

My testimony today addresses: 

—the actions Federal, State, and local authorities are taking to adapt to climate 

change; 

—the challenges that Federal, State, and local officials face in their efforts to 

adapt and actions Federal agencies could take to help address these challenges; 

and 

—the extent to which Federal funding for adaptation and other climate change 

activities is consistently tracked and reported and aligned with strategic priorities. 

The information in this testimony is based on prior work, largely on our recent 

reports on climate change adaptation and Federal climate change funding.4 Additional information on our scope and methodology is available in each issued product. 

All of the work on which this statement is based was performed in accordance with 

generally accepted government auditing standards. 

FEDERAL, STATE, AND LOCAL AUTHORITIES ARE BEGINNING TO TAKE STEPS TO ADAPT

TO CLIMATE CHANGE

Our October 2009 report on climate change adaptation found no coordinated national approach to adaptation, but our May 2011 report on climate change funding 

cited indications that Federal agencies were beginning to respond to climate change 

more systematically.5 About the same time as the issuance of our October 2009 report, Executive Order 13514 on Federal Leadership in Environmental, Energy, and 

Economic Performance called for Federal agencies to participate actively in the 

Interagency Climate Change Adaptation Task Force.6 The task force, which began 

meeting in spring 2009, is co-chaired by the Council on Environmental Quality 
23 

7The White House Council on Environmental Quality, Progress Report of the Interagency Climate Change Adaptation Task Force: Recommended Actions in Support of a National Climate 

Change Adaptation Strategy (October 5, 2010). This report is available at http:// 

www.whitehouse.gov/sites/default/files/microsites/ceq/Interagency-Climate-ChangeAdaptationProgress-Report.pdf. 8Secretarial Order No. 3289 (September 14, 2009), as amended by Secretarial Order No. 3289, 

Amendment No. 1 (February 22, 2010). As originally enacted, the order also designated eight 

regional Climate Change Response Centers, which were subsequently renamed Climate Science 

Centers. According to the Department of the Interior, these centers will synthesize existing climate change impact data and management strategies, help resource managers put them into 

action on the ground, and engage the public through education initiatives. Interior has also 

identified specific adaptation strategies and tools for natural resource managers. For example, 

Interior provided a number of adaptation-related policy options for land managers in reports 

produced for its Climate Change Task Force, a past effort that has since been expanded upon 

to reflect new priorities. 9GAO–10–113. 

10 New York City Department of Environmental Protection Climate Change Program, with 

contributions by Columbia University’s Center for Climate Systems Research and HydroQual 

Continued 

(CEQ), the National Oceanic and Atmospheric Administration (NOAA), and the Office of Science and Technology Policy (OSTP), and includes representatives from 

more than 20 Federal agencies and executive branch offices. The task force was 

formed to develop Federal recommendations for adapting to climate change impacts 

both domestically and internationally and to recommend key components to include 

in a national strategy. 

On October 14, 2010, the task force released its interagency report outlining recommendations to the President for how Federal policies and programs can better 

prepare the United States to respond to the impacts of climate change. The report 

recommends that the Federal Government implement actions to expand and 

strengthen the Nation’s capacity to better understand, prepare for, and respond to 

climate change. These recommended actions include making adaptation a standard 

part of agency planning to ensure that resources are invested wisely and services 

and operations remain effective in a changing climate. According to CEQ officials, 

the task force will continue to meet as an interagency forum for discussing the Federal Government’s adaptation approach and to support and monitor the implementation of recommended actions in the progress report. The task force is due to release another report in October 2011 that documents progress toward implementing 

its recommendations and provides additional recommendations for refining the Federal approach to adaptation, as appropriate, according to CEQ officials.7

Individual agencies are also beginning to consider adaptation actions. For example, in May 2009, the Chief of Naval Operations created Task Force Climate Change 

to address the naval implications of a changing Arctic and global environment. The 

Task Force was created to make recommendations to Navy leadership regarding policy, investment, and action, and to lead public discussion. In addition, the Department of the Interior issued an order in September 2009 designed to address the impacts of climate change on the Nation’s water, land, and other natural and cultural 

resources.8 Among other things, the order requires each bureau and office in the Department to consider and analyze potential climate change impacts when undertaking long-range planning exercises, setting priorities for scientific research and investigations, developing multi-year management plans, and making major decisions 

regarding potential use of resources. In another example, according to the NOAA, 

its Regional Integrated Sciences and Assessments (RISA) program supports climate 

change research to meet the needs of decisionmakers and policy planners at the national, regional, and local levels. 

In October 2009, we reported that some State and local authorities were beginning to plan for and respond to climate change impacts.9 We visited three U.S. sites 

in doing the work for that report—New York City; King County, Washington; and 

the State of Maryland—where State and local officials were taking such steps. We 

have not evaluated the progress of these initiatives since the issuance our 2009 report. 

New York City.—New York City’s adaptation efforts stemmed from a growing recognition of the vulnerability of the city’s infrastructure to natural disasters, such as 

the severe flooding in 2007 that led to widespread subway closures. At the time of 

our October 2009 report, New York City’s adaptation efforts typically had been implemented as facilities were upgraded or as funding became available. For example, 

the city’s Department of Environmental Protection (DEP), which manages water 

and wastewater infrastructure, had begun to address flood risks to its wastewater 

treatment facilities. These and other efforts are described in DEP’s 2008 Climate 

Change Program Assessment and Action Plan.10 Many of New York City’s waste-
24 

Environmental Engineers & Scientists, P.C., Report 1: Assessment and Action Plan—A Report 

Based on the Ongoing Work of the DEP Climate Change Task Force (New York City, N.Y., 2008). 11King County Ordinance 15728 (April 25, 2007). The district is funded by a countywide ad valorem property tax levy of 10 cents per $1,000 assessed value. 12 University of Washington Climate Impacts Group, The Washington Climate Change Impacts Assessment: Evaluating Washington’s Future in a Changing Climate (Seattle, Wash., 

2009). 13Maryland Commission on Climate Change, Climate Action Plan (Annapolis, Maryland, 

2008). 14Maryland Commission on Climate Change Adaptation and Response Working Group, Comprehensive Strategy for Reducing Maryland’s Vulnerability to Climate Change Phase I: Sea Level 

Rise and Coastal Storms. 15Wanda Diane Cole, Maryland Eastern Shore Resource Conservation & Development Council, Sea Level Rise: Technical Guidance for Dorchester County, a special report prepared at the 

request of the Maryland Department of Natural Resources, March 2008; URS and RCQuinn 

Consulting, Inc., Somerset County Maryland Rising Sea Level Guidance, a special report prepared at the request of Somerset County, Maryland, Annapolis, Md., 2008; and CSA International Inc., Sea Level Rise Response Strategy Worcester County, Maryland, a special report 

prepared at the request of Worcester County, Maryland Department of Comprehensive Planning, September 2008. 

water treatment plants, such as Tallman Island, are vulnerable to sea level rise and 

flooding from storm surges because they are located in the floodplain next to the 

bodies of water into which they discharge. In response to this threat, DEP planned 

to, in the course of scheduled renovations, raise sensitive electrical equipment, such 

as pumps and motors, to higher levels to protect them from flood damage. 

King County, Washington.—According to officials from the King County Department of Natural Resources and Parks, the county took steps to adapt to climate 

change because its leadership was highly aware of climate impacts on the county. 

For example, in November 2006, the county experienced severe winter storms that 

caused a series of levees to crack. The levees had long needed repair, but the storm 

damage helped increase support for the establishment of a countywide flood control 

zone district, funded by a dedicated property tax.11 The flood control zone district 

planned to use the funds, in part, to upgrade flood protection facilities to increase 

the county’s resilience to future flooding. In addition to more severe winter storms, 

the county expected that climate change would lead to sea level rise; reduced 

snowpack; and summertime extreme weather such as heat waves and drought, 

which can lead to power shortages because hydropower is an important source of 

power in the region. The University of Washington Climate Impacts Group, funded 

by NOAA’s RISA program, has had a long-standing relationship with county officials 

and worked closely with them to provide regionally specific climate change data and 

modeling, such as a 2009 assessment of climate impacts in Washington, as well as 

decisionmaking tools.12

Maryland.—Maryland officials took a number of steps to formalize their response 

to climate change effects. An executive order in 2007 established the Maryland Commission on Climate Change, which released the Maryland Climate Action Plan in 

2008.13 As part of this effort, the Maryland Department of Natural Resources (DNR) 

chaired an Adaptation and Response Working Group, which issued a report on sea 

level rise and coastal storms.14 The 2008 Maryland Climate Action Plan calls for 

future adaptation strategy development to cover other sectors, such as agriculture 

and human health. Additionally, Maryland provided guidance to coastal counties to 

assist them with incorporating the effects of climate change into their planning documents. For example, DNR funded guidance documents to three coastal counties— 

Dorchester, Somerset, and Worcester—on how to address sea level rise and other 

coastal hazards in their local ordinances and planning efforts.15

GOVERNMENT OFFICIALS FACE NUMEROUS CHALLENGES WHEN CONSIDERING ADAPTA- TION EFFORTS, AND FURTHER FEDERAL ACTION COULD HELP THEM MAKE MORE IN- FORMED DECISIONS

In our prior work, we found that the challenges faced by Federal, State, and local 

officials in their efforts to adapt to climate change fell into several categories: 

Focusing on Immediate Needs.—Available attention and resources were focused on more immediate needs, making it difficult for adaptation efforts to 

compete for limited funds. For example, several Federal, State, and local officials who responded to a questionnaire we prepared for our October 2009 report 

on adaptation noted how difficult it is to convince managers of the need to plan 

for long-term adaptation when they are responsible for more urgent concerns 

that have short decisionmaking timeframes. One Federal official explained that 

‘‘it all comes down to resource prioritization. Election and budget cycles complicate long-term planning such as adaptation will require. Without clear top- 
25 

16GAO, Climate Change: Agencies Should Develop Guidance for Addressing the Effects on Federal Land and Water Resources, GAO–07–863, (Washington, D.C.: August 7, 2007). 17We conducted our work for GAO–07–863 between May 2006 and July 2007. The agencies 

involved with this work are now beginning to consider climate change adaptation in planning 

decisions. 18 National Research Council (2009), Informing Decision in a Changing Climate. Panel on 

Strategies and Methods for Climate-Related Decision Support, Committee on the Human Dimensions of Global Change, Division of Behavioral and Social Sciences and Education. Washington, DC: The National Academies Press. 19GAO, Climate Change: Financial Risks to Federal and Private Insurers in Coming Decades 

Are Potentially Significant, GAO–07–285, (Washington, D.C.: March 16, 2007). 

down leadership setting this as a priority, projects with benefits beyond the 

budget cycle tend to get raided to pay current-year bills to deliver results in this 

political cycle.’’ 

Insufficient Site-specific Data.—Without sufficient site-specific data, such as 

local projections of expected changes, it is hard to predict the impacts of climate 

change and thus hard for officials to justify the current costs of adaptation efforts for potentially less certain future benefits. This is similar to what we 

found in past work on climate change on Federal lands. Specifically, our August 

2007 report demonstrated that land managers did not have sufficient site-specific information to plan for and manage the effects of climate change on the 

Federal resources they oversee.16 In particular, the managers lacked computational models for local projections of expected changes. For example, at the time 

of our review, officials at the Florida Keys National Marine Sanctuary said that 

they did not have adequate modeling and scientific information to enable managers to predict the effects of climate change on a small scale, such as that occurring within the sanctuary.17 Without such modeling and information, most 

of the managers’ options for dealing with climate change were limited to reacting to already-observed effects on their units, making it difficult to plan for future changes. Furthermore, these resource managers said that they generally 

lacked detailed inventories and monitoring systems to provide them with an 

adequate baseline understanding of the plant and animal species that existed 

on the resources they manage. Without such information, it is difficult to determine whether observed changes are within the normal range of variability. 

Lack of Clear Roles and Responsibilities.—Adaptation efforts are constrained 

by a lack of clear roles and responsibilities among Federal, State, and local 

agencies. Of particular note, about 70 percent (124 of 178) of the Federal, State, 

and local officials who responded to a questionnaire we prepared for our October 

2009 report on adaptation rated the ‘‘lack of clear roles and responsibilities for 

addressing adaptation across all levels of government’’ as very or extremely 

challenging. For example, according to one respondent, ‘‘there is a power struggle between agencies and levels of government... Everyone wants to take 

the lead rather than working together in a collaborative and cohesive way.’’ 

These challenges make it harder for officials to justify the current costs of adaptation efforts for potentially less certain future benefits. A 2009 report by the National 

Research Council discusses how officials are struggling to make decisions based on 

future climate scenarios instead of past climate conditions.18 According to the report, requested by the Environmental Protection Agency and NOAA, usual practices 

and decision rules (for building bridges, implementing zoning rules, using private 

motor vehicles, and so on) assume a stationary climate—a continuation of past climate conditions, including similar patterns of variation and the same probabilities 

of extreme events. According to the National Research Council report, that assumption, which is fundamental to the ways people and organizations make their choices, 

is no longer valid; Climate change will create a novel and dynamic decision environment. 

We reached similar conclusions in a March 2007 report that highlighted how historical information may no longer be a reliable guide for decisionmaking.19 We reported on the Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program (NFIP), which insures properties against flooding, and the U.S. 

Department of Agriculture’s (USDA) Federal Crop Insurance Corporation, which insures crops against drought or other weather disasters. Among other things, the report contrasted the experience of private and public insurers. We found that many 

major private insurers were proactively incorporating some near-term elements of 

climate change into their risk management practices. In addition, other private insurers were approaching climate change at a strategic level by publishing reports 

outlining the potential industry-wide impacts and strategies to proactively address 

the issue. 
26 

20GAO–07–863. 21 Climate Change: Expert Opinion on the Economics of Policy Options to Address Climate 

Change, GAO–08–605, (Washington, D.C.: May 9, 2008). 22GAO–11–317. 

In contrast, we noted that the agencies responsible for the Nation’s two key Federal insurance programs had done little to develop the kind of information needed 

to understand their programs’ long-term exposure to climate change for a variety 

of reasons. As a FEMA official explained, the NFIP is designed to assess and insure 

against current—not future—risks. Unlike the private sector, neither this program 

nor the Federal Crop Insurance Corporation had analyzed the potential impacts of 

an increase in the frequency or severity of weather-related events on their operations over the near- or long-term. The proactive view of private insurers in our 

2007 report was echoed on March 17, 2009, by the National Association of Insurance 

Commissioners, which adopted a mandatory requirement that insurance companies 

disclose to regulators the financial risks they face from climate change, as well as 

actions the companies are taking to respond to those risks. We have not studied the 

progress of these specific programs in managing the Nation’s long-term exposure to 

climate change since the issuance of our 2007 report. 

Based on information obtained from studies, visits to sites pursuing adaptation 

efforts, and responses to a Web-based questionnaire sent to Federal, State, and local 

officials knowledgeable about adaptation, our October 2009 report identified three 

categories of potential Federal actions for addressing challenges to adaptation efforts: 

—First, training and education efforts could increase awareness among Government officials and the public about the impacts of climate change and available 

adaptation strategies. A variety of programs are trying to accomplish this goal, 

such as the Chesapeake Bay National Estuarine Research Reserve (partially 

funded by NOAA), which provides education and training on climate change to 

the public and local officials in Maryland. 

—Second, actions to provide and interpret site-specific information could help officials understand the impacts of climate change at a scale that would enable 

them to respond. About 80 percent of the respondents to our Web-based questionnaire rated the ‘‘development of State and local climate change impact and 

vulnerability assessments’’ as very or extremely useful. 

—Third, the Congress and Federal agencies could encourage adaptation by clarifying roles and responsibilities. About 71 percent of the respondents to our Webbased questionnaire rated the development of a national adaptation strategy as 

very or extremely useful. Furthermore, officials we spoke with and officials who 

responded to our questionnaire said that a coordinated Federal response would 

also demonstrate a Federal commitment to adaptation. Importantly, our October 2009 report recommended that within the Executive Office of the President 

(EOP) the appropriate entities, such as CEQ, develop a national adaptation 

plan that includes setting priorities for Federal, State, and local agencies. CEQ 

generally agreed with our recommendation. 

Some of our other recent climate change-related reports offer additional examples 

of the types of actions Federal agencies and the Congress could take to assist States 

and communities in their efforts to adapt. Our August 2007 report, for example, recommended that certain agencies develop guidance advising managers on how to address the effects of climate change on the resources they manage.20 Furthermore, 

our May 2008 report on the economics of policy options to address climate change 

identified actions the Congress and Federal agencies could take, such as reforming 

insurance subsidy programs in areas vulnerable to hurricanes or flooding.21

FUNDING FOR ADAPTATION AND OTHER FEDERAL CLIMATE CHANGE ACTIVITIES COULD

BE BETTER TRACKED, REPORTED, AND ALIGNED WITH STRATEGIC PRIORITIES

Our May 2011 report on Federal climate change funding found that: 

—agencies do not consistently interpret methods for defining and reporting the 

funding of climate change activities; 

—key factors complicate efforts to align such funding with strategic priorities; and 

—options are available to better align Federal funding with strategic priorities, 

including governmentwide strategic planning.22

Any effective Federal climate change adaptation strategy will need to ensure that 

Federal funds are properly tracked and that funding decisions are aligned with strategic priorities. Given the interdisciplinary nature of the issue, such alignment is 

a challenge as formidable as it is necessary to address. 
27 

23The other methods identified by respondents were guidance from interagency programs and 

periodic ‘‘data calls’’ to collect information for unique reporting needs. 24 CEQ, OMB, and OSTP submitted consolidated technical comments on our May 2011 report. 

These comments are reflected in this statement as appropriate. 25 In GAO–11–317 we analyzed OMB funding reports and responses to a Web-based questionnaire sent to key Federal officials with the assistance of the EOP and interagency coordinating 

bodies. 26These key reasons are discussed in detail in our May 2011 report: GAO–11–317. 27These sources include: 

—strategic plans for interagency programs and agencies; 

—executive-level guidance memoranda; 

—the development of new interagency initiatives; 

—regulations and guidance memoranda; 

—international commitments; and 

—testimony of Federal executives before the Congress. 

In our report, we identified three methods for defining and reporting climate 

change funding, foremost of which is guidance contained in OMB’s Circular A–11.23

The circular directs agencies to report funding that meet certain criteria in three 

broad categories—research, technology, and international assistance. According to 

OMB staff, Circular A–11 is the primary method for defining and reporting longstanding ‘‘cross-cuts’’ of funding for climate change activities. Interagency groups, 

such as USGCRP have collaborated in the past with OMB to clarify the definitions 

in Circular A–11, according to comments from CEQ, OMB, and OSTP.24

Our work suggests that existing methods for defining and reporting climate 

change funding are not consistently interpreted and applied across the Federal Government.25 Specifically, for our May 2011 report, we sent a Web-based questionnaire 

to key Federal officials involved in defining and reporting climate change funding, 

developing strategic priorities, or aligning funding with strategic priorities. Most of 

these respondents indicated that their agencies consistently applied methods for defining and reporting climate change funding. Far fewer respondents indicated that 

methods for defining and reporting climate change funding were applied consistently across the Federal Government. Some respondents, for example, noted that 

other agencies use their own interpretation of definitions, resulting in inconsistent 

accounting across the Government. Respondents generally identified key reasons 

agencies may interpret and apply existing methods differently, including difficulty 

determining which programs are related to climate change.26 In comments to our 

May 2011 report, CEQ, OMB, and OSTP noted that consistency likely varies by 

method of reporting, with Circular A–11 being the most consistent and other methods being less so. 

In addition, our work identified two key factors that complicate efforts to align 

Federal climate change funding with strategic priorities across the Federal Government. First, Federal officials lack a shared understanding of priorities, partly due 

to the multiple, often inconsistent messages articulated in different sources, such as 

strategic plans.27 Our review of these sources found that there is not currently a 

consolidated set of strategic priorities that integrates climate change programs and 

activities across the Federal Government. As we stated in our May 2011 report, in 

the absence of clear, overarching priorities, Federal officials are left with many different sources that present climate change priorities in a more fragmented way. The 

multiple sources for communicating priorities across the climate change enterprise 

may result in conflicting messages and confusion. 

The second key factor that complicates efforts to align Federal funding with priorities is that existing mechanisms intended to do so are nonbinding, according to respondents, available literature, and stakeholders. For example, some respondents 

noted that the interagency policy process does not control agency budgets and that 

agencies with their own budget authority may pay little attention to Federal strategic priorities. In other words, Federal strategic priorities set through an interagency process may not be reflected in budget decisions for individual agencies. 

As OSTP officials acknowledged to us, ‘‘The major challenge is the need to connect 

climate science programs with broader inter- and intra-agency climate efforts.’’ In 

comments to our report, OSTP stated that while significant progress is being made 

in linking the climate science-related efforts, individual agencies still want to advance initiatives that promote or serve their agency missions. This, according to 

OSTP, yields a broader challenge of tying climate-related efforts (science, mitigation, 

and adaptation) together into a coherent governmentwide strategy. 

Our May 2011 report identified several ways to better align Federal climate 

change funding with strategic priorities, including: 

—options to improve the tracking and reporting of climate change funding; 

—options to enhance how strategic climate change priorities are set; 
28 

28These were identified by respondents, available literature, and stakeholders. 

—the establishment of formal coordination mechanisms; and 

—continuing efforts to link related climate change activities across the Federal 

Government.28 Specific options are discussed in detail in our May 2011 report 

and include a governmentwide strategic planning process that promotes a 

shared understanding among agencies of strategic priorities by articulating 

what they are expected to do within the overall Federal response to climate 

change. Also discussed in detail is an integrated budget review process that better aligns these priorities with funding decisions through a more consistent 

method of reporting and reviewing climate change funding. 

Federal entities are beginning to implement some of these options. For example, 

there has been some recent progress on linking related Federal climate change programs, according to OSTP. Specifically, OSTP stated that the science portion of the 

CEQ, NOAA, and OSTP-led Climate Change Adaptation Task Force is being integrated within USGCRP. OSTP also stated that it is working to create an interagency body that will bring together agencies that provide climate services to allow 

for better links between climate services and other Federal climate-related activities. 

To further improve the coordination and effectiveness of Federal climate change 

programs and activities, we recommended in our May 2011 report that the appropriate entities within the EOP, in consultation with the Congress, clearly establish 

Federal strategic climate change priorities and assess the effectiveness of current 

practices for defining and reporting related funding. 

Chairman Durbin, Ranking Member Moran, and members of the subcommittee, 

this concludes my prepared statement. I would be happy to respond to any questions 

that you or other Members of the subcommittee may have. 

APPENDIX

WHY THE GAO DID THIS STUDY

A 2009 assessment by the USGCRP found that many types of extreme weather 

events, such as heat waves and regional droughts, have become more frequent and 

intense during the past 40 to 50 years. According to the assessment, changes in extreme weather and climate events will affect many aspects of society and the natural environment, such as infrastructure. In addition, the Department of Defense 

found that climate change may act as an accelerant of instability or conflict, placing 

a burden to respond on militaries around the world. 

According to the National Academies, USGCRP, and others, greenhouse gases already in the atmosphere will continue altering the climate system into the future 

regardless of emissions control efforts. Therefore, adaptation-defined as adjustments 

to natural or human systems in response to actual or expected climate change—is 

an important part of the response to climate change.This testimony addresses: 

—the actions Federal, State, and local authorities are taking to adapt to climate 

change; 

—the challenges that Federal, State, and local officials face in their efforts to 

adapt and actions Federal agencies could take to help address these challenges; 

and 

—the extent to which Federal funding for adaptation and other climate change 

activities is consistently tracked and reported and aligned with strategic priorities. The information in this testimony is based on prior work, largely on the 

GAO’s recent reports on climate change adaptation and federal climate change 

funding. 

WHAT GAO FOUND

Federal, State, and local authorities are beginning to take steps to adapt to climate change. Federal agencies are beginning to respond to climate change systematically through an Interagency Climate Change Adaptation Task Force formed to 

recommend key components for inclusion in a national adaptation strategy. Individual agencies are also beginning to consider adaptation actions. For example, in 

May 2009, the Chief of Naval Operations created Task Force Climate Change to address the naval implications of a changing Arctic and global environment. Some 

State and local government authorities were beginning to plan for and respond to 

climate change impacts, the GAO reported in 2009. For example, the State of Maryland had a strategy for reducing vulnerability to climate change, which focused on 

protecting habitat and infrastructure from future risks associated with sea level rise 

and coastal storms. In another example, King County, Washington, established a 
29 

countywide flood control zone district to upgrade flood protection facilities and increase the county’s resilience to future flooding, among other things. 

Federal, State, and local officials face numerous challenges in their efforts to 

adapt to climate change, and further Federal action could help them make more informed decisions. These challenges include a focus of available attention and resources on more immediate needs and insufficient site-specific data—such as local 

projections of expected climate changes. The lack of such data makes it hard to understand the impacts of climate change and thus hard for officials to justify the cost 

of adaptation efforts, since future benefits are potentially less certain than current 

costs. The GAO’s October 2009 report identified potential Federal actions for improving adaptation efforts, including actions to provide and interpret site-specific information, which could help officials understand the impacts of climate change at 

a scale that would enable them to respond. In a May 2008 report on the economics 

of policy options to address climate change, the GAO identified actions Congress and 

Federal agencies could take, such as reforming insurance subsidy programs in areas 

vulnerable to hurricanes or flooding. 

Funding for adaptation and other Federal climate change activities could be better 

tracked, reported, and aligned with strategic priorities. The GAO’s report on Federal 

climate change funding suggests that methods for defining and reporting such funding are not consistently interpreted and applied across the Federal Government. 

The GAO also identified two key factors that complicate efforts to align funding 

with priorities. First, officials across a broad range of Federal agencies lack a shared 

understanding of priorities, partly due to the multiple, often inconsistent messages 

articulated in different policy documents, such as strategic plans. Second, existing 

mechanisms intended to align funding with government-wide priorities are nonbinding and limited when in conflict with agencies’ own priorities. Federal officials 

who responded to a Web-based questionnaire, available literature, and stakeholders 

involved in climate change funding identified several ways to better align Federal 

climate change funding with strategic priorities. These include a governmentwide 

strategic planning process that promotes a shared understanding among agencies of 

strategic priorities by articulating what they are expected to do within the overall 

Federal response to climate change. 

Senator DURBIN. Thank you very much. I mentioned earlier, Mr. 

Trimble is with the GAO and has published, at least, his climate 

change adaptation publication, that I believe was issued on July 

28. Is that correct? 

Mr. TRIMBLE. Yes, we have a written statement for today’s hearing—— 

Senator DURBIN. Good. 

Mr. TRIMBLE [continuing]. A longer statement. 

Senator DURBIN. Thank you very much. Kathryn Sullivan, as I 

mentioned earlier, is with the NOAA and is our next witness. 

Please proceed. 

STATEMENT OF KATHRYN D. SULLIVAN, Ph.D., ASSISTANT SECRETARY 

OF COMMERCE FOR ENVIRONMENTAL OBSERVATION AND PREDICTION, NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION, DEPARTMENT OF COMMERCE 

Dr. SULLIVAN. Thank you, Chairman Durbin and Ranking Member Moran, for this opportunity to testify on Federal disaster budgeting and whether our Nation is weather ready. As you mentioned, 

I am from the NOAA and am the deputy administrator there. The 

chairman just gave a very cogent and remarkable account of the sequence of events that we’ve seen so far this year in severe weather 

and the great toll that they’ve taken on our country to date. 

I won’t repeat that long string of events, but it is compelling, indeed, and in fact, the trends are moving in a direction that suggest 

we will have more such events. The NOAA’s role in supporting 

Federal disaster budgeting for these events is to predict them 

ahead of time, to observe them in real time, and to help people prepare in advance for the impacts they’re likely to have. 
30 

This advance awareness is, in fact, the very foundation of a 

weather-ready Nation. Businesses, State and local governments, 

and our citizens rely on the NOAA for reliable weather and water 

forecasts to underpin their responses and their long-range planning. We’ve made tremendous strides in our forecast and warning 

capability over the past few decades. 

Our lead time for tornadoes has doubled since we modernized our 

technology and infrastructure in the 1980s and early 1990s. We’ve 

made significant leaps in our seasonal predictive capability, due 

mainly to researching the weather patterns associated with El 

Nin ̃ o and La Nin ̃ a, and also improvements in numerical modeling 

methods. 

Advances in understanding these, and other larger-scale phenomena, and their relationship to high-impact weather events has 

been the key to giving us the ability to help the Nation to give the 

Nation advance notice and time to prepare. 

For example, we were able, this year, to provide the Midwest 

with spring flood outlooks as early as January, and to foresee the 

continued severity of Texas’ historical drought. Even as our predictions improve, however, factors such as demographic trends and 

population growth make society more vulnerable than ever to highimpact events. Nearly 90 percent of all Presidentially declared disasters are weather- and water-related. And as the chairman noted, 

studies show that frequency of these events is increasing. 

As a result, many concerns from agriculture to city planners, 

business, and the military, are looking for ways to increase their 

resilience now. 

The city of Chicago, heeding recent NOAA data on trends, and 

our analytical climate support, is preparing for the likelihood of 

more intense storms and rainfall, along with warmer temperatures. 

Similar adaptation planning is underway in New York City, with 

particular focus on the risk of flooding from rising sea level. 

The Navy’s Task Force on Climate Change has advised that service to prepare to police the equivalent of an extra sea, as Arctic ice 

melts. These decisionmakers and many others, are using NOAA 

science and support to take mitigating steps now in order to increase their resilience to these events and reduce the potential of 

severe societal and economic impacts. They realize that the past is, 

indeed, no longer prologue. 

In my written testimony, I describe the four pillars that support 

the NOAA’s, i.e., the Nation’s, predictive capabilities: environmental observations; including weather satellites; computer modeling; scientific research; and of course, our people, the technical 

experts who provide the forecasts, warnings, and decision assistance. To improve both our short-term, local-impact forecasts, and 

the long-range outlooks that enable advance planning, we need to 

invest in each of these pillars. As President Obama said in his address to the Nation on Monday, while we all want and need a Government that lives within its means, there are still things we need 

to pay for as a country, such as weather satellites. 

I need hardly note to this body that the funding for that critical 

infrastructure is in jeopardy this year. The NOAA’s Federal, academic, and private sector partners play critical roles in mitigating 

the impacts of weather and water events. We work hand-in-hand 
31 

with our Federal partners, such as the U.S. Geological Survey 

(USGS), the Army Corps of Engineers, and the Federal Emergency 

Management Agency (FEMA). 

This quartet of core partners often acts as conveners and integrators of necessary information and people, including State and local 

emergency officials and managers. 

This is just one key part of our efforts to prepare for and mitigate impacts. We work very closely together to minimize 

redundancies and enhance the sum of our parts. Our combined efforts, before and during this year’s historical floods, provide an excellent example of the efficacy of these partnerships. 

The spring flood outlooks the NOAA issued in January along 

with local decision support, allowed many communities to take actions that limited flood impacts, including massive levee reinforcements to, eventually, precautionary evacuations. FEMA and the 

Red Cross prepositioned assets. The USGS ensured the river 

gauges were operational. 

We can do better. The NOAA, the USGS, and the Corps of Engineers recently signed a memorandum of understanding to begin 

significant advancement of our joint efforts in water resource observations, prediction, and management. We’ve committed to a framework that will provide an integrated, common operating picture for 

water resources and management nationwide. 

This is known as the Integrated Water Resource Science and 

Service Initiative (IWRSSI). This is just one of many ways in which 

the NOAA is working to improve our ability to provide climate information and services effectively to public and private sector partners. 

In closing, I’d like to emphasize that the Nation’s investments in 

the NOAA’s weather prediction and warning capabilities have directly saved lives this year. 

PREPARED STATEMENT

We are clearly experiencing a trend toward more high-impact 

weather and water events. Thanks to the Congress’ support, the 

NOAA, today, is able to help the Nation anticipate their development and prepare for their impacts. 

The NOAA is committed to continual improvement of our predictive capabilities, and working with our Federal and private sector partners, to providing the highest level of preparedness and 

promoting our Nation’s resilience to these events. Thank you, Mr. 

Chairman, Mr. Moran, and I look forward to any questions you 

may have. 

[The statement follows:] 

PREPARED STATEMENT OF KATHRYN D. SULLIVAN, PH.D. 

Good morning Chairman Durbin, Ranking Member Moran, and members of the 

subcommittee. My name is Dr. Kathryn D. Sullivan, and I am the Assistant Secretary of Commerce for Environmental Observation and Prediction for the National 

Oceanic and Atmospheric Administration (NOAA). Thank you for the opportunity to 

testify today at this hearing about the Federal Government’s role in mitigating the 

economic impact of severe weather events. High-impact weather sometimes takes 

the form of relatively short-lived, but extreme events such as tornados, flash floods, 

hurricanes, wildfires, tsunamis, dust storms, or heat waves—but also of longer-term 

events such as floods and drought, which have broader impacts across many economic sectors. The NOAA’s short-term weather forecasts of conditions out to about 
32 

2 weeks have been critical to saving lives and property in the days leading up to 

and during the extreme events we’ve been seeing this spring and summer. The 

NOAA’s long-range weather and seasonal forecasts, also known as ‘‘climate forecasts,’’ have been critical to making the advance planning decisions, from weeks to 

months ahead of time, that allow rapid response to the onset of these weather 

events. 

An Historic Year in the Making 

The year 2011 has already established itself in the record books as an historic 

year for weather-related disasters and it is not over—in fact hurricane season is just 

getting underway. Just past the year’s midpoint, we have already seen eight $1-billion-plus disasters. Total damages from weather- and water-related events since 

January for the United States are well more than $32 billion and climbing (Lott, 

et al. 2011). Tied for fifth, 2011 is as the deadliest tornado year for the United 

States since modern recordkeeping began in 1950, with 537 people killed so far. 

April 2011 ranks as the most active tornado month on record with 875 tornadoes, 

breaking the previous record of 542 set in 2003. More tornadoes occurred on April 

27 of this year than any other day in the past 61 years. On May 22, a large portion 

of Joplin, Missouri was devastated by an EF–5 (winds greater than 200 mph) tornado, resulting in more than 150 fatalities and more than 1,000 persons injured. 

The Joplin tornado was the deadliest this year and is ranked seventh among the 

deadliest tornadoes in U.S. history. 

Prime wildfire conditions prevailed across portions of the Southern Plains and 

Southwestern States, with a record breaking 1.79 million acres burned across the 

country in April alone, with Texas, New Mexico, and Arizona bearing the brunt of 

the wildfire activity. Nearly 6 million acres have burned nationwide—double the 10- 

year average by this time of year. 

Fueled by record-setting precipitation totals, historic flooding has hit the Midwest 

and Ohio Valley, from the smallest streams to the largest rivers. The Ohio Valley 

region had its wettest April on record, and the record goes back to 1895 for some 

States. Record breaking heavy rains across Montana and the Dakotas, combined 

with runoff from record winter snowpack, caused tremendous flooding across those 

States, with Minot, North Dakota, being among the hardest hit. Forecasts now indicate this season could rival the Great Flood of 1993. In that year, the Upper Midwest endured persistent, record-breaking floods from April through August, impacting nine States and causing more than $25 billion in damages (adjusted for inflation)(Lott, et al. 2010). The effects of floods are felt far downstream as well. Following the 1993 flood, the spatial extent of the hypoxic zone, or ‘‘dead zone’’ in the 

Gulf of Mexico more than doubled its size, to more than 18,000 km2, and persisted 

at that size through midsummer 1997. The tremendous amount of water flowing 

into the Gulf of Mexico from this year’s record spring flooding is expected to cause 

the largest ever ‘‘dead zone’’, surpassing that of 1993 (Rabelais, et al 2011). Dead 

zones—areas lacking the necessary oxygen and salinity to fuel marine life—are primarily caused by the effects of runoff from floods, which carry not only the upstream 

sediments such as agricultural nutrients, but also the tremendous freshwater influx 

to the gulf waters. This stimulates an overgrowth of algae that sinks, decomposes, 

and consumes most of the life-giving oxygen supply in the water. The Gulf of Mexico 

dead zone is of particular concern because it threatens valuable commercial and recreational gulf fisheries that generate about $2.8 billion annually. 
33 

DEPICTION OF GULF OF MEXICO HYPOXIA ZONE IMAGE

SOURCE.—NOAA. 

WHAT IT MEANS

Nearly 90 percent of all Presidentially declared disasters are weather and waterrelated, and our vulnerability to the impacts is increasing as our population grows. 

As shown in the chart below, the, the number of these events is trending upward, 

with 2011’s numbers on track to surpass last year’s record. 

SOURCE.—Munich Re NatCatSERVICE. 

Over the past 30-plus years, the United States has seen a total of 107 weatherrelated disasters each totaling more than $1 billion in damage. Total standardized 

losses since 1980 exceed $750 billion. 
34 

Demographic trends and population growth and an increased reliance on technology, coupled with this trend in extreme weather events, have made our society 

more vulnerable to high-impact events. As a result, many agricultural, business, 

and urban planners are looking for ways to increase community resilience now. For 

example, the city of Chicago is taking steps to prepare for the likelihood of intense 

storms striking more often, of rainfall events causing more flooding, and of warmer 

temperatures. Local climate studies, along with recent trends such as an increase 

in the frequency of heavy rainfall events, have led them to conclude that this is the 

soundest action to take in order to mitigate the cost and impact of these events. 

New York City is also engaged in adaptation planning, with particular focus on the 

risk of flooding from rising sea level. The Navy’s Task Force on Climate Change has 

advised that the Navy should prepare to police the equivalent of an extra sea as 

the Arctic ice melts. These cities and organizations, among many others, recognize 

the need to understand changes and trends in weather patterns, and to apply this 

to planning that may reduce vulnerability to high-impact weather and water events. 

Their recognition for the need to reduce their vulnerability to weather and water 

extremes is an important first step. However, there is much more that needs to be 

done in other sectors of our economy and with the general public to increase our 

resiliency to the impacts of these events. 

There is more that can be done, and that communities and businesses are mobilizing to do. This is why the NOAA’s mission to understand and predict changes in 

climate, weather, oceans, and coasts, to share that knowledge and information with 

others, and to conserve and manage coastal and marine resources is so vital. Our 

vision for healthy ecosystems, communities, and economies, that are resilient in the 

face of change, can lead to improved economic viability of weather-dependent sectors 

like agriculture and other businesses, as well as more lives saved. 

THE VARIOUS ROLES OF NOAA

Many Federal agencies have a critical role in preparing for weather and water 

disasters, including the United States Geological Survey (USGS), the United States 

Army Corps of Engineers (USACE), and the Federal Emergency Management Agency (FEMA). The NOAA works collaboratively with these Federal agencies to ensure 

preparedness and a coordinated approach to preparedness. 

Research, Observations, and Prediction 

NOAA scientists have been at the forefront of weather and climate science, forecasting and public preparedness for decades—our science helps save lives and livelihoods. The NOAA has a leading role in understanding changes in weather and climate extremes, such as trends in severe local storms and extremes in precipitation—too little or too much, too often or too infrequent. 

Longer lead-time forecasts for droughts, seasonal flooding, heavy rainfall events, 

heat waves, and cold spells provide tremendous economic value for the Nation. The 

NOAA provides a spectrum of critical information across a range of time and space 

scales, which is used by government, business, emergency managers, planners, and 

the public. That information’s value increased when businesses, farmers, energy 

producers and utilities, as well as the general public, are prepared and have effective plans of action to mitigate impacts. 

Our Nation’s environmental predictive capabilities are supported by four 

foundational pillars: observations, computer models, research, and our people, who 

provide forecasts, warnings, and decision assistance to key decisionmakers. By 

strengthening the pillars—through improved satellite and in-situ observations, computational capacity, and coupled atmosphere, ocean, land models, and necessary research—we can revolutionize the forecast process across the entire spectrum, from 

relatively small-scale, short-range applications to long-range weather and climate 

predictions. For example, on the larger scale, coupled models provide improved simulations of the interaction between the ocean and atmosphere, resulting in more accurate predictions of tropical cyclone behavior. On smaller scales, higher-resolution 

observations and models can provide the type of short-term severe weather predictions that will one day allow us to ‘‘warn on forecast,’’ or know up to 60 minutes 

ahead of time where a tornado will touch down. 

We know that shifts in weather patterns are often regional in nature, and have 

variable time spans. For example, El Nin ̃ o and La Nin ̃ a, which have become household words, are generally predictable over fairly definable areas and time spans. 

During the 1997–1998 El Nin ̃ o and 1998–1999 La Nin ̃ a, the U.S. agricultural sector 

experienced damages of $2.4 billion–$2.8 billion and $3.6 billion–$10.7 billion (in 

2010 dollars), respectively (Adams, et al. 1999). We are coming to understand many 

of these larger-scale phenomena, such as the North Atlantic Oscillation, which is a 

change in the water temperature in the North Atlantic that is strongly correlated 
35 

with heavy snowfall events in the Mid-Atlantic and Northeast States. However, we 

still do not always fully understand how these pattern shifts relate to or affect one 

another, and there are likely many other phenomena we have yet to discover. For 

example, while there are some known correlations between the La Nin ̃ a phase and 

tornadic activity across the United States, significant research is required to improve our scientific understanding of links between climate patterns and local 

weather extremes. 

Our tornado warnings have improved significantly over the past two decades primarily because of past research efforts. More research would help us better understand the rapid evolution of severe thunderstorms and why some produce tornadoes 

and others do not. We face a similar challenge with our understanding of hurricanes. While our track forecasts have improved greatly—our forecast location for 5 

days out is now as accurate as the forecast location for 3 days out was 15 years 

ago—we still do not understand what causes some tropical systems to jump two intensity categories in less than 24 hours, while others do not. Understanding these 

atmospheric evolutions will help us increase forecast lead time and accuracy for 

these damaging and deadly storms. 

Getting the Word Out 

As the Federal Government’s sole official voice for issuing warnings during lifethreatening weather events, and as an established reliable and trusted source, the 

NOAA provides the Nation’s first line of defense against severe weather. NOAA operates the Nation’s geostationary and polar orbiting satellites, a nationwide network 

of Doppler weather radars and surface observing stations. Scientists develop computational models that combine these observations with equations describing the 

physics of our atmosphere and ocean, and our forecasters interpret and deliver critical information. Alerts and warnings for severe weather and other near-term hazards (tornados, hurricanes, severe thunderstorms, winter storms, most floods, chemical spills, volcanic ash, tsunami, space weather, etc.,) are delivered through multiple redundant mechanisms, including: NOAA Weather Radio, which triggers the 

Emergency Alert System; NWSChat, which focuses on real-time coordination with 

local core customers in the broadcast media and emergency management; the Internet; and, through our private sector partners—commercial television and radio, 

which communicate critical information to much larger audiences and effectively inform those in harm’s way to take appropriate action. 

Preparedness 

Our prospects for success in this role, and of achieving our vision of resilient communities, lie in our unique enterprise capabilities. The goal of disaster resilience is 

to enhance the capacity of a community exposed to hazards to adapt, by resisting 

or changing, in order to reach and maintain an acceptable level of functioning and 

structure. The preparedness challenge remains essentially the same across both 

short-term and long-term weather and water events: public awareness, education, 

and plans of action to mitigate impacts on the personal, community and regional 

scales provide the best protection against potential disasters. The NOAA has longheld and strongly established ties to the emergency management community, 

through State, local and tribal officials, which help ensure appropriate action is 

taken to prepare communities for weather and water events. The NOAA and its 

partners, such as the National Sea Grant network, use integrated research, training, and technical assistance to enhance the ability of communities to prepare for, 

respond to, and rebuild after disasters strike. For example, we are developing a 

Coastal Resilience Index that provides a tangible way for communities to identify 

gaps and examine how prepared they are for storms and storm recovery, and provide guidance on how to increase resilience through measures including strengthening infrastructure or adopting stricter building codes. 

The historic floods currently spanning from Montana across the Dakotas, into the 

northern and central plains and southern Mississippi Valley are an excellent example of why we need to prepare for catastrophic events. The NOAA/National Weather 

Service (NWS) spring flood outlook highlighted those particular areas as having the 

likelihood of major flooding. Our River Forecast Centers and local Weather Forecast 

Offices worked with Federal, State, and local emergency managers and planners to 

help prepare for and plan to mitigate the impact of the flooding. Based on our forecasts, communities took extensive actions to limit the impact of the flooding, including massive levee reinforcements and eventual evacuations to prevent loss of life. 

FEMA prepositioned relief assets, and the USGS ensured their river gauges were 

operational—all of the agencies worked together to help mitigate the potential impact. 
36 

The NOAA often plays a key Federal role throughout these events as an integrator of the many Federal capacities applied to alert communities and regions to 

an event and its likely impacts, and to help mitigate those impacts as they’re occurring and afterward. For example, due to the large extent of the Midwest floods this 

year, we are predicting a very extensive ‘‘dead zone’’ in the Gulf of Mexico, due to 

the excessive fresh water flowing into the gulf. This will have a significant impact 

on the lives and livelihoods of those in the gulf region. The NOAA is working to 

ensure the gulf region, its communities, and the commercial interests are aware of 

the impacts and timing of this event, and supporting mitigation efforts. 

Unfortunately, in spite of our best efforts, severe weather events still cause loss 

of life and significant damage. More of this could be mitigated with more timely, 

accurate and focused warnings. The impacts and lives lost from the disasters mentioned above would have been far worse without critical data input of observations 

from satellites and in-situ observations, and the extensive work of the NOAA and 

our Federal, non-Federal, State, and local partners to improve the Nation’s preparedness for these events through education and outreach. However, as evidenced 

by the tragic loss of life in a number of these events, there is a long way to go to 

truly achieve a weather-ready Nation. 

ACHIEVING A WEATHER- AND WATER-READY NATION

We have made tremendous strides thanks to the modernization of the NWS two 

decades ago. Because of advances in data assimilation and modeling, and critical 

sampling of the atmosphere from our polar orbiting satellites and geostationary satellites, model forecasts for 3 days and beyond have improved substantially. For example, our forecasts for 3 days away are now as accurate as they were for 2 days 

away only 10 years ago. These improvements have allowed for advance lead times 

between first alert and the actual event. 

For example, leading up to the ‘‘Snowmageddon’’ event of February 2010, the 

NOAA was able to detect the storm threat 7-plus days in advance and begin alerting 

the east coast up to 5 days in advance of the storm. This allowed States to implement contingency and continuity of operations plans, airlines to rearrange flights, 

and the retail industry to pre-stock their shelves. As a result, there was minimal 

impact to national and local airline and highway transportation. This long lead time 

was made possible in large part by observations obtained by NOAA’s polar-orbiting 

satellite and numerical weather prediction models. Polar-orbiting satellites are the 

backbone of all model forecasts at 3 days and beyond; however, the launch of the 

next generation of the NOAA’s polar-orbiting satellites, the Joint Polar Satellite System (JPSS), has been delayed by the fiscal year 2011 appropriations process. As a 

result, the NOAA is faced with a nearly 100 percent chance of a data gap in the 

U.S. civilian polar orbit, on which both civilian and military users rely, by late 2016 

to early 2017 when the current polar satellites reach the end of their life expectancy. The JPSS is a critical part of NOAA’s future infrastructure needed to continue 

our path of forecast improvement—and to maintain what we have built during the 

last 30 years. 

The NOAA was also able to highlight the likelihood for severe weather in southwest Missouri several days in advance of the May 22 Joplin tornado. Even our lead 

times for imminent hazards have increased: the tornado warning for the Joplin area 

was issued 24 minutes before the tornado struck, a substantial improvement over 

the 5-minute advance warnings that were typical just two decades ago. We have 

achieved similar forecast improvements for hurricanes. The NOAA’s hurricane forecast track error has decreased 60 percent since 1990. All these advances have come 

about through the close coupling of research and operations in NOAA’s weather enterprise. All of these advances have helped save lives and reduce the economic impacts of severe weather. 

With the high death toll and impacts we’ve seen this year, we take little solace 

in knowing that outcomes could have been worse without the extensive work of 

NOAA and our Federal, non-Federal, State, and local partners. There is much more 

that needs to be done to improve the Nation’s resilience for these events. Research, 

education, and outreach are the essential ingredients to improving preparedness 

and via improved forecast and warning accuracy and lead times. Realizing a weather-ready Nation, where society is prepared for and responds to weather-dependent 

events, is vital. 

Weather-related catastrophes with high economic and social costs are not just 

acute events like tornado outbreaks or hurricanes, but also longer-term events such 

as seasonal or prolonged flooding, droughts, wildfire outbreaks, and other phenomenon brought on or enhanced by environmental change. These forces of nature 

can sometimes exact an even higher cost, since they occur over longer periods of 
37 

time, impact greater areas, and require longer-term planning to mitigate. The 

NOAA has significant expertise in this area, and our products, services, information, 

and planning are being used more broadly and sought out more fervently than ever 

before. One example is the NOAA’s work with our partners as part of the Devils 

Lake Task Force. Devils Lake is an enclosed basin in north-central North Dakota 

with no natural outlet. The water level in the lake has risen more than 50 feet in 

the last 50 years. Flood damages in the Devils Lake Basin have exceeded $300 million and inundated more than 138,000 acres since 1993 (Wiche, et al. 2010), and 

increased in volume by six times. The community’s concerns continue to grow regarding how much more of their land and homes, their businesses and infrastructure, the lake will consume, and how much more damage it may cause. The NOAA 

is using our weather and climate information—spanning from daily weather forecasts to seasonal outlooks and local and regional climate trends and analysis—to 

provide decision-support services to the local community, as well as resource management and disaster-response partners at FEMA, USGS, USACE, USDA, and others. It is this type of science-based support that these decisionmakers demand and 

need as they plan current and future actions to better prepare for both the continued flooding, and the potential impacts of a spill catastrophe should the lake reach 

critical spill elevation. 

As noted earlier, demographic trends and population growth, plus our increased 

reliance on technology, have made our society more vulnerable to extreme weather. 

The NOAA has started a national dialog with the Nation’s top experts in broadcast 

meteorology, emergency management, and the weather industry to examine what is 

happening with severe weather and what can be done in the short- and long-term 

to improve the Nation’s severe weather forecasts and warnings, and community preparedness. Included in this effort are social sciences, innovative technologies, and 

social media to improve our effectiveness in reaching those in harm’s way and provoking appropriate response, whether to the urgency of a tornado or tsunami warning, or to the longer-term likelihoods of flooding or drought. For example, most NWS 

offices have established Facebook pages, providing an additional medium for conducting outreach and education, as well as highlighting information about ongoing 

or upcoming weather events. Additionally, the NOAA uses NWSChat to give private 

sector partners an invaluable opportunity to interact with NWS experts, and to refine and enrich their communications to the public. Moreover, more private companies are carrying weather warnings on wireless networks, providing real-time alerts 

to your cell phone or email. 

Sea level rise, the increased number and intensity of heavy rainfall events and 

strong coastal storms, and other natural and human hazards are putting more people and property at risk, with major implications for human safety, economic vitality, and environmental health, especially in coastal areas. A new study by the 

NOAA indicates that coastal communities along the U.S. east coast may now be at 

greater risk of inundation during El Nin ̃ o years due to higher sea levels, accompanied by more destructive storm surges. To achieve a weather-ready Nation, it is 

essential that residents of communities understand these risks and learn what they 

can do to reduce their vulnerability and respond quickly and effectively when events 

occur. 

The NOAA is working on a number of efforts to increase the resilience of coastal 

communities. The NOAA’s multi-mission National Water Level Observation Network provides water level data that supports near-term warnings conducted by the 

NWS for storm surge and tsunamis, and provides long-term climatic records for sea 

level trends. The NOAA has worked with many entities to help them incorporate 

sea level trend guidance into their policy and planning documents. The NOAA also 

maintains the National Spatial Reference System (NSRS), which is the national coordinate system that defines position (latitude, longitude, and elevation), distances 

and directions between points, strength of gravitational pull, and how these change 

over time. The NSRS is a network of precisely located, permanently marked, inground geodetic reference points critical for accurate GPS use, and is critical to determine an accurate depiction of the shoreline. Both systems are needed to accurately model coastal inundation ranging from short-term extreme events to longterm sea level changes. 

A key component of achieving a weather-ready Nation is community preparedness. NOAA’s StormReady program works at the local level to ensure communities, 

both inland and coastal, have the warning capabilities and plans in place to help 

safeguard them against all types of disasters. This effort is complemented by 

NOAA’s Coastal Storms Program (CSP), which is a nationwide effort to reduce loss 

of life and mitigate impacts of storms on coastal communities and the environment. 

CSP provides dedicated resources and expertise from across NOAA to deliver capacity-building tools, training, data, and other products and services to enhance hazard 
38 

resilience in coastal communities in particular. For example, NOAA is working with 

communities along the Gulf of Mexico to provide a simple, inexpensive method for 

leaders to perform a self-assessment of their community’s resilience to coastal hazards. The results help communities prioritize what needs to be addressed before the 

next extreme event. Through these various community resilience efforts, NOAA is 

placing an increased focus on social science to better understand how and why decisions are made at the State and local levels and how NOAA can improve its efforts 

to communicate risk and uncertainty to the public at large. 

Sustaining our commitment to existing services, while continuing to improve our 

capacity to meet the Nation’s weather and water needs, requires targeted investments to shore up aging infrastructure, improve scientific understanding, and implement enhanced services to reduce risk to the Nation caused by weather and water. 

Today’s services are built upon earlier investments in innovative science and technology as well as our highly skilled workforce. Our capacity to collect and assimilate 

increasing amounts of data to improve model performance must increase to realize 

their potential. This is achieved through making critical improvements to science 

and technology. Future technology improvements include continued polar and geostationary satellites, more sophisticated radar coverage, observing systems, and improved computing capabilities. These technology assets are crucial pieces of our national infrastructure. The gap in data from the NOAA’s JPSS will significantly impact our ability to achieve a weather-ready Nation, because it will degrade our ability to accurately forecast severe weather events 3 days and beyond. 

Water management decisionmakers also require a new generation of water information, forecasts, and decision support. The NOAA is working with its Federal partners USGS, USACE, and others to implement Integrated Water Resources Science 

and Services, creating an integrated, high-resolution common operating picture for 

water information, supporting timely and critical water management decision in full 

coordination and collaboration with forecasting and decision support services. 

We know that the NOAA forecasts, warnings, and community-based preparedness 

programs are vital in enhancing the economy and saving lives. It all starts with a 

commitment on improved forecasting and ends with a weather-ready Nation in 

which businesses, governments, and people are prepared to use those forecasts to 

mitigate impacts. 

SUMMARY

To achieve an increase in community resilience and reduce the Nation’s vulnerability to weather- and water-related extreme events, we must continue to improve 

predictions. Again, our Nation’s environmental predictive capabilities are supported 

by four foundational pillars: observations, computer models, research, and our people. By strengthening the pillars—through improved satellite and in-situ observations, computing capacity, coupled atmosphere, ocean, land models, and necessary 

research and science improvement—we can revolutionize the forecast process across 

the entire spectrum from relatively small-scale, short-range applications to longrange weather and climate predictions. 

The dual goals of preparing for and mitigating natural hazards require the continuous commitment and partnership of many individuals and sectors—from Federal, 

State, tribal, and local to public, private, and academic. The investments made by 

the Congress and the administration in NOAA’s weather prediction and warning capabilities directly save lives in the United States during these weather disasters. 

NOAA remains committed to leading U.S. efforts to save lives and property through 

preparedness, detection, modeling, and forecasting efforts necessary for improved 

decisionmaking. Although nothing can eliminate the physical threat that severe 

weather and natural hazards pose, NOAA has demonstrated success in better predicting them, reducing their impact, and helping vulnerable communities become 

more resilient to their devastating effects—and will work to continuously improve 

its natural hazards products and services to the Nation. 

Senator DURBIN. Thanks, Dr. Sullivan. James Rivera is here, Associate Administrator, Office of Disaster Assistance, Small Business Administration. Please proceed. 

STATEMENT OF JAMES RIVERA, ASSOCIATE ADMINISTRATOR, OFFICE 

OF DISASTER ASSISTANCE, SMALL BUSINESS ADMINISTRATION 

Mr. RIVERA. Good afternoon, Chairman Durbin, and Ranking 

Member Moran, and distinguished members of the subcommittee. 
39 

My name is James Rivera and I’m the associate administrator for 

the Office of Disaster Assistance at the SBA. 

Thank you for inviting me to testify on my experience in administering the Disaster Loan Program and how the SBA budgets for 

its response in disasters. 

The SBA is responsible for providing affordable, timely, and accessible financial assistance, following a disaster to businesses, 

homeowners, and renters. This financial assistance comes in the 

form of low-interest loans to affected homeowners, renters, businesses, and nonprofit organizations. 

Since the SBA was created in 1953, we have provided more than 

1.9 million loans amounting in more than $49 billion. In terms of 

recent activity, as a result of the recent spring floods, tornadoes, 

and disaster events, the SBA has responded in 13 States and has 

provided more than $220 million in loans to homeowners and businesses. This is for uninsured losses. 

With regards to budgeting, the Federal Credit Reform Act of 

1990 requires the President’s annual budget reflect the estimated 

long-term costs of Federal credit programs on a net present value 

basis. Accordingly, we estimate subsidy cost of our credit program. 

Subsidy models are based on the available, historical data, so 

that the estimates can be performed, and therefore, the budget formulation subsidy is broadly based on loans made in response to 

historical disasters. 

The Disaster Loan Model produces cash flow projections for 

budget formulations, subsidy estimates, and re-estimates. The 

model uses the historical performance of more than 650,000 loans 

since 1992 to project future cash flows. The model also predicts individual loan performance based on current performance, and the 

historical experience of loans with similar characteristics. 

Loan characteristics found predictive for disaster loan behavior 

include whether the loan was made to a home, or a business, the 

size of the loan, deferral period, type of injury, and the age of the 

loan. 

The SBA recognizes the added value of external modeling, and 

uses this approach to gather information from these models to provide additional event-specific information that will refine and improve the SBA’s ongoing response. The Department of Homeland 

Security and FEMA have a tool called Hazards United States 

(HAZUS) that is a loss-estimation methodology for natural disasters in the United States. 

HAZUS is a powerful program for analyzing potential losses from 

floods, hurricanes, and earthquakes. The program couples the latest scientific and engineering knowledge with advanced geographic 

information systems technology to produce estimates of hazard-related damage before, during, or after disaster. 

The use of the HAZUS Program, allows the SBA to produce more 

accurate, actionable, and timely information when responding to 

natural disasters. We also incorporate this information for our 

Scalability Model. The model is designed to further refine and analyze disaster loan estimates for the purpose of accurately correlating damage estimates into actionable, and immediately staffing, 

budgetary projections. 
40 

This year, as in past years, Dr. Gerry Bell, a climate specialist 

and research meteorologist at the NOAA’s Climate Prediction Center, will brief the SBA’s senior management on the NOAA’s updated hurricane prediction. 

Dr. Bell specializes in monitoring global climate variability, especially patterns related to El Nin ̃ o, and La Nin ̃ a, and other atmospheric processes. This briefing will aid the SBA in our strategic 

planning efforts in this hurricane season. 

I would also like to quickly highlight some recent improvements 

to our disaster operation. The SBA is partnering with Agility Resource Solutions and we provide monthly webinars on preparedness. We also partner with the Red Cross and leverage the Ready 

Rating Program for homeowners and businesses. 

We’ve invested in our infrastructure and have increased the 

number of workstations for disaster staff employees from 300 to 

more than 2,100 work stations, which include 350 surge 

workstations at another location. We’ve increased the capacity of 

our computer system, the Disaster Credit Management System, 

from 800 concurrent users up to 10,000 concurrent users. 

PREPARED STATEMENT

Since Hurricane Katrina, the SBA has processed applications 

within 10 days, with an average goal of 14 days for homes and 18 

days for businesses. To put this in perspective, the average processing during the 2005 gulf coast hurricanes was 74 days for homeowners and 66 days for business loans. 

I appreciate the opportunity to share with the subcommittee the 

role the SBA plays in disaster recovery. We believe that we’re prepared to be effectively and efficiently respond to the needs of disaster victims. I look forward to your questions and thank you. 

[The statement follows:] 

PREPARED STATEMENT OF JAMES RIVERA

Good afternoon Chairman Durbin, Ranking Member Moran, and distinguished 

members of the subcommittee. Thank you for inviting me to testify on my experiences administering the Small Business Administration (SBA) Disaster Loan Program and how the SBA budgets for its response to disasters. 

Disaster assistance has been part of the SBA’s mission since 1953. Through the 

SBA’s Office of Disaster Assistance (ODA), the SBA provides affordable and timely 

financial assistance to disaster victims. This financial assistance comes in the form 

of low-interest loans to affected homeowners, renters, businesses, and nonprofit organizations. 

Many disaster victims have insurance, which covers part or all of the physical 

property losses due to a natural disaster. But for disaster losses not covered by insurance, an the SBA loan is the primary form of Federal financial assistance. Since 

the SBA’s inception in 1953, we have provided more than 1.9 million loans totaling 

more than $49 billion to help disaster victims in the wake of natural—as well as 

manmade—disasters. These loans are the only form of SBA assistance not limited 

to small businesses. The majority of the SBA disaster loans approved—about 80 percent—go to homeowners and renters. 

In terms of recent disaster events, in response to the severe storms and flooding 

this spring, the SBA has approved more than 3,700 loans totaling more than $207 

million. And last year, as a result of the Deepwater BP oil spill, small businesses 

in the gulf region that earn their living fishing in these waters, as well as seafood 

retailers, boat yards, shipping companies, processing plants, and other coastal small 

businesses faced the potential of tremendous financial losses from having to shut 

down operations because of the oil spill. The SBA assisted these small businesses 

by making Economic Injury Disaster Loans (EIDL) available for small businesses 
41 

in Louisiana, Mississippi, Alabama and Florida, and approved $41 million to affected small businesses. 

THE SBA’S ROLE IN RESPONDING TO A DISASTER

The SBA is not a ‘‘first responder agency’’ following a disaster. Rather, the SBA’s 

role focuses on providing loans as part of the recovery effort. The SBA carries out 

this role in coordination with other government partners at the Federal, State, and 

local levels. 

When the President makes a disaster declaration, various forms of Federal assistance, including SBA’s Disaster Loan Program, become available. If the Federal 

Emergency Management Agency (FEMA) declines a request for a declaration or if 

the State determines the damage is not extensive enough to request FEMA assistance, the State can request an ‘‘Administrative/Agency Declaration’’ from the SBA’s 

Administrator. And if that request meets the SBA’s damage requirements, area residents and business owners may apply for SBA disaster assistance. 

Disaster loans are a vital source of economic support in the affected areas. As part 

of an overall effort to get victims back on their feet, the SBA’s disaster home loans 

of up to $200,000 help local community members return and rebuild their homes. 

Moreover, businesses and nonprofits of all sizes are eligible for loans of up to $2 

million to assist with any uninsured and otherwise uncompensated physical losses 

sustained during a disaster. These funds are used to repair or replace damaged 

physical property. 

Additionally, the SBA offers EIDLs to small businesses, small agricultural cooperatives, aqua culture businesses and most private nonprofit organizations that 

have suffered economic injury caused by a disaster. If a small business or organization is unable to meet obligations and pay its ordinary and necessary operating expenses, an EIDL loan can help. These loans provide working capital to businesses 

or organizations. The maximum loan amount is $2 million combined for both physical and economic injury. 

In processing applications under longstanding program criteria, the SBA does not 

price loans based on the types of disasters that occur—interest rates for disaster victims are not based on the types of exposure that have the potential of higher losses. 

Funds are available and based on needs of each particular disaster and more specifically the disaster victim and their damages. Unlike other financial institutions, we 

do not use a progressive scale in determining interest rates based on potentially 

higher loss rates. However, the SBA has a responsibility to taxpayers to be a prudent lender and to not only require a reasonable assurance of repayment ability, but 

also to impose requirements upon disaster borrowers that will help minimize the potential need for future disaster loans (e.g., through insurance requirements mandated by regulations and SBA policy). 

BUDGET FORMULATION SUBSIDY ESTIMATES

The Federal Credit Reform Act of 1990 requires that the President’s budget reflect 

the estimated long-term cost of Federal credit programs on a net present value 

basis. Accordingly, credit agencies estimate the subsidy costs of Federal credit programs prior to submission of the President’s annual congressional budget submission. Subsidy models are oriented primarily toward preparing budget formulation 

subsidy estimates based on the available historical data so that estimates can be 

performed long before the fiscal year begins. For disaster assistance loans, we cannot know what kinds of disasters will occur in advance or how they will interact 

with other events. Therefore, the budget formulation subsidy estimate is broadly 

based on loans made in response to historical disasters. 

The disaster loan model produces cash flow projections for budget formulation 

subsidy estimates and re-estimates. The model uses the historical performance of 

more than 650,000 loans disbursed since 1992 to project future cash flows. The 

model predicts individual loan performance based on current performance and the 

historical experience of loans with similar characteristics. Loan characteristics found 

predictive for disaster loan behavior include whether the loan was made to a home 

or a business, the size of the loan, grace period length, type of injury (economic or 

physical), and age of the loan. 

ADDITIONAL RESOURCES

The SBA recognizes the added value of external modeling approaches and uses 

information gathered from these modeling approaches to provide additional, eventspecific information that will refine and improve the SBA’s ongoing response. 
42 

HAZUS–MH 

Hazards-US/Multi-Hazard (HAZUS–MH) is the Department of Homeland Security’s loss-estimation methodology for natural hazards in the United States. 

HAZUS–MH, also commonly referred to as The Risk Map Assessment Tool, is a 

powerful program for analyzing potential losses from floods, hurricanes and earthquakes. The program couples the latest scientific and engineering knowledge with 

advanced geographic information systems technology to produce estimates of hazard-related damage before, during, or after a disaster. 

The ODA is a strong partner in the HAZUS modeling community and actively 

works with FEMA’s HAZUS program management office and developer community 

to strengthen and support Government and industry use of HAZUS technology for 

responding to, and mitigating against, potential disaster losses. Use of the HAZUS– 

MH program allows the ODA to produce more accurate, actionable, and timely information when responding to natural disasters. 

In addition to HAZUS–MH, the primary model used by the ODA is the Scalability 

Model. This model is a custom developed program exclusive to the SBA. It was designed to further refine and analyze disaster loss estimates from models such as 

HAZUS for the purpose of accurately correlating damage estimates into actionable 

and immediate staffing and budgetary projections. 

The ODA has joined the Department of Homeland Security (DHS), FEMA, and 

other Federal partners in establishing the first ever Geospatial Concept of Operations (GeoCONOPS). The GeoCONOPS is an effort focused on geospatial communities supporting the DHS and the emergency management activities under the National Response Framework (NRF). It is a multiyear effort designed to document the 

current geospatial practices supporting NRF and Stafford Act activities. The participants include the 15 emergency support functions, and other Federal mission partners. 

National Oceanographic and Atmospheric Administration (NOAA) 

This year, as in years past, Dr. Gerry Bell, climate specialist and research meteorologist at NOAA’s Climate Prediction Center, will brief SBA’s Senior Management 

on NOAA’s updated hurricane predictions. Dr. Bell specializes in monitoring global 

climate variability, especially patterns related to the El Nin ̃ o, the multi-decadal 

cycle, and other large-scale atmospheric processes. He is the chief editor and co-author of the monthly Climate Diagnostics Bulletin, which provides the latest El Nin ̃ o 

analysis and diagnosis, along with a description and analysis of global weather and 

climate conditions. This briefing will aid the SBA in our strategic planning efforts 

this hurricane season. 

Another step we took to help small business owners in these areas who were repaying existing SBA disaster loans, was to allow them to request a deferment. Additionally, the SBA strongly encouraged its participating private lenders to consider 

on a case-by-case basis deferment relief for borrowers with SBA-guaranteed 7(a) 

loans and 504 loans. 

SIGNIFICANT IMPROVEMENTS SINCE HURRICANE KATRINA

Since 2005, we have seen a great deal of improvement in our disaster program. 

While we fortunately had a light 2010 hurricane season, in fiscal year 2010 we responded to more small-scale disasters (51 agency declarations and 15 economic injury declarations) than in the past 10 years combined. Following the 2005 gulf coast 

hurricanes, the SBA faced severe challenges in providing disaster assistance in a 

timely fashion. As a result, we made dramatic improvements in our operations and 

processes. Today, by incorporating lessons learned, SBA’s Disaster Assistance Program has overhauled its processes and improved response times. The SBA is now 

better prepared to process loans faster, provide a better quality of service, and be 

more helpful to disaster victims. 

To ensure overall preparedness, the disaster program has increased the number 

of workstations for disaster-assistance employees from 300 to more than 2,100, and 

we have brought online a ‘‘surge’’ center with 350 additional workstations. We are 

currently staffed at approximately 974 employees with a reserve force of more than 

2,000. Additionally, the SBA has the ability to request assistance from Small Business Development Centers and other SBA resource partners. 

The SBA has also improved its Disaster Credit Management System, which now 

gives the agency improved technology to serve many users, with increased disaster 

recovery capacity from 800 to 10,000 concurrent users. 

We have also processed applications within 10 days on average with a goal of 14 

days for home loans and 18 days for business loans. To put this into perspective, 

the average processing time during the 2005 gulf coast hurricanes was 74 days for 
43 

disaster home loans and 66 days for disaster business loans. Additionally, in August 

2008, the SBA introduced an electronic loan application that allows disaster victims 

to apply for assistance online. Currently, this mechanism accounts for approximately one-third of all applications submitted. 

The SBA has also revamped the postapproval process, improving the processes 

and tools for loan closings and funding disbursements. Our emphasis is on customer 

service and accountability, with each approved loan being assigned an individual 

case manager. 

In regards to marketing and outreach, the SBA has developed an aggressive plan 

to reach all potential applicants in an area before a disaster strikes. We are concentrating on areas that are vulnerable to recurring similar disasters to provide expanded outreach efforts before the disaster occurs. Additionally, we have provided 

all SBA employees with access to an online ‘‘Disaster Tool Kit’’ with detailed information on the agency’s role in preparedness, outreach, and assistance. 

The SBA has also signed a Memorandum of Understanding (MOU) with the 

American Red Cross and the Agility Recovery Solutions. Both MOUs are designed 

to promote disaster preparedness and educate potential disaster victims on the benefits of advanced planning for disasters. 

We have also instituted annual disaster trainings for the SBA’s Regional Administrators, District Directors, and Disaster Public Information Officers. And finally, we 

are currently involved in an overall assessment of our disaster assistance messaging, branding, and outreach. 

In closing, we appreciate the opportunity to share with the subcommittee the role 

the SBA plays in small business disaster recovery efforts. We firmly believe that the 

reforms we have instituted have enabled us to be prepared to effectively and efficiently respond to the needs of our Nation’s disaster victims. 

Senator DURBIN. Thanks a lot for your testimony, Mr. Rivera, 

and I will have a few questions for you. I’d like to invite Dr. 

Wuebbles, at this point, to proceed with his testimony. 

STATEMENT OF DR. DONALD J. WUEBBLES, THE HARRY E. PREBLE 

PROFESSOR OF ATMOSPHERIC SCIENCES, UNIVERSITY OF ILLINOIS-URBANA, ILLINOIS 

Dr. WUEBBLES. Thank you. Thank you for the opportunity to testify today. I’m professor in atmospheric sciences at the University 

of Illinois and an expert in the physics and the chemistry of the 

atmosphere. 

Along with the many scientific articles I’ve published in peer-reviewed literature, I’ve also been a leader in national and international assessments to look at various concerns about our climate 

system. As a son of an Illinois farmer, I know the impacts of severe 

weather are of great concern, to me, the people, and my country. 

As we will discuss, the evidence is strong, and there is an increasing trend of a—recent decades for severe weather, especially 

very heavy precipitation events. Scientific analysis also suggests 

that the likelihood for these events is likely to further increase as 

our climate continues to change over this century. 

In today’s testimony, I will focus on four main points about severe weather events in the United States and their relationship to 

changes occurring in our climate system. First, there are strong indications that the United States is seeing more extreme weatherrelated events in recent decades than in the past. 

We’ve already had some discussion about what’s been going on 

in—in 2011. We’ve seen more than $32 billion in damages already 

this year, and that doesn’t account for recent events such as the 

flooding in Iowa, and in the Midwest, and the—on the Missouri 

River, et cetera, wildfires in Arizona and New Mexico during late 

June, or the heat waves that gripped most of the country this last 

week. This year, 2011, is just part of the picture. 
44 

Overall, there’s been an increase in some—in key types of extreme weather events, at—since at least 1980. Widespread changes 

in temperature extremes have been observed over the last 50 years. 

In particular, the number of heat waves, globally, has increased 

and there has been a widespread increase in the number of warm 

nights, cold days, cold nights, and days with frost have become 

rarer. 

Changes are also occurring in the amount, intensity, frequency, 

and types of precipitation. I’ll highlight a few specific examples of 

the observed trends. First of all, we’re now seeing breaking—we’re 

now breaking twice as many heat records as cold records in the 

United States, and seeing this over the last 50 years. 

Since 1957, there has been an increase in the number of historically top 1 percent of heavy precipitation events across the United 

States, with an increase in such events of more than 30 percent in 

the Midwest and 67 percent in the Northeast. 

Our ongoing analyses of the repeat or recurrent frequencies of 

large precipitation storms, which, by the way, I’m doing, the people 

from the NOAA, are showing that such events are occurring more 

often than in the past. For example, the historical 20-year storm 

in the Midwest, of roughly 4.4 inches of precipitation in a single 

day, has now become the 12- to 13-year storm event. 

The pattern of precipitation change is one of increases generally 

at high northern latitudes because of—as the atmosphere gets 

warmer, it holds more moisture, and drying in the tropics and subtropics over land, so the wetter getting wetter and the dryer getting dryer. 

Number two, there is clear scientific understanding that the 

Earth’s climate system is changing and that it is largely happening 

because of human activities. There is no debate in the scientific 

community, based on the peer-reviewed literature, about the large 

changes occurring in the Earth’s climate or the connection of these 

changes to human activities, largely the result of the burning of 

fossil fuels and other human-related emissions. 

The science is clear and convincing that climate change is happening, happening rapidly, and happening primarily because of 

human activities. 

Number three, scientific analyses are now indicating a strong 

link between changing trends in severe weather events and changing climate. Every weather event that happens nowadays takes 

place in the context of changes in this background climate system. 

Globally, the temperatures are higher, the sea level is higher, 

and there is more water vapor in the atmosphere, which energizes 

storms. So nothing is entirely natural anymore. The background atmosphere has changed and continues to change because of the 

changing climate. 

It’s important to bear in mind that when one considers interpretation of specific severe events, it’s a fallacy to think that individual events are caused entirely by any one thing, either human 

variation or human-induced climate change. Every event is influenced by many factors. Human-induced warming is now a factor in 

all climate events. 

I could go on and give other examples, but I think I’ll go onto 

number four. Climate analyses suggest that the severe weather 
45 

and storm events are likely to become more common in the future. 

Other modeling results indicate that, if the nations continue to increase their emissions of GHG, the U.S. ratio of daily record highs 

to record lows are likely to increase by 20 to 1 by mid-century and 

50 to 1 by the end of the century. 

Our analyses of projected climate changes in the Chicago region 

have shown that the previously unheard of 1995-type heat wave is 

likely to become commonplace by the end of the century, occurring, 

at minimum, every few years. Over the coming decades, we can expect that the hottest summer you have ever experienced will become the norm. Severe precipitation events will also become more 

commonplace. 

PREPARED STATEMENT

Water vapor will continue to increase in the atmosphere, along 

with the water—and large precipitation events will continue in intensity and frequency. While we are already seeing the climatic effects of heat-trapping gases, it is important to recognize that the 

future lies largely in our hands, while we reduce our emissions and 

have a future of less warming and less severe impacts, or while we 

continue to increase our emissions and have a future with more 

warming, more severe weather, including the type of things we’ve 

been seeing recently. The choice is ours. 

[The statement follows:] 

PREPARED STATEMENT OF DR. DONALD J. WUEBBLES

Thank you for the opportunity to testify today on the changing trends in severe 

weather and the relationship of these trends to ongoing changes in the Earth’s climate system, and the risks and opportunity those challenges pose for our Nation’s 

energy and economic security. 

I am a professor and atmospheric scientist in the Department of Atmospheric 

Sciences at the University of Illinois. I am an expert in atmospheric physics and 

chemistry, and have authored more than 400 scientific articles in peer-reviewed 

journals, books, chapters of books, and in a number of national and international 

assessments related to concerns about ongoing changes in the Earth’s climate and 

atmospheric chemistry. I am a coordinating lead author for the next major international Intergovernmental Panel on Climate Change (IPCC) assessment of climate 

change and a member of the Executive Secretariat and the Federal Advisory Committee that is undertaking the next U.S. National Climate Assessment. 

As the son of an Illinois farmer, I know that the impacts of severe weather are 

of great concern to farmers and many other people because of the effects on our 

economy and on our personal well-being. As we will discuss, the evidence is strong 

that there is an increasing trend over recent decades for severe weather, especially 

very heavy precipitation events. Scientific analyses also suggest that the likelihood 

for these events is likely to further increase as our climate continues to change over 

this century. In today’s testimony, I will focus on four main points about severe 

weather events in the United States and their relationship the changes occurring 

in our climate system. 

THERE ARE STRONG INDICATIONS THAT THE UNITED STATES IS SEEING MORE EXTREME

WEATHER-RELATED EVENTS IN RECENT DECADES THAN IN THE PAST

Analyses from the National Oceanic and Atmospheric Administration (NOAA) National Climate Data Center (NCDC) indicate that 2011 has so far been one of the 

most extreme weather, and most costly, years in the history of our country. As of 

early June, there have roughly $32 billion in damages from severe events in 2011, 

the highest damage costs-to-date for any year since 1980 when the NOAA started 

tracking the major damaging events. The events they have evaluated this year include major blizzards last January and February, the outbreak of tornadoes in April 

and May, the drought and wildfires in Texas, New Mexico, and Oklahoma during 

the spring and early summer, and major flooding on the Mississippi River. However, 
46 

these analyses do not include the damages from other recent events, such as the 

effects of flooding of the Missouri and other rivers in Iowa and other Midwest 

States, the wildfires in Arizona and New Mexico during late June, or the heat wave 

that gripped most of the Midwest, South, and Northeast just last week. 

However, 2011 is just part of the picture. Overall, there has been an increase in 

some key types of extreme weather events since at least 1980. Widespread changes 

in temperature extremes have been observed over the last 50 years. In particular, 

the number of heat waves globally has increased, and there have been widespread 

increases in the numbers of warm nights. Cold days, cold nights, and days with 

frost have become rarer. Changes are also occurring in the amount, intensity, frequency, and type of precipitation (note that these aspects of precipitation generally 

exhibit large natural variability compared to temperature, making it harder to detect trends in the observational record thus requiring sophisticated analysis techniques). I will highlight a few specific examples of the observed trends: 

—We’re now breaking twice as many heat records as cold records in the United 

States (see Figure 1). If the climate weren’t changing, the number of record 

daily highs and lows being set each year would be approximately even. Instead, 

from 1950 to 2009, we have observed a shift to twice as many daily heat records 

being broken as night-time records. If we look at 2011, so far the heat records 

outnumber cold records by a ratio of 2.2 to 1 (based on the NOAA NCDC 

datasets). Overall, we’re seeing more extreme heat and less extreme cold, as 

you’d expect in a warming climate. 

—Since 1957, there has been an increase in the number of historically top 1 percent of heavy precipitation events across the United States (see Figure 2 from 

the U.S. Global Change Research Program (USGCRP), 2009), with an increase 

in such events of more than 30 percent in the Midwest and by 67 percent in 

the Northeast. Over the United States as a whole, there’s been a 20 percent increase in the amount of precipitation falling in the heaviest events. More intense rainfall means an increased likelihood of floods. 

—Our ongoing analyses (by Ken Kunkel of the NOAA NCDC, one of my students, 

and I) of the repeat or reoccurrence frequencies of large precipitation storms are 

showing that such events are occurring more often than in the past. For example (see Figure 3), the historical 20-year storm in the Midwest (NOTE.—A 20- 

year storm has a 5 percent chance of occurring each year so that the odds are 

that one occurs every 20 years) of roughly 4.4 inches of precipitation in a single 

day has now become the 12- to 13-year storm event. Similarly, our analyses are 

showing that the 5-year storm in the Northeast (3.5 inches in a day) has now 

become the 3-year storm event. 

The pattern of precipitation change is one of increases generally at higher northern latitudes (because as the atmosphere warms it holds more moisture) and drying 

in the tropics and subtropics over land. The wet are get wetter and the dry are get 

drier. 

For some severe weather events, such as tornadoes, lightning, hail and strong 

winds, uncertainties in the data collection make it difficult to determine statistically 

significant trends. 

THERE IS CLEAR SCIENTIFIC UNDERSTANDING THAT THE EARTH’S CLIMATE SYSTEM IS

CHANGING AND THAT IT IS LARGELY HAPPENING BECAUSE OF HUMAN ACTIVITIES

There is no debate within the science community, based on the peer-reviewed literature, about the large changes occurring in the Earth’s climate or the connections 

of these changes to human activities, largely the result of the burning of fossil fuels 

(e.g., see national and international assessments of our climate such as USGCRP, 

2009 and IPCC, 2007). The science is clear and convincing that climate change is 

happening, happening rapidly, and happening primarily because of human activities. 

There are an ever-increasing number of many independent surface observations 

that give a consistent picture of a warming world. Such multiple lines of evidence, 

the physical consistency among them, and the consistency of findings among multiple, independent analyses form the basis for the conclusion from the 2007 IPCC 

international climate assessment that the ‘‘warming of the climate system is unequivocal’’. As part of the changing climate, along with changes in the mean temperature being seen worldwide, there is likely to be an amplified change in extremes, both in temperature and in precipitation. 
47 

SCIENTIFIC ANALYSES ARE NOW INDICATING A STRONG LINK BETWEEN CHANGING

TRENDS IN SEVERE WEATHER EVENTS AND THE CHANGING CLIMATE

Every weather event that happens nowadays takes place in the context of the 

changes in the background climate system. Globally, the temperatures are higher, 

the sea level is higher, and there is more water vapor in the atmosphere, which energizes storms. So nothing is entirely ‘‘natural’’ anymore. The background atmosphere has changed and continues to change because of the changing climate. It is 

important to bear this in mind when one considers interpretation of specific severe 

events. For example, a pure meteorological analysis of the 2011 would events would 

note their consistency with the behavior from the La Nin ̃ a cold Pacific temperatures 

found earlier this year and the effects of the phase of the North Atlantic Oscillation 

ocean-atmosphere interactions, but would the severity of the 2011 events been as 

bad as they are without the changes in the background climate system. Analyses 

still need to be done to sort this out. 

It’s a fallacy to think that individual events are caused entirely by any one thing, 

either natural variation or human-induced climate change. Every event is influenced 

by many factors. Human-induced warming is now a factor in all weather events. 

We’re seeing more heat waves and they are hotter and they last longer. And while 

we might still have had a particular heat wave in the absence of human-induced 

warming, it would not have been as hot, or lasted as long, and such events would 

not occur as frequently. For example, an analysis of the 2003 European heat wave 

(Stott et al., Nature, 2004) that killed tens of thousands of people was shown to be 

about four times more likely due to human-induced warming. And in the future, 

summers that hot will be commonplace, if we continue on our current path of increasing emissions of heat-trapping gases. 

The changes occurring in precipitation are also consistent with the analyses of our 

changing climate. For extreme precipitation, we know that more precipitation is falling in very heavy events. And we know key reasons why—warmer air holds more 

water vapor, and so when any given weather system moves through, all that extra 

water dumps out in a heavy downpour. And in between these downpours there are 

longer periods without rain. So you get this cycle of very wet and very dry conditions. And we’re seeing this happening now, just as climate studies indicated it 

would. 

A key ingredient in changes in character of precipitation is the observed increase 

in water vapor and thus the supply of atmospheric moisture to all storms, increasing the intensity of precipitation events on average. Widespread increases in heavy 

precipitation events and risk of flooding have been observed, even in places where 

total amounts have decreased. Hence the frequency of heavy rain events has increased in most places but so too has episodic heavy snowfall events that are thus 

associated with the changing climate. 

CLIMATE ANALYSES SUGGEST THAT SEVERE HEAT AND STORM EVENTS ARE LIKELY TO

BECOME MORE COMMON IN THE FUTURE

Sophisticated computer models of the global climate system are being used to determine how severe weather is likely to change during the course of this century. 

For example, in a study of record high and low temperatures by Jerry Meehl of National Science Foundation’s National Center for Atmospheric Research, climate modeling results indicate that if nations continue to increase their emissions of greenhouse gases in a ‘‘business as usual’’ scenario, the United States ratio of daily record 

high to record low temperatures would increase to about 20 to 1 by mid-century and 

50 to 1 by 2100. The mid-century ratio could be much higher if emissions rose at 

an even greater pace, or it could be about 8 to 1 if emissions were reduced significantly. 

Our analyses (see Chicago Climate Action Plan or Wuebbles et al., Journal of 

Great Lakes Research, 2010) of projected climate changes in the Chicago region 

have shown that the previously unheard of 1995 type heat wave is likely to become 

commonplace by the end of the century, occurring at minimum every few years. 

Over the coming decades, we can expect that the hottest summer you have ever experienced will become the norm. 

As the climate system continues to warm, these models of the Earth’s climate system indicate severe precipitation events will also become more commonplace. Water 

vapor will continue to increase in the atmosphere along with the warming, and 

large precipitation events will increase in intensity and frequency. At the same 

time, droughts like we have been seeing in recent years in the Southwest will likely 

become stronger and more frequent as the climate change continues. Basically, we 

expect the wet to get wetter and the dry to get drier. 
48 

Some people have criticized climate models. However, today’s climate models encapsulate the great expanse of current understanding of the physical processes involved in the climate system, their interactions, and the performance of the climate 

system as a whole. These complex numerical models account for the many feedbacks 

that occur through interactions among the components of the climate system: 

—the atmosphere; 

—oceans; 

—land; and 

—cryosphere (which includes sea, lake and river ice, snow cover, glaciers, ice caps, 

ice sheets, and frozen ground). 

Today’s climate models are extensively tested relative to observations and are able 

to reproduce the key features found in the climate of the past century, and simulations of the evolution of global surface temperature over the past millennium are 

consistent with past climate reconstructions. 

However, these models are not perfect and likely can’t ever be perfect. Uncertainties arise from shortcomings in the understanding and how to best represent complex processes in models. Nonetheless, these models do many things well and provide the best representation possible of the climate system and its changes. 

Because models do differ in their representation of certain processes, we make use 

of these differences by examining suites of models in the climate assessments. However, it is worth noting that they all give the same basic story—human-related activities are significantly heating up the Earth’s climate and altering its precipitation 

patterns and will continue to do so over this century and beyond unless the human 

effects are reduced. Also, despite the tremendous improvements in the climate modeling capabilities over my 40 years as a scientist, the basic response of a significant 

effect on the climate system from human activities continues to be about the same 

as the models were finding 40-year ago. These models are the only crystal balls we 

have—and although not perfect, they are very useful tools. By downscaling approaches that account for local/regional observations, the results from these models 

can and are being used to clearly illuminate the choices we face—between a future 

with lower versus higher impacts on humanity and ecosystems. 

While we are already seeing the climatic effects of our emissions of heat-trapping 

gases, it is important to recognize that the future lies largely in our hands. Will we 

reduce our emissions, and have a future with less warming and less severe impacts, 

or will we continue to increase our emissions and have a future with more warming 

and more severe impacts, including more extreme weather events? The choice is 

ours. 

FIGURE 1.—This graphic shows the ratio of record daily highs to record daily lows 

observed at about 1,800 weather stations in the 48 contiguous United States from 

January 1950 through September 2009. Each bar shows the proportion of record 
49 

highs (red) to record lows (blue) for each decade. The 1960s and 1970s saw slightly 

more record daily lows than highs, but in the last 30 years record highs have increasingly predominated, with the ratio now about 2 to 1 for the 48 States as a 

whole (based on Meehl et al., Geophysical Research Letters, 2009). 

FIGURE 2.—The map shows percent increases in the amount falling in very heavy 

precipitation events (defined as the heaviest 1 percent of all daily events) from 1958 

to 2007 for each region. There are clear trends toward more very heavy precipitation 

for the Nation as a whole, and particularly in the Northeast and Midwest. (from 

Global Climate Impacts in the United States, USGCRP, 2009). 
50 

FIGURE 3.—Using NOAA daily precipitation data (from the NOAA NCDC) for 497 

stations in the Midwest, we have been analyzing the returns for the Midwest in 

terms of a single-day event returning in 5 years, 10 years, and 20 years (we are 

also analyzing multiple-day events). The graph shows the single-year analyses and 

a 10-year running mean of the 20-year storm event in the Midwest for data starting 

in 1930 through 2010 (it does not include the huge rainfalls already observed in 

2011). As would be expected, the annual signal is noisy, but much less noisy for the 

10-year running mean. This analysis suggests that what was a 20-year precipitation 

event over the Midwest is becoming more common over time and has become a 12- 

to 13-year event in recent years. 

Senator DURBIN. Thank you very much, Dr. Wuebbles. Franklin 

Nutter is president of the Reinsurance Association of America. 

Please proceed. 

STATEMENT OF FRANKLIN W. NUTTER, PRESIDENT, REINSURANCE 

ASSOCIATION OF AMERICA 

Mr. NUTTER. Chairman Durbin, Ranking Member Moran, thank 

you very much for this opportunity. Reinsurance is, essentially, the 

insurance of insurance companies. It serves a variety of purposes, 

but most relevant to this hearing, it is the financing of risk for severe and infrequent natural and manmade catastrophes. 

We share the subcommittee’s concern that an increase in severe 

weather events requires a more forward-looking and proactive approach to financing recovery from disasters. I have attached to my 

statement a series of slides, like the ones you show here, about the 

number and the increase in number of events, but also the financial impact in the United States and outside the United States of 

natural catastrophes. 

Much of this increase can be attributed to changes in weather intensity and climate-related impacts, but a fundamental driver is 

the increase in the number of people living in areas vulnerable to 
51 

natural catastrophes, the increase in property values, and the vulnerability of construction materials and technology. 

The reality is that our society has moved increasingly to areas 

with the greatest exposure to natural catastrophes, along our 

coasts and rivers, and invaded the natural landscape in areas susceptible to wildfire and drought. The subcommittee asked that I address how insurers prepare and evaluate this changing risk landscape, and how that might be applied in a public sector. 

And indeed, as was mentioned by the chairman, the Federal Government has much the same insured exposures through the NFIP 

and the Federal Crop Insurance Program. But, of course, the Federal Government has the additional responsibility for disaster assistance. 

While no one can reliably predict specific weather events, this 

does not preclude financial planning for the likelihood of these 

events, or through—for the reliance of—on the scientific community 

to assess future conditions that can be used to make decisions 

about appropriate policy. 

The insurance industry believes that long-term solutions to hazard reduction should be driven by mitigation and adaptation strategies. Federal incentives for improved natural hazard building 

codes, improved financing for mitigation and relocation of repetitive 

lost properties in the NFIP, better preservation of natural habitats 

that service protected areas for property and people should all be 

included in the Government’s portfolio of approaches. 

The insurance industry funds research in this area through the 

Institute for Business and Home Safety, which recently opened a 

research facility, which replicates natural hazards in a controlled 

environment and assesses their impact on commercial and residential structures. 

The traditional insurance model is largely an actuarial one. A 

pool of data of actual loss is trended forward, using economic factors. 

And insurers rely primarily on three interrelated approaches for 

financial protection for future severe and infrequent events, the 

first being actuarially driven pricing that reflects actual risk assessment; the second being diversification of its portfolio of insured 

properties, geographically and by line of insurance. 

And the third is the utilization of reinsurance to transfer risk beyond which the insurer wishes to retain. In recent years, the insurance industry has modified this traditional approach to its business 

by assessing and pricing catastrophe risk. 

After Hurricane Andrew in 1992, it was clearly obvious that a 

retrospective loss model, as I had described momentarily above, 

was inadequate, and indeed, misleading for future catastrophic 

events. 

To address this dilemma, probabilistic models were developed to 

assess a financial impact of catastrophic natural hazards, simulating possible future events over long periods of time, to produce 

a representative loss scenario. 

As it has become standard practice for insurers and reinsurers, 

I recommend this approach to the subcommittee and to the Government as a means for planning for future funding needs related to 
52 

natural catastrophes. These models operate on the following principles. 

A hazard component, populated by teams of scientists, creates a 

catalog of thousands of potential computer-simulated catastrophes. 

I might add that most of that information, really, is derived from 

Government programs and Government-funded programs through 

the National Science Foundation and through the NOAA. 

The engineering component consists of detailed information 

about properties exposed to these events in specific locations or regions. 

And the financial component derives information—provides information about potential losses for individual properties, or groups of 

properties, and applies a probability of loss. 

PREPARED STATEMENT

These models allow users to assess the impact and severity of future loss scenarios, analyze the effect of changes in conditions, or 

propose changes in hazard mitigation, assess adaptation scenarios, 

and determine the appropriate pre-funding needs. 

In the case of the insurance industry, that would apply to the insurance premiums, in the case of Government, the pre-funding disaster assistance needs. Mr. Chairman, we commend you and the 

subcommittee for looking at this very important issue and look forward to exploring the kind of risk management and risk-financing 

techniques used in the private insurance sector for public needs. 

Thank you. 

[The statement follows:] 

PREPARED STATEMENT OF FRANKLIN W. NUTTER

I am Franklin Nutter, president of the Reinsurance Association of America (RAA). 

Thank you for the opportunity to testify. 

Reinsurance is essentially the insurance of insurance companies. It serves a variety of purposes in the financial structure of insurance companies, but perhaps the 

most relevant to this hearing is the financing of risk for severe and infrequent natural and manmade catastrophes. Reinsurers have borne significant shares of insured losses from many major catastrophic events including 55 percent of September 11 losses; 33 percent of Hurricanes Katrina; Rita and Wilma; 40 percent of 

the recent Japanese earthquake and tsunami; and 33 percent of the recent Midwest 

tornadoes. 

We share the subcommittee’s concern that an increase in severe weather events 

requires a more forward-looking and proactive approach to financing recovery from 

disasters. Attached to this testimony are a series of slides showing a clear increase 

in the number and financial impact of United States and non-United States natural 

catastrophes including geophysical (earthquake); climatological (extreme temperature, drought, wildfire); hydrological (flood); and meteorological (winter and thunderstorms and related hurricanes and tornadoes) events. Much of this increase can 

be attributed to changes in weather intensity and climate-related impacts. However, 

the fundamental driver is the increase in the number of people living in areas vulnerable to catastrophic storms, the increase in property values in these high-risk 

areas, and the vulnerability of construction materials and technology. The reality 

is that our society has moved increasingly to areas with the greatest exposure to 

natural catastrophes along our coasts and rivers and invaded the natural landscape 

in areas susceptible to wildfire and drought. Where these areas once served as natural habitats to wildlife and buffers from natural hazards, they are now populated 

with communities and infrastructure. 

The subcommittee asked that I address how insurers prepare and evaluate this 

changing risk landscape and how that might be applied in the public sector. Indeed 

the Federal Government has much the same insured exposure through the National 

Flood Insurance Program (NFIP)—with 5.5 million homes insured—and the Federal 

Crop Insurance Program (FCIP). The Federal Government has the additional bur-
53 

den of disaster assistance following catastrophic events and appears to rely primarily on postevent appropriations. No one can reliably predict specific weather 

events more than a few days in advance and there is no reliable prediction for 

earthquakes. That does not preclude, however, financial planning for the likelihood 

of these events or for reliance on the scientific community to assess future conditions that can be used to make decisions about appropriate policy matters. Support 

of the work of the National Science Foundation and National Oceanographic and Atmospheric Administration (NOAA) remain an important part of assessing risk from 

natural forces. The private sector benefits immensely from funded research programs by these institutions. 

The insurance industry believes that long-term solutions to hazard reduction 

should be driven by mitigation and adaptation strategies. Federal incentives for improved natural hazard building codes, improved financing for mitigation and relocation of repetitive loss properties in the NFIP, better preservation of natural habitats 

that serve as protective areas for property and people should all be included in the 

Government’s portfolio of approaches for minimizing the economic consequences of 

natural disasters—many of which are ultimately borne by U.S. taxpayers. The insurance industry also funds research to address building features and styles that 

can significantly reduce damage to property. The Institute for Building and Home 

Safety recently opened a new research facility which replicates natural hazards 

(hurricanes, thunderstorms, hail, wildfire) and their impact on residential and commercial structures. Its research will lead to improved building and community resilience. 

The traditional insurance model applied to automobiles, workers’ compensation 

and homes as it relates to non-natural peril insurance coverage’s is largely an actuarial one: a pool of data of actual losses trended forward using economic factors such 

as cost of living adjustments and inflation. Insurers then seek to collect a premium 

from an insured based on this analysis not knowing of course whether any specific 

insured property would suffer damage, but predicting reasonably well what the likely loss experience of the pool of insureds would be over a period of time. 

Insurers rely primarily on three interrelated approaches for financial protection 

from severe and infrequent events: 

Actuarially Driven Pricing That Reflects Actual Risk Assessment.—Unfortunately, the NFIP reports that it subsidizes about 25 percent of its properties, 

that 1 percent of the properties account for 30 percent of the losses as repetitive 

loss properties and then relies on borrowing from the U.S. Treasury for funding 

shortfalls. The Program is $18 billion in debt to the Treasury at this time. 

Diversification.—Variation of the portfolio of insured properties geographically and by line of insurance. 

Utilization of Reinsurance To Transfer Risk Beyond What the Insurer Wishes 

To Retain.—NFIP legislation recently passed by the House authorizes the NFIP 

to purchase reinsurance rather than rely exclusively on Federal debt. The FCIP 

is already a public private partnership. 

Given the enormous recent losses of property and people to natural events, the 

insurance industry in recent years has modified its approach to assessing and pricing catastrophe risk. After Hurricane Andrew in 1992, it was clearly obvious that 

a retrospective loss business model as described above was inadequate, and indeed, 

misleading for catastrophic events, particularly if a changing pattern of weather and 

climate were developing. Assessing risk by applying historical loss events over current insured properties leads to an underestimation of potential losses. To address 

this dilemma, probabilistic models were developed to assess the financial impact of 

catastrophic natural hazards simulating possible future events over long periods of 

time to produce a representative loss scenario. As it has become standard practice 

for insurers and reinsurers, I recommend this approach to the subcommittee as a 

means to plan for future funding needs related to natural catastrophes. 

These catastrophe models are provided to subscribers by several firms whom I 

have identified in the appendix and in some cases by reinsurers and reinsurance 

brokers. The models operate on the following principles: 

—The hazard component, populated by teams of scientists (meteorologists, seismologists, geophysicists, and hydrologists) creates a catalog of thousands of potential computer simulated catastrophes and applies the intensity of an event 

at specific locations. 

—The engineering component consists of detailed information about the properties 

exposed to these events in specific locations or regions (including location data 

and building characteristics). 

—The financial component provides information about potential losses for individual properties or groups of properties and applies a probability of loss. 
54 

These models allow users to assess the impact and severity of future loss scenarios, analyze the effects of changes in conditions or proposed changes in hazard 

mitigation (e.g. building codes, structural changes to properties), assess adaptation 

scenarios and determine the appropriate pre-funding needs. In the latter case that 

would apply to insurance premiums, or in the case of the Government, to pre-funding disaster assistance needs. These models are routinely updated to reflect new scientific or local infrastructure and building information. Some of these models have 

been applied to pandemics, terrorism-related events and climate change as well. 

Mr. Chairman, on behalf of the RAA, we look forward to exploring the risk management and financing techniques currently in practice in the reinsurance industry 

to determine how the Government can improve its financial planning needs related 

to manmade and natural catastrophes. 

Senator DURBIN. Thank you very much. I know Senator Moran 

has to go to another meeting, but I thank you for attending today. 

If we have any written questions, we will submit them to be entertained by the panel here. Mr. Nutter, I think you sent us this chart 

here. I’m taking a look at it, Top 16 Most Costly World Insurance 

Losses. Is that your chart—— 

Mr. NUTTER. Yes, I have—— 

Senator DURBIN. For the insurance? 

Mr. NUTTER. I have several. Let me make sure I have the one 

that you’re—— 

Senator DURBIN. Insurance Information Institute? I don’t think 

we have that in large font, do we? 

Mr. NUTTER. I have that here with me. 

Senator DURBIN. Do you? Well, this chart, as it is titled, Top 16 

Most Costly World Insurance Losses, 1970 to 2011—so that’s a 41- 

year period of time. And it says two noteworthy things. Taken as 

a single event, the spring 2011 tornado season would likely become 

the ninth costliest event in global insurance history. (50:26 of 

webcast) 
55 

SOURCES.—Swiss Re sigma 1/2011; AIR Worldwide, RMS, Eqecat; Insurance 

Information Institute. 

And then it says 3 of the top 15 most expensive catastrophes in 

the history of the world have occurred in the past 18 months. So 

let me ask you this question, and then I think I know the answer, 

but I want it on the record. Do you adjust these dollar losses to inflation? 

Mr. NUTTER. These all reflect 2011 dollars. They’ve been adjusted so that they can be reconciled with each other. 

Senator DURBIN. So we just can’t argue that things are more expensive now than they were 20 years ago, and a small event today 

may cost a lot more money than it did 20 years ago? 

Mr. NUTTER. That’s correct. 

Senator DURBIN. These have been adjusted accordingly? 

Mr. NUTTER. That’s correct. 

Senator DURBIN. So, then, this is noteworthy. And let me ask 

you, what is the impact of this kind of information on your industry, when the people are trying to decide whether they’ll write insurance, and if they do, what kind of reserve they need, what kind 

of premiums they charge? 

Mr. NUTTER. Well, Mr. Chairman, as you mentioned in your 

opening comments, obviously, the insurance industry looks at historical losses and determines whether or not the premiums that it’s 

charging reflect the risk that it’s assessing. 

But in this area of natural catastrophe, the industry has tried to 

do a better job in assessing the probability of future events, and adjusted, you know, these premiums accordingly. 
56 

So, in some cases, insurance companies have looked at their exposures, what they’ve written in high-risk areas. Think coastal 

areas, the State of Florida, the east coast, the gulf coast. 

And some insurance companies have pulled back from those 

areas because they feel like that—what they should charge, related 

to the risk of exposure, they can’t, or that the regulatory system 

inhibits them, so that they pull back. They decline coverage or they 

nonrenew coverage. 

On the other hand, in our community, the reinsurance community looks to right catastrophe risk, largely because it does not 

have regulated premiums, but in fact, operates at a very competitive environment not unlike the insurance industry in the State of 

Illinois operates in a competitive rate environment. So in our sector, catastrophe risk is somewhat counterintuitive. In fact, they 

look to right this risk, believing that they can assess it. 

Senator DURBIN. So let me ask you, from an actuarial or a statistical point of view, how do they factor in whether something is an 

aberration, a once-in-a-100-year event, or a pattern emerging? 

Mr. NUTTER. Yes, it really is a probabilistic analysis. It’s a 

stochastic analysis, if you will, trying to assess whether or not 

these events are, indeed, outliers. 

I think what we would say is that the outliers have become commonplace, not unlike Dr. Wuebbles said that your—you know, the 

hottest day you’ve experienced will become the norm going forward, 

that the insurance industry looks at these losses as being common, 

largely because of the movement of people into these high-risk 

areas. 

If you looked at the development, as well as population shifts to 

coastal areas in particular, it’s pretty notable. So we don’t—I don’t 

think the industry sees these as outliers, any one event, but in fact, 

a pattern that’s going to continue and continue to grow going forward. 

Senator DURBIN. So you see the weather pattern and also the 

residential or settlement pattern coming together? 

Mr. NUTTER. Absolutely, in the wrong way. 

Senator DURBIN. Magnifying these losses in the wrong way. Let 

me, if I can, turn to Mr. Rivera, because, following what Mr. Nutter 

has just said, it’s very clear that they’re looking beyond any fiscal 

year to a pattern that would lead them to decide whether to write 

insurance, and if so, what reserves are necessary to protect their 

risk. 

You discussed the advanced modeling that you’re using for budget projections for the Federal Government. You have one small, but 

important, part here, SBA disaster loans. And you used, as I understand it, these budget projections, for short-term estimates 

only—seasonal and annual. So what, if anything, are you doing to 

look to the long term? 

Mr. RIVERA. Thank you, Senator. You know, as I’m listening to 

Mr. Nutter here, he’s talking about his actuarial approach, pricing 

risk, diversification, and reinsurance. We pick up some of those 

components. 

We do look at historical data that takes in the recent weather 

patterns. We look at the long-term costs, and we do the annual as-
57 

sessment based on the Federal Credit Reform Act, since 1990, and 

moving forward. 

But the thing that I find very interesting is, in the Federal Government, or at least with the Disaster Loan Program, the SBA is 

not able to price risk as the private sector is. So for example, a disaster applicant comes to me and whether they’re insured or uninsured, or underinsured, we go ahead and provide that loan to them 

from that perspective. 

We’re open and interested in trying to figure out if we can make 

a connection between what the private sector is doing and what 

we’re doing in the Federal Government. I mean, that makes a lot 

of sense. 

But the different perspective of us not being able to price our 

product, for example, the maximum interest rate for a homeowner 

loan can be no more than 4 percent by statute. So we’re a little bit 

more boxed in from that perspective. 

Senator DURBIN. So let’s follow up on that, Mr. Trimble. It seems 

to me that, as I try to take Mr. Nutter’s good advice about what 

the private sector is doing and apply it to the Federal Government, 

in our exposure to weather events, Mr. Rivera has just identified 

a problem. The people setting the premiums, interest payments, 

and such, happen to be Members of Congress and the President, 

who enact laws. 

So as we try to envision a more challenging world, in terms of 

risk exposure, has the GAO taken a look at whether or not we are 

adjusting our economic models and projections, in terms of premiums collected, monies set aside, or are we just going to rely on 

disaster payments if we get into a fix? 

Mr. TRIMBLE. Well, we looked, as part of a study a couple years 

ago, at two Federal insurance programs, the crop insurance and 

the flood insurance programs. And what we found was similar. 

Their perspective was budgeting by year, based on past losses. 

But at that time, the point was also made that those programs operate under different constraints and imperatives, based on their 

statutory requirements. 

So we’ve not done a full examination of the constraints of those 

statutory requirements, in terms of how they operate day-to-day. I 

think the question is, what latitude they have to incorporate climate change under the existing requirements they’re under. 

Senator DURBIN. Dr. Sullivan, I suspect that some of the information that Mr. Nutter and his industry uses comes from your 

agency, in terms of what you are observing and the changes that 

are taking place. 

And you’ve made a good point about how you need to continue 

to have the technology, keep up with the science, so that you can 

avoid exposure for loss of life and dollar cost that might be associated with it. So are you—as you look at these projections from the 

NOAA’s point of view, seeing these severe weather trends emerging 

and growing in the future? 

Dr. SULLIVAN. Senator, we’re not assuming in our analyses, that 

the patterns, specifically that we see in past data, will remain the 

patterns that future data will show. Mr. Nutter’s testimony alluded 

to this. Excuse me, Dr. Wuebbles’s testimony alluded to this. 
58 

The 50-year flood is now the 20-year flood, is now the 12-year 

flood. So analytical methods that our NCDC personnel use in concert, in partnership with a variety of academic partners, such as 

Dr. Wuebbles, test and examine repeatedly, almost continually, in 

fact, those trends, those patterns, and try to arrive at some statistical confidence about what slant, what trend should be incorporated in forward projections so that we have what are called nonstationary statistics. 

I’d also comment, if I may amplify a bit on what I mentioned 

about the IWRSSI effort that we’re doing with the Corps of Engineers and the USGS. We’re working there to make all of our data 

systems, from maps to stream flow data and everything in between, fully interoperable and fused on a common platform, common portal. 

And that will allow Federal partners, who try to support regional, local, and State officials in flood-prone areas do the things 

that Mr. Nutter was talking about, not just give you a forecast for 

a point on a river at a certain point in time, but actually let you 

interactively translate that into specific inundation levels that may 

be expected at your Main Street bridge in your neighborhood, and 

lay that against the Census, and other demographic and economic 

data to readily give you an economic outlook for the possible damage that you may be seeing if the flood really reaches the stage 

that’s been forecast. 

Senator DURBIN. Dr. Wuebbles, I’ve had the good fortune of 

meeting a lot of Illinois farmers, which is your family background. 

They are courteous and thoughtful people who come to visit me and 

consider an important part of their responsibility to help educate 

a Senator about agriculture and the world that they live in, in Illinois or around the Nation. 

And for a period of time there, I’d asked each group of farmers 

from Illinois, who came in to see me, the same question. I asked 

them how many of you believe that man’s activity on Earth is 

changing the climate that we live with? Is it changing the weather 

patterns, or the temperatures, the world that we live with? 

And I would say, out of, perhaps, 100 farmers, 2 said yes. And 

I would, then, pursue with them, do you believe that things are 

changing in this world? Are glaciers melting? Do you see changes 

in the weather patterns? And if so, how do you explain it? If it isn’t 

our activity adding to this, what’s causing it? 

And they would kind of be very quiet. I had to probe, come on 

now, give me an answer. And you know, one farmer said to me, 

from Illinois—he said, Senator, 8 years ago, I had a flood. Last 

year, I had a drought. God’s going to throw different things at me 

from time to time. It’s kind of this divine mood swing that they 

really view as behind this. 

So I’d like to say to you that I’m not going to try to resolve that 

political environmental question here. But I think what we try to 

do in this hearing is to acknowledge what is objective and obvious. 

Something’s changing. I don’t know the reason. I mean, I think I 

happen to agree with you what the reason is. 

But whether or not you agree with your premise, or mine, or 

someone else’s, the facts are the facts. Things are changing in 

weather patterns here. I guess the only thing that I know with any 
59 

degree of certainty is what it’s like to make 48 round trips between 

Illinois and Washington a year for 29 years. 

I’ve spent a lot of time in airplanes, and I’ll tell you, the weather 

is a mess this year, and I’ve never seen it this bad. And it continues to be bad, way beyond the spring storms that we’re used to. 

The point I’d like to get to is whether or not we can come to some 

consensus here, beyond the political debate about climate change, 

about the reality of what we face. 

Within the academic community, where there might be a difference of opinion about man’s impact on the environment, is there 

at least a common conclusion that things are changing in a patterned way? 

Dr. WUEBBLES. Basically, yes, I think you’d find very strong consensus that a—what’s occurring in the long-term averages of 

weather, in the statistics of weather, are changing. You know, 

there’s no question about that. 

You know, more than 90 percent of the glaciers in the world are 

decreasing significantly. And there’s—I’ve talked today about precipitation events, you know. The data itself is very, very strong 

that things are changing. 

I think, if you had asked the farmers a different question, if 

you’d asked them, are you seeing changes occurring in what you’re 

doing in your fields and in trying to get out there each year, I think 

you would have gotten a little bit different answer, that you—they 

definitely are seeing more, in the Midwest, in Illinois, more situations of flooding, strong precipitation in the spring, can’t get out 

into their fields as soon. 

And so I think you would have seen that, yes, they definitely 

have—they know that something’s happening. And it’s not just 

what it was 30, 40 years ago. 

It’s—if we turn back to the science community, you know, that’s 

very clear, that, as I said in my testimony, if you go and look at 

the peer-reviewed literature, which is how we—you know, scientists judge ourselves by publishing papers and having our peers 

look, examine those papers, before they can be published. 

And so it’s our way of trying to put in checks and balances of it 

in what we do. You don’t find a disagreement about the fact that 

humans are having an impact on our climate system. It’s just not 

there. And very, very few papers make it in at all. And those that 

do usually are shot down pretty rapidly because they’ve made mistakes in the evaluation of the data, so I think the evidence is quite 

strong that, you know, it’s unequivocal that our climate is changing, and that there is a strong relationship to what’s—what human 

activities are doing. 

Senator DURBIN. So let me try to draw all of you into this common question. Going back to Mr. Nutter’s premise, I assume that, 

if you guess wrong in the insurance business, it’s going to affect the 

bottom line, whether or not you’re profitable, whether you’ve collected enough premiums and set aside enough reserves. And so we 

do things a little differently in Washington. 

If we guess wrong, in terms of a program that is supposed to protect people from a disaster, let’s say crop insurance, if we guess 

wrong, we have something called a supplemental appropriation, 

which means we make up the difference with a disaster payment. 
60 

And they frequently are coming through the Congress for everything you can imagine, from earthquakes in California to, you 

name it, droughts, and fires, and all the rest. So we move in with 

the supplemental appropriations, which are unpredictable, and 

usually just go directly to the deficit, with very, very few exceptions. 

Now, I served on the Deficit Commission, the Bowles-Simpson 

Deficit Commission, that the President created. And they decided 

to try to do something about that. And I’m going to ask you all to 

think about this, that have not heard it before, and react to whether or not you think this is constructive, is complete, or how you 

might modify it. The Fiscal Commission emphasized that restoring 

fiscal discipline requires honest budgeting. 

And a given disaster may, itself, be unpredictable, but the need 

to pay for some level of disaster relief is not. Federal budgets rarely 

set aside adequate resources in anticipation of disasters, and instead, rely on emergency supplemental funding requests. 

With that premise, the Commission plan explicitly called for setting aside funds for disaster relief and establishing stricter parameters for their use. The disaster fund budget authority would be 

limited to the rolling—this is the operative sentence—average of 

disaster spending in the most recent 10 years, excluding the highest and lowest years. 

Any unused budget authority would be rolled forward to increase 

the disaster fund budget authority available the following year. 

Any spending above the disaster fund limit would need to be offset 

with reductions in spending in other areas or special parliamentary 

procedures. 

So, if you can follow the premise, it’s pretty basic. You can, without a statistics course, I think, understand it. Take the last 10 
61 

years. Throw out the highest and the lowest year. Average it. And 

we’re going to make sure we have at least that amount of money 

available each year. 

If we don’t spend it all, we’ll roll it over to the next year. Now, 

apply that model to what you’ve seen in the last 10 or 20 years, 

or what you see coming, and tell me whether or not you think 

that’s adequate. What do you think, Mr. Nutter? 

Mr. NUTTER. I would start, and I think the insurance industry 

learned a lesson some time ago, that ’s not an adequate way to do 

that. 

Senator DURBIN. Not adequate? 

Mr. NUTTER. Not an adequate way to do that. That as I said in 

the testimony, when prior to Hurricane Andrew, which is 1992, the 

industry had an estimate, that the potential losses of a hurricane 

in that area would be about $8 billion. That was the number. 

It turned out to be $25 billion when it actually occurred. And it 

really was a change in the thinking of the industry, that you can’t 

just presume that the past is prologue. You can’t take past events, 

and overlay it on current infrastructure and inventory of homes, 

and presume that ’s what’s going to happen. 

So these probabilistic models that developed, really, were an effort to try and look at the probability of much more extreme future 

events. And let me take two of the programs you mentioned—have 

been mentioned here repeatedly, the NFIP. It effectively does use 

an average annual loss scenario for its pricing. And it does have 

some statutory limitations and caps. 

The House of Representatives, just in the last month, reauthorized the NFIP and included in there a provision that the program 

was authorized to go to the private reinsurance sector and assess 

the reinsurance sector’s capacity and pricing. We have encouraged 

the Senate, when it considers the Banking Committee, considers 

the flood program to do the same thing because it does bring in 

that kind of private sector risk assessment scenario that we think 

would, in fact, change the thinking about what you presume. 

The NFIP is $18 billion in debt, not counting the 2011 storms or 

whatever borrowing it might have. The debt is to the Treasury. It’s 

a postevent funding scenario, as you have said. The insurance industry can’t do that. 

So the industry relies on a pre-event funding scenario, where it 

assesses risk and tries to price for it. We really think, by introducing private sector risk assessment principles in programs like 

the NFIP, would change that mindset, that the assumption that’s 

made in the report, valuable as it may be, in fact, probably understates, and underestimates, and is really misleading about what 

the costs are likely to be. 

One more quick comment, the Crop Insurance program is actually a public-private partnership. You have private insurance companies and the Federal Government with both a risk-bearing role. 

And in fact, I read a report the other day that said the Federal 

Government’s actually made money in the Federal Crop Insurance 

Program because of that kind of involvement with the private sector. 

Senator DURBIN. It would seem to me that what you’re suggesting is that we are understating the premiums necessary to 
62 

cover the risk, which is probably a great political decision on our 

part, but not a very good actuarial decision in terms of what we 

need to pay out. Is that fair? 

Mr. NUTTER. Fair comment. I understand the political problem 

of asking people to pay more for their insurance, but you’re either 

asking the people who have the risk, who have the homes and 

properties in these areas, to pay a risk-based premium, which is 

what the insurance companies would do, or you’re asking the taxpayers to, effectively, subsidize those decisions by issuing debt after 

the fact. 

Senator DURBIN. Mr. Rivera, what would it mean if we followed 

the private sector model and, as Mr. Nutter has questioned, whether or not we can do the past-as-prologue premise? 

Mr. RIVERA. Chairman Durbin, looking at the chart over there. 

And the SBA chart, if I can just point to it for just a minute, the 

red bars are the supplementals that we’ve had and the green bars 

is our lending authority. So if you look at it, there have been four 

big spikes. There was one in 1994, we had the Northridge earthquake. I think that’s the third. 

Senator DURBIN. Yes. 

Mr. RIVERA. And then we had, in 2005, Hurricanes Katrina, Rita, 

and Wilma. That’s the big one in the middle. We had the two, the 

four Florida hurricanes in 2004, and then Gustav and Ike in 2008, 

the 2008 gulf coast hurricanes. So if you look over the last—I think 

that’s, since 1992—18, 19 years? 

Senator DURBIN. Yes. 

Mr. RIVERA. We’ve really only needed a supplemental in those 

four cases. So the methodology that you mentioned is really what 

we really do. We look back over the last 10 years. We knock out 

the big year, which is Katrina in this case. That’s the $11 billion 

year we had. And we average $1 billion a year. 

And we have no-year funds, fortunately for us. We’re able to 

carry over funds from year to year. So in the event that there is 

a need above the normal appropriations of $1 billion, we’re able to 

use it from year to year. 

So the theory, as far as, we should look forward, it’s a little bit 

different statutorily, because we use the Credit Reform Act and we 

have to go off of historical data. But in this case, out of, you know, 

19 years, there’s been four major supplementals. 

I’m not going to sit here and argue that we should stick with our 

current process because we’re willing and would look at the opportunity to meet with the insurance company or the reinsurers. The 

parameters that we have from a statutory perspective, I think 

makes the model pretty successful. Now, I hope I don’t jinx myself, 

that we don’t have a tropical storm right now. 

Senator DURBIN. I hope we don’t. 

Mr. RIVERA. I think from that perspective, that’s the approach 

that we’ve been taking. 

Senator DURBIN. So Mr. Trimble, I’d like your reaction to this 

Deficit Commission, a 10-year look back. Now, are we stuck with 

that because of the way we do business in Government, as opposed 

to the way Mr. Nutter deals with the insurance industry? 

Mr. TRIMBLE. We have not looked at or considered that proposal, 

to my knowledge, I would point to the statement in my testimony 
63 

regarding what the National Research Council pointed out, and 

what we said here, which was, past is not prologue. 

Past models aren’t necessarily great predictors. I think you’d 

really have to go into the basics of the statutes these guys are operating under and then look at the models. You may be able to go 

historical for a while, but the question becomes how long does your 

luck hold out? 

Senator DURBIN. Mr. Rivera, the SBA Disaster Loan Program has provided close to $50 billion in loans since it began in 1953. 

In contrast to the private sector insurers, SBA cannot charge borrowers more or less to price relative risk, based on exposure to natural disasters. 

In fact, the SBA disaster loans help borrowers recover losses that 

the private sector insurance does not cover. As private sector insurers decline to issue policies in risky areas, due to exposure to erratic weather patterns, will more and more of the financial burden 

shift to the Government? 

Mr. RIVERA. Chairman Durbin, we do assume the risk. I mean, 

that’s part of the program, as we continue to get individuals that 

are underinsured or uninsured. 

Once we do make the loan, we do require insurance. And there’s 

a limit on a ‘‘like kind’’ event. We will not provide any additional 

insurance for like-kind disasters moving forward, so we try to protect ourselves, from that perspective. 

Senator DURBIN. Well, let me go to Mr. Nutter. There was a— 

correct me if I’m wrong here—conscious decision made by some insurers not to insure in Florida after certain hurricane experiences. 

Is what I just said accurate? 

Mr. NUTTER. It’s—it’s probably an overly broad statement. I 

think some insurers pulled back from the immediate coastal areas 

in Florida, as they did in coastal areas in the gulf coast. 

Senator DURBIN. And so they made a decision, obviously, based 

on their loss experience, that they couldn’t write a reliable policy, 

profitable policy, with any degree of certainty in that area. So do 

we—I know the answer, but I’m going to ask you anyway—follow 

that kind of decisionmaking when it comes to our exposure for the 

Federal Government? 

Mr. NUTTER. Chairman Durbin, we—we provide disaster assistance to all disaster victims, as long as they have repayment ability 

and are credit worthy. We don’t—we do not, not make a loan just 

because the individual does not have insurance or doesn’t have— 

what we’ve discovered in Florida is that, after the—the 1992 and 

the—and the 1994 hurricane season, is it—the hazard insurance 

policy that used to protect hurricanes—I mean, homeowners from 

windstorm insurance—they’ve peeled that off, and now—now, they 

add that on as a rider. 

So the insurance company has continued to minimize their risk 

by separating certain aspects of a policy. We find that all over the 

gulf coast. 

Senator DURBIN. Let me talk about the gulf for a moment. Dr. 

Sullivan, in your testimony, you mentioned that runoff from severe 

chronic flooding in the Midwest will lead to hypoxic dead zones in 

the Gulf of Mexico. And you stated, the Gulf of Mexico dead zone 

is a particular concern because it threatens valuable commercial 
64 

and recreational gulf fisheries, that generate about $2.8 billion annually. 

So what is the size of this dead zone in the Gulf of Mexico, compared to that? Let me see if I can point to this here. And perhaps, 

you can identify this a little better than I can. Is the bright blue 

area the dead zone that we’re talking about here? 

DEPICTION OF GULF OF MEXICO HYPOXIA ZONE IMAGE

SOURCE.—NOAA. 

Dr. SULLIVAN. Yes, Senator, the red and orange areas are the 

longshore coastal flow. Those regions also are most depleted in oxygen, so they also are dead. And the blue zone is depleted, to varying different levels, so sort of a contour of oxygen depletion in the 

waters. 

Senator DURBIN. And it’s not altogether clear in this photograph, 

but we’re looking at the continental United States, with the Gulf 

of Mexico in the bright area down to the right there. And what I 

see is the flow of the Mississippi River, and all its tributaries into 

the Gulf of Mexico, and all of those chemicals we pay so much for 

in Illinois, coming down that river into the Gulf of Mexico. So what 

is the size of the dead zone that we’re talking about here, compared 

to the 2010 BP oil spill? 

Dr. SULLIVAN. Senator, an estimate was just released—a forecast 

was just released, a couple weeks ago by the NOAA and our partners down in Louisiana that the dead zone this year will be between 8,500 and 9,400 square miles. Put that in perspective. That’s 

about the size of New Hampshire, slightly larger than New Jersey. 

There are crews underway right now that are making those measurements. 

So I think, in a few weeks, we’ll have an update to that figure. 

The Deepwater Horizon spill, in comparison, was 29,000 to 31,000 

square miles, closer to the size of South Carolina. So this is forecast to be one of the largest, if I may, dead zones produced by the 
65 

watershed drainage and runoff, that we’ve seen in many years, 

coming in, according to the forecast, between 8,500 and 9,400 

square miles. 

Senator DURBIN. So for the record, what is a dead zone? 

Dr. SULLIVAN. A dead zone is an area where a bulge of freshwater, such as comes down the Mississippi River, plus the sediments and other chemicals that are in that water, cause a blossoming of algae that consumes all the oxygen in the water. 

That burst deprives the oxygen other animals in the marine environment require that they need to grow. 

Senator DURBIN. And so there’s little or no marine life in this 

area? 

Dr. SULLIVAN. Becomes what’s called hypoxic. Marine life that’s 

mobile will flee, and they’ll sense the oxygen gradient, and go 

somewhere where they can still breathe, if you will. Facile or attached marine life from bottom-dwelling creatures to plants—plant 

species that grow along the shores, corals—they’re stuck and they 

will suffer a degradation, as the oxygen is removed from the water. 

Senator DURBIN. Heavy rain in the Midwest, water flowing down 

through the rivers, flooding that it causes on the way down, the 

damage—— 

Dr. SULLIVAN. Yes. 

Senator DURBIN [continuing]. Ultimately ending up in the Gulf 

of Mexico, creating a dead zone area that is about one-third, if I 

was trying to calculate quickly, one-third of the area affected by 

the BP oil spill. 

Dr. SULLIVAN. Roughly one-third. 

Senator DURBIN. All right. So how long will these effects last in 

this dead zone? 

Dr. SULLIVAN. It’s hard to predict how long they will last, Senator. It depends on further rainfall. Tropical Storm Dawn, which is 

moving across the western Gulf of Mexico now—forecasts bring 5 

to possibly 7 inches of rain as it goes ashore, and then later tomorrow. 

That water and the winds associated with the storm may help 

mix the waters and disperse this bulge of freshwater and the 

chemicals more efficiently. So certainly, factors enter in, but it’s 

normally, at least months and some of it endures year-to-year. 

Senator DURBIN. It’s not my part of the world, but I assume this 

has an impact on the gulf economy? 

Dr. SULLIVAN. It would have a tremendous impact, affecting the 

coastal habitat that supports the oyster fisheries, nursery grounds 

for many other commercial fish species that are fished in the gulf, 

the shrimp fishery. 

Senator DURBIN. Dr. Wuebbles and Dr. Sullivan, both of your 

testimonies point to the fact that there’s a projected rise in sea levels. And that will have a dramatic impact on risk in many communities. Mr. Trimble has talked about adaptation as a result. 

Dr. Sullivan, you point to the effect this will have on East Coast 

communities during El Nin ̃ o years. And Professor Wuebbles, you 

state that, globally, the temperatures are higher. The sea level is 

higher. 

There’s more water vapor in the atmosphere, which energizes 

storms. So what are some of the specific dangers that could occur 
66 

because of these changing weather patterns and this rising higher 

sea level, Dr. Wuebbles? 

Dr. WUEBBLES. Well, the—the best analysis right now are—are 

indicating that, if we continue the pathway we’re going without 

making, you know, extensive decreases in the emissions of these, 

you know, heat-trapping gases that are affecting our climate system, that by the end of this century, we may see in the order of 

a—of a meter, and possibly even more, increase in sea level. 

Now, it isn’t just the increase in sea level that gets you. It’s the 

storm surges. So when you have a—a large storm or a hurricane, 

you get even more damage because of, you know, that large amount 

of water that’s there. So that itself is a big concern. In addition, 

we can expect that the amount of, you know we’ve been seeing an 

increase in severe precipitation events. 

We can, I think, further expect that we’re going to see more such 

events. Basically, the parts of the country where—which tend to be 

wet are likely to be wetter. The parts of the country that tend to 

be dry are likely to be dryer. So we’re going to see an increase both 

in droughts and in floods that are likely to be important to us all. 

Senator DURBIN. Mr. Nutter, do you buy that? 

Mr. NUTTER. Yes, the industry is very concerned about storm 

surge. I would have said the same thing that Dr. Wuebbles did, 

that the—we’ve increasingly built properties in very attractive 

coastal areas, often with not a sufficient setback, certainly probably 

in the current environment. 

But if you have an increasing sea level rise and you have storms, 

you’re going to have more water pushed on shore and more storm 

surge-related property damage. 

Senator DURBIN. And is that why, the insurance industry is pulling back from some of these coastal areas? 

Mr. NUTTER. It is. It is why a number of insurers have pulled 

back or sought much higher insurance premiums for properties in 

those areas, absolutely. 

Senator DURBIN. So Dr. Sullivan, can you help us out here? As 

you project forecasting capabilities, is there any way that we can 

reduce this projected problem and the economic impact of these catastrophes? 

Dr. SULLIVAN. Well, Senator, certainly, if nations around the 

world choose to take GHG mitigation actions and reduce those 

emissions, that would certainly lower the projected trend from that 

cause. This is a problem that’s already affecting certain coastal 

communities. New York has planning underway. 

The city of Norfolk, with—where I will visit in a couple of weeks, 

has been experiencing more frequent local inundation. And the 

Navy there is even looking at the prospect of needing to elevate 

their piers to accommodate the changing shoreline. 

So there are some signs there’s sea level rise induced by continuous and secular change in climate, plus the potential that further 

warming of the planet and associated changes alter the large-scale 

circulation in our major ocean basins. 

There was a 2-foot sea level anomaly in some portions of the U.S. 

east coast, including Chesapeake Bay, back in 2009, that was due 

principally to natural variations in a North Atlantic oscillation and 

effects that this had on the gulf stream and longshore currents. 
67 

So we live in a very dynamic environment. We are citing tremendously expensive infrastructure, highly built cities, dense populations, preferentially in these coastal zones. There are certainly 

things we can do to make our coastal communities more resilient. 

The NOAA has developed a tool called the Coastal Resilience 

Index, intended to help local planners. 

It’s a simple, several-hour question and answer exercise that 

planners can use to bring key community stakeholders together, 

and take stock of where they have key vulnerabilities, key gaps in 

their preparedness, and look to take immediate and near-term actions to remedy those. 

Senator DURBIN. Does anyone have anything they’d like to add 

that we haven’t touched on here, that you think might be important or relevant, Dr. Wuebbles? 

Dr. WUEBBLES. It’s just one minor thing, that—an important but 

minor thing for—for this. As we look at—at the projections of climate, and we recognize that the—the oceans have a large heat capacity. So they respond much more slowly than the rest of the atmosphere. 

The real response from these emissions occur 20 to 30 years after 

the initial emissions. So we’re seeing the effect right now of the 

emissions we made 20 or 30 years ago. The emissions since then 

have continued to increase, so we can expect larger impacts in— 

over the coming decades just because of that impact, effect, that— 

that the oceans are going to take a much longer time to respond. 

That—that’s one of the reasons for urgency in considering doing 

something. 

Senator DURBIN. Thanks. I said to my staff, I want to hold this 

hearing. I want to figure out how we can talk about this issue because nobody else is talking about it. We stopped talking about this 

on Capitol Hill. 

We decided that the debate over global warming was too contentious, too politically charged, and too divided for us to have any 

meaningful conversation about what to do with it. And so we 

stepped away from it. I think it’s a big mistake. 

I think that we are overlooking the obvious. Dramatic things are 

happening. They are things that are affecting lives, and fortunes, 

and are going to affect us, and the way we live, and the way we 

govern. 

I don’t think we have really measured, adequately, the impact of 

our exposure at the Government level to the things that are happening in weather pattern change, nor the exposure of our economy 

to what’s going to happen as these unfold. And that is unfortunate. 

And I’m hoping that, at least on our watch on the subcommittee, 

that we have raised an issue which is not being discussed very frequently on Capitol Hill. And I think we need to step back and ask 

honest questions about whether we are portraying our risk and our 

exposure as taxpayers and as a Government against what may 

likely occur in the near future. 

And I will just say, confessing my bias if I have any, and I probably have plenty, I happen to believe that Dr. Wuebbles’s approach 

to this is a sensible one, that small changes in our lifestyles today 

can make a dramatic difference in our future. 
68 

And if we ignore them and say let the next generation take care 

of it, then the last point you made is an obvious one. Their problems are going to go on much longer and much worse than what 

we’ve seen. 

ADDITIONAL COMMITTEE QUESTIONS

Now, on that happy note, I thank you all for coming. And we will 

probably send some written questions your way. I hope you’ll have 

a chance to respond in a timely fashion. The record will remain 

open until next Thursday, August 4, at 12 noon—I hope we are 

gone by then—for subcommittee members to submit statements 

and other materials. 

I greatly appreciated all five of you for taking the time in getting 

us such valuable testimony. 

[The following questions were not asked at the hearing, but were 

submitted to the Department for response subsequent to the hearing:] 

QUESTIONS SUBMITTED BY SENATOR RICHARD J. DURBIN

QUESTIONS SUBMITTED TO KATHRYN D. SULLIVAN, PH.D. 

Question. Dr. Sullivan, in both your written statement and verbal testimony, you 

addressed the importance of computer modeling and forecasting for the United 

States to be prepared for severe weather events in the long-term. 

Given the importance of accurate models to proper budgetary planning, what key 

enhancements do you think could be made to improve these models? 

Answer. As mentioned in my testimony, our Nation’s environmental predictive capabilities are supported by four foundational pillars: 

—observations; 

—computer models; 

—research; and 

—our people. 

The computer models pillar includes the entire computer-based forecast system— 

which is composed of forecast model software, data assimilation software for 

initializing the model, and a supercomputer to carry out the calculations. An accurate forecast requires both initial information on the state of the atmosphere, and 

an accurate physical depiction of the evolution of the atmosphere during the forecast. The President’s fiscal year 2012 request invests in high-performance supercomputing for the National Weather Service (NWS), sustaining the rate of improvement 

in our numerical weather prediction modeling capability that is key to our plans to 

take advantage of improved observations. 

The following key enhancements are critical to improve the models: 

Advanced Data Assimilation.—An analysis is a process resulting in an accurate image of the atmosphere at a given time, represented in a model as a collection of numbers—and data assimilation is an analysis technique in which the 

observed information is accumulated into the model state. Probably the most 

important of the enhancements overall, advanced data assimilation techniques 

are needed to provide more accurate initial conditions using information from 

observations. New techniques are being developed to extract more usable information from all available observations. These are undergoing testing, and 

should be operational in 1–2 years. 

Model Physics.—The forecast model contains representations of clouds, precipitation, the daily sunlight radiation cycle, evaporation and heating from the 

Earth’s surface, and more. In nature, each of these elements of physics plays 

a major role in determining the evolving weather. Generally, the more accurate 

they are represented in the forecast model, the more accurate the forecast. 

Use of Ensemble-based Forecast Systems.—Making multiple model forecasts 

with slightly different initial conditions, or with other slight alterations, gives 

us the ability to make definitive statements about our confidence in the operational forecast. These statements of confidence can be very important to decisionmakers, especially when major events are predicted. For example, if multiple runs of one or more models show strong agreement on the path of a hurricane or the development of a major storm, we can place a high confidence in 
69 

the forecast and resulting impacts for that event. The higher our confidence 

level in the forecast, the more likely appropriate action will be taken in advance. 

Model Resolution.—Representing the detailed evolution of the atmosphere depends on the resolution of the forecast model. Following this paragraph are two 

figures with 12 km and 4 km representations of the topography over Puget 

Sound, Washington. Clearly, the one with 4 km resolution contains more detail. 

Experience has shown that forecast models with higher resolution will give 

more detail and greater accuracy. The 4 km forecast uses 27 times more computer resources than the 12 km forecast, which is why computer power is critical for weather forecasting models used in operational forecasts. Model resolution is particularly important for major weather events such as hurricanes, severe spring and summer convective storms and winter snow and ice storms. 

12 km 
70 

4 km 

Improved Observation Network and Observation Use.—Increased information 

from observations, through the data assimilation process, results in more accurate initial conditions. Critical observations include those from current and future weather satellites (the Joint Polar Satellite System (JPSS), the GOES–R 

Program), commercial aircraft, Dual Polarization Radar, and advanced technology sensors for measuring temperature and moisture in the lowest 3,000 ft 

of the atmosphere. Research, leading to operational implementation of new, 

cost-effective observing systems, is also necessary for progress in this area. 

Again, our Nation’s environmental predictive capabilities are supported by four 

foundational pillars: 

—observations; 

—computer models; 

—research; and 

—our people. 

These pillars are completely interdependent, and should be enhanced in a balanced way in order to promote a strong and vibrant foundation for improvements. 

For example, investments in supercomputing capability strengthen and enhance all 

four pillars in an integrated way, as all benefit from the advanced guidance and improved accuracy delivered by the additional computing capacity. All four of the pillars require continuous and balanced strengthening in order to achieve significant 

advancements in our environmental prediction capabilities. 

Question. How could better forecasting capabilities help reduce the economic impact of the increased natural catastrophes? 

Answer. In addition to advising the public and our partners of immediate impacts 

that threaten life and property, National Oceanographic and Atmospheric Administration’s (NOAA) environmental forecasts and warnings also provide the capability 

to mitigate the economic impact of the wide variety of natural hazards that face our 

Nation through advanced alerts to potential impacts. 

Improved numerical model information would enable NOAA forecasters to produce 

forecasts and warnings with increased confidence, consistency, and accuracy. Even 

a small improvement in forecast accuracy can result in more effective and/or timely 

positioning of critical and limited resources ahead of and even during environmental 

disasters. This is key to saving lives and containing cost. 

Specific scenarios follow to illustrate these and additional benefits of improved 

forecasts to users, sectors, or others: 
71 

1 Chagnon, S.A. (ed.) (2000). El Nino 1997–1998: The Climate Event of the Century. New York, 

NY: Oxford University Press, 147–148. 2 Adams, R., L. Houston, and R. Weiher, (2004, August), ‘‘The Value of Snow and Snow Information Services,’’ Report prepared for NOAA’s National Operational Hydrological Remote Sensing Center. Chanhassen, MN. 

Climate 

Improved seasonal forecasts would enable more effective actions across a number 

of economic sectors, from optimizing the seasonal acquisition of road salt supplies, 

to planning ship routing and timing strategies, to long-term actions associated with 

clothing and food supplies. In addition, improved seasonal forecasts would facilitate 

more efficiency in planning the opening and closing of fisheries, and recreational 

areas/beaches. 

Improved forecasting capabilities would enable users of climate information to 

better prepare for extremes in weather and climate and attempt to mitigate them. 

For instance, the State of California determined a savings of around $1 billion during the 1997–1998 El Nin ̃ o compared to the 1982–1982 El Nin ̃ o. This is largely attributed to having enough time to implement extensive mitigation activities.1 Other 

sectors of the economy that stand to benefit from improved forecasts include water 

resource managers, energy producers, distributors, and providers, the transportation 

and agricultural sectors, to name a few. 

Aviation 

Improved forecasting capabilities would reduce economic impacts resulting from 

air traffic delays. The total cost of domestic air traffic delays to the U.S. economy 

in 2007 was as much as $41 billion, with an estimated $10 billion lost by industries 

that rely on air traffic for supplies or customers (U.S. Congressional Joint Economic 

Committee, 2008). Weather is the major cause of most flight delays, reroutes and 

cancellations. 

NOAA will support the FAA in its evolution to the Next Generation Air Traffic 

Control System (NextGen) through provision of a four-dimensional (three-dimensional space along with time) cube of weather information, which will be used to 

project conditions for airline trajectories in space and time, requiring improvements 

in spatial and time-scale forecast accuracy. 

Winter Storm 

Improved weather modeling would lead to better preparation for severe winter 

storms, including readying of equipment, personnel, and supplies to fight effects of 

a heavy snow, ice storm, or severe cold outbreak. Advanced warnings could save additional millions of dollars in potential disruptions, power outages, stranded planes, 

and commerce.2 In general, improved weather forecasts would support optimization 

of surface rail and road systems, ensure on-time delivery of services, minimize infrastructure and capacity damage, and improve maintenance scheduling. 

Flood 

High-resolution, geo-referenced flood forecast inundation maps would enable 

emergency managers to preposition people and resources to more effectively reduce 

the impacts of flood events. These maps depict the areal extent and depth of flood 

waters, linked with other infrastructure and demographic information such as 

FEMA’s HAZUS. It would also enable the high-resolution water resources analyses 

and forecasts (e.g., soil moisture, evapotranspiration, ground water, water quality, 

snow water equivalent) necessary to better manage our increasingly limited water 

supply and support routine high-value decisions in the transportation, hydropower, 

agricultural, water supply, recreational, and floodplain management sectors. 

Improved forecasts of runoff and stream discharge, if combined with high-resolution, geo-referenced flood forecast inundation maps depicting the areal extent and 

depth of flood waters, could also be linked to infrastructure- and demographic-based 

information, to facilitate the pre-positioning of resources to reduce the impacts of 

flooding events. 

Marine 

Improved forecasting capabilities would help to better inform the decisions made 

by commercial and recreational fishermen, such as whether to stay in port, remain 

at sea, or alter course depending on forecast conditions, thus maximizing resources 

and safety, while reducing economic impact and loss of life. 

Charter fishing guides could make better decisions by knowing, days in advance, 

when staying in port or going out would be in the best interest of their vessels or 

customers. Maintenance could be scheduled well ahead for bad weather days, saving 
72 

the economic loss of performing maintenance when they could be carrying passengers and earning revenue. 

Large ship (oil tankers, container ships, aircraft carriers) operators at sea could 

alter course and speed to avoid or mitigate storm conditions affecting their route, 

thus preventing loss of cargo and/or personnel. 

Coast Guard and other rescue operators could better anticipate needs for additional manpower, and adjust staffing to meet anticipated needs. 

Fire Weather 

Improved forecasting of key fire weather variables such as temperature, humidity, 

and wind would reduce the risk of firefighter and public fatalities by providing advanced notice of fire movement and extreme fire behavior. This would, in turn, allow 

appropriate evacuations and safe fire management tactics to be implemented in a 

more effective and cost-effective manner. 

Improved fire weather forecasts would also allow for more efficient prepositioning 

of firefighting resources before an anticipated fire outbreak. This would increase initial attack success, and therefore lower the risk of large, costly wildfires. Also, improved fire weather forecasts would support safer and more cost-effective land management treatments, and would greatly lessen the risk of escaped prescribed burns. 

Tropical Storm/Hurricane 

Improved hurricane forecasts would reduce impacts from unnecessary evacuations 

along the Nation’s coastlines prior to hurricane landfall. These impacts reach farther than the great inconvenience and cost of moving large numbers of people out 

of potential danger, with lost business revenues and nationwide resource impacts 

due to significant transportation delays. 

Improved storm surge forecasts would result from improved hurricane track and 

intensity forecasts, resulting in far better mitigation plans for resulting flood impacts, targeted to the areas which need it. 

Improved hurricane forecasting would reduce the amount of lives and property 

lost from unforeseen rapid deepening of storms as they approach land. An example 

is Hurricane Charley in 2004, which rapidly intensified to a Category 4 hurricane 

before making landfall in southwest Florida, where it claimed at least 16 lives and 

left tens of thousands seeking emergency shelter. 

NOAA’s making targeted investments toward improvements in these forecasts. 

QUESTIONS SUBMITTED TO DAVID C. TRIMBLE

DANGERS AND DRAWBACKS OF FRAGMENTED MANAGEMENT

Question. Mr. Trimble, in the Government Accountability Office’s (GAO) prepared 

statement you make an observation that can be attributed, regrettably, to a wide 

array of disparate Government programs. I recall hearing a similar refrain relating 

to our Nation’s fragmented food safety system. 

You explain that ‘‘when agencies do not collaborate well when addressing a complicated, interdisciplinary issue (like climate change), they may carry out programs 

in a fragmented, uncoordinated way, resulting in a patchwork of programs that can 

limit the overall effectiveness of the Federal effort.’’ These stovepipes can also mean 

redundancies, management challenges, and competition for scarce funds. 

What are the key ingredients of a new approach to doing business and instituting 

a Government wide approach? 

Answer. Based on our past work (GAO–06–15, GAO/GGD–00–106) key practices 

that can help agencies enhance and sustain their Government wide collaborative efforts include: 

—defining and articulating a common outcome among agencies with different missions; 

—agreeing on roles and responsibilities in achieving the common outcome; 

—establishing compatible policies, procedures, and other means to operate across 

agency boundaries; 

—identifying and addressing needs by leveraging resources, such as by collectively 

funding interagency initiatives; and 

—developing mechanisms to monitor, evaluate, and report on results. 

As we have previously reported (GAO/T–GGD–00–26), perhaps the single most 

important element of successful management improvement initiatives is the demonstrated commitment of top leaders to change. Top leadership involvement and 

clear lines of accountability are critical to overcoming natural resistance to change, 

marshalling needed resources, and building and maintaining the commitment to 

new ways of doing business. 
73 

Question. What impediments need to be removed in order to make a different approach workable? 

Answer. As reported in our October 2009 report on climate change adaptation 

(GAO–10–113), we found that the challenges faced by Federal, State, and local officials in their efforts to adapt to climate change fell into several categories. First, 

available attention and resources were focused on more immediate needs, making 

it difficult for adaptation efforts to compete for limited funds. Second, without sufficient site-specific data, such as local projections of expected changes, it is hard to 

predict the impacts of climate change and thus hard for officials to justify the current costs of adaptation efforts for potentially less certain future benefits. Third, adaptation efforts are constrained by a lack of clear roles and responsibilities among 

Federal, State, and local agencies. 

According to Federal, State, and local officials we interviewed and other information we analyzed for our October 2009 report, potential Federal actions for addressing such challenges fall into three areas: 

—Federal training and education initiatives that could increase awareness among 

Government officials and the public about the impacts of climate change and 

available adaptation strategies; 

— actions to provide and interpret site-specific information that could help officials understand the impacts of climate change at a scale that would enable 

them to respond; and 

—steps the Congress and Federal agencies could take to encourage adaptation by 

setting priorities and re-evaluating programs that hinder adaptation efforts. 

In our October 2009 report, we recommended that the appropriate entities within 

the Executive Office of the President (EOP) develop a national adaptation plan that 

includes setting priorities for Federal, State, and local agencies. The Council on Environmental Quality (CEQ) generally agreed with our recommendations, and said 

that the Interagency Climate Change Adaptation Task Force will prepare a report 

in October 2011 that documents its progress. 

In addition, our May 2011 report on Federal climate change funding (GAO–11– 

317) found that agencies do not consistently interpret methods for defining and reporting the funding of climate change activities, and that Federal officials lack a 

shared understanding of priorities, partly due to multiple, often inconsistent messages articulated in different sources, such as strategic plans. We also found that 

existing mechanisms intended to align funding with Government wide priorities are 

nonbinding and limited when in conflict with agency priorities. Federal officials who 

responded to a Web-based questionnaire for this report and other sources identified 

ways to better align Federal climate change funding with strategic priorities, including: 

—options to improve the tracking and reporting of climate change funding; 

—options to enhance how strategic climate change priorities are set; 

—the establishment of formal coordination mechanisms; and 

—continuing efforts to link related climate change activities across the Federal 

Government. 

In May 2011, we reported that Federal entities were already taking steps to implement several of these options. Specifically, the Interagency Climate Change Adaptation Task Force, co-chaired by CEQ, the National Oceanic and Atmospheric Administration (NOAA), and the Office of Science and Technology Policy (OSTP), was 

formed to develop Federal recommendations for adapting to climate change impacts 

and to recommend key components to include in a national strategy. In addition, 

the NOAA’s proposed Climate Service would, according to NOAA, provide a single, 

reliable, and authoritative source for climate data, information, and decision-support 

services to help individuals, businesses, communities, and governments make smart 

choices in anticipation of a climate changed future. 

In our May 2011 report, among other things, we recommended that the appropriate entities within the EOP, in consultation with the Congress clearly establish 

Federal strategic climate change priorities and assess the effectiveness of current 

practices for defining and reporting related funding. We requested comments on a 

draft of this report from the chair of CEQ, the Director of the Office of Management 

and Budget, and the Director of the OSTP. They did not provide official written 

comments to include in our report. Instead, they provided technical comments, 

which we incorporated as appropriate. 

ADDRESSING GOVERNMENT CHALLENGES BY ADAPTING PRIVATE SECTOR TOOLS

In the prepared statement for the hearing, the GAO sets forth three categories 

of the challenges faced by government officials at all levels in their efforts to adapt 

to climate change. 
74 

The GAO cites ‘‘focusing on immediate needs’’, ‘‘insufficient site-specific data’’, and 

‘‘lack of clear roles and responsibilities’’ as the key areas which hamper informed 

Government decisionmaking. 

GAO references the lack of adequate computational modeling in an example about 

how a Florida marine sanctuary had difficulty planning, and lacked inventories and 

monitoring systems to frame a baseline of the types of plants and animals thriving 

on the resources they managed, thus making it hard to know whether particular 

habitat changes they observed are ‘‘normal’’ or aberrant. 

Question. Does this data problem facing the Government stem from a wholesale 

lack of any models that could be adapted? 

Answer. Based on our prior work, finding the right model for the right application 

is challenging. Interpreting the output of such models can be equally, if not more 

challenging. Senior Federal officials spoke of the need for a ‘‘clearinghouse’’ to validate available models which can be of varying quality. The National Research Council (NRC) is analyzing many of these issues right now in a study titled ‘‘A National 

Strategy for Advancing Climate Modeling.’’ 

Question. Why do agencies have such difficulty developing the kinds of important 

information they need to analyze impacts and better understand long-term exposure 

to risk as a result of changing weather events? 

Answer. As we reported in October 2009, adaptation information challenges generally fit into two categories: 

—the difficulty in justifying the current costs of adaptation with limited information about future benefits; and 

—translating climate data—such as projected temperature and precipitation 

changes—into information that officials need to make decisions. 

According to a recent NRC report, while the costs of policies to mitigate and adapt 

to climate change may be considerable, it is difficult to estimate the costs of inaction—costs which could be much greater. This report cites the long time horizon associated with climate change, coupled with deep uncertainties associated with forecasts and projections, among other issues, as aspects of climate change that are 

challenging for decisionmaking. 

As we reported in October 2009, the process of providing useful information to officials making decisions about adaptation can be summarized in several steps, each 

of which is complicated. First, data from global-scale models must be ‘‘downscaled’’ 

to provide climate information at a geographic scale relevant to decisionmakers. Second, climate information must be translated into impacts at the local level, such as 

increased stream flow. Third, local impacts must be translated into costs and benefits, since this information is required for many decisionmaking processes. Fourth, 

decisionmakers need baseline monitoring data to evaluate adaptation actions over 

time. 

Question. How complicated would it be, in terms of time and resources, to compile 

inventories to establish foundational starting points to better recognize and measure 

environmental change (and the impact of an increase in frequency or severity of 

weather-related events) when it is observed? 

Answer. We have not evaluated the time or resources needed to establish or improve monitoring systems for weather-related events. Regarding efforts to measure 

environmental change and the impact of an increase in the observed frequency or 

severity of weather-related events, NOAA tracks and consolidates data on its climate services Web site at http://www.climate.gov/#climateWatch. Data on this site 

are provided by various NOAA centers, including the National Climatic Data Center 

and the National Weather Service Climate Prediction Center. In addition, we are 

currently reviewing the NOAA’s U.S. Historical Climatology Network, used to track 

national trends in basic meteorological variables such as temperature and precipitation. 

Question. What private sector experiences, techniques, and lessons learned would 

be useful to evaluate and adapt to address the challenges the GAO describes? 

Answer. Our 2007 report on Federal flood and crop insurance programs (GAO– 

07–285) found that many major private insurers were proactively incorporating 

some near-term elements of climate change into their risk management practices. 

In addition, other private insurers were approaching climate change at a strategic 

level by publishing reports outlining the potential industry-wide impacts and strategies to proactively address the issue. Statements from the reinsurance industry at 

your July 28 hearing emphasized these issues. 

In addition, we are beginning an engagement on climate change adaptation and 

infrastructure development. As we noted in our October 2009 report (GAO–10–113), 

of particular importance in adaptation are planning decisions involving physical infrastructure projects, which require large capital investments and which, by virtue 

of their anticipated lifespan, will have to be resilient to changes in climate for many 
75 

decades. The techniques used by the private sector and lessons arising from this 

work may also prove useful. 

CONCLUSION OF HEARING

Senator DURBIN. This hearing of the subcommittee stands recessed. 

[Whereupon, at 3:15 p.m., Thursday, July 28, the hearing was 

concluded, and the subcommittee was recessed to reconvene subject 

to the call of the Chair.] 

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