Disaster Assistance: Information on Federal Disaster Mitigation Efforts
(Stmnt. for the Rec., 01/28/98, GAO/T-RCED-98-67).

GAO discussed the Federal Emergency Management Agency's (FEMA) disaster
mitigation efforts, focusing on: (1) the reasons why disaster mitigation
efforts are not always undertaken by state and local governments and
individuals; (2) FEMA's efforts to encourage mitigation; and (3) issues
that GAO believes are pertinent to ensuring the cost-effective use of
federal dollars for hazard mitigation.

GAO noted that: (1) hazard mitigation is primarily the responsibility of
state and local governments, and individuals; however, mitigation
actions are not always taken; (2) the reasons for this include local
sensitivity to such measures as: (a) building code enforcement and land
use planning; (b) conflict between mitigation and developmental goals;
and (c) individuals' perceptions that the possibility of a disaster's
occurrence is low; (3) FEMA's hazard mitigation efforts include grants
and training for state and local governments, funding for mitigating
damage to public facilities and purchasing and converting flood-prone
properties to open space, federal flood insurance, and programs targeted
at reducing the loss of life and property from earthquakes and fires;
(4) in recent years, FEMA has taken a strategic approach to mitigation
by publishing a 15-year national mitigation strategy and establishing
5-year mitigation objectives in its strategic plan pursuant to the
Government Performance and Results Act; (5) FEMA expects to reflect its
strategic goal and objectives in future performance partnership
agreements with states; (6) GAO's work has identified several issues
pertinent to ensuring the cost-effective use of federal dollars for
hazard mitigation; (7) studies have shown a variety of approaches with
the potential for increasing the level of mitigation, including
regulatory and financial incentives proposed by FEMA, the National
Research Council, and the National Performance Review; however, these
and other proposals require analysis to determine their relative costs
and benefits; (8) under existing approaches, it is uncertain that,
collectively, federal funds are effectively targeted to projects where
the risk of loss is greatest because: (a) limitations on data needed to
estimate risks often make it difficult to determine the
cost-effectiveness of specific actions; and (b) federal hazard
mitigation funds are provided through a number of different programs and
agencies--some limited to particular hazards; and (9) the extent to
which cost-effective mitigation projects will result in federal dollar
savings is uncertain, depending upon the actual incidence of future
disaster events and the extent to which the federal government would
bear the resulting losses.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-RCED-98-67
     TITLE:  Disaster Assistance: Information on Federal Disaster 
             Mitigation Efforts
      DATE:  01/28/98
   SUBJECT:  Flood insurance
             Disaster relief aid
             Building codes
             Federal aid to states
             Emergency preparedness
             Intergovernmental relations
             Strategic planning
             Cost effectiveness analysis
             State governments
             Local governments
IDENTIFIER:  FEMA National Flood Insurance Program
             National Performance Review
             Disaster Relief Fund
             National Earthquake Hazards Reduction Program
             
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Cover
================================================================ COVER


Before the Subcommittee on Water Resources and Environment, Committee
on Transportation and Infrastructure, House of Representatives

For Release
on Delivery
Expected at
12 p.m.  EST
Wednesday
January 28, 1998

DISASTER ASSISTANCE - INFORMATION
ON FEDERAL DISASTER MITIGATION
EFFORTS

Statement for the Record by
Stanley J.  Czerwinski, Associate Director,
Housing and Community Development Issues,
Resources, Community, and Economic
Development Division

GAO/T-RCED-98-67

GAO/RCED-98-67T


(385711)


Abbreviations
=============================================================== ABBREV

  FEMA - Federal Emergency Management Agency
  NPR - National Performance Review
  NEHRP - National Earthquake Hazards Reduction Program
  NFIP - National Flood Insurance Program

============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

We appreciate the opportunity to provide this statement for the
record, which discusses issues related to our past work on federal
disaster mitigation efforts.  Mitigation consists of measures taken
to prevent future losses or reduce the losses that might otherwise
occur from disasters.  While several federal agencies undertake
mitigation activities, this statement focuses primarily on those of
the Federal Emergency Management Agency (FEMA).  Our statement is
based on our work for the Senate Bipartisan Task Force on Funding
Disaster Relief,\1 our past reviews of various federal disaster
assistance programs, and our review of FEMA's strategic plan prepared
pursuant to the Government Performance and Results Act.  Our
statement briefly discusses (1) the reasons why disaster mitigation
efforts are not always undertaken by state and local governments and
individuals, (2) FEMA's efforts to encourage mitigation, and (3)
issues that we believe are pertinent to ensuring the cost-effective
use of federal dollars for hazard mitigation. 

In summary: 

  -- Hazard mitigation is primarily the responsibility of state and
     local governments, and individuals; however, mitigation actions
     are not always taken.  The reasons for this include local
     sensitivity to such measures as building code enforcement and
     land use planning; conflict between mitigation and developmental
     goals; and individuals' perceptions that the possibility of a
     disaster's occurrence is low. 

  -- FEMA's hazard mitigation efforts include grants and training for
     state and local governments, funding for mitigating damage to
     public facilities and purchasing and converting flood-prone
     properties to open space, federal flood insurance, and programs
     targeted at reducing the loss of life and property from
     earthquakes and fires.  In recent years, FEMA has taken a
     strategic approach to mitigation by publishing a 15-year
     national mitigation strategy and establishing 5-year mitigation
     objectives in its strategic plan pursuant to the Results Act. 
     FEMA expects to reflect its strategic goal and objectives in
     future performance partnership agreements with states. 

  -- Our work has identified several issues pertinent to ensuring the
     cost-effective use of federal dollars for hazard mitigation. 
     Studies have shown a variety of approaches with the potential
     for increasing the level of mitigation, including regulatory and
     financial incentives proposed by FEMA, the National Research
     Council, and the National Performance Review; however, these and
     other proposals require analysis to determine their relative
     costs and benefits.  Under existing approaches, it is uncertain
     that, collectively, federal funds are effectively targeted to
     projects where the risk of loss is greatest because (1)
     limitations on data needed to estimate risks often make it
     difficult to determine the cost-effectiveness of specific
     actions and (2) federal hazard mitigation funds are provided
     through a number of different programs and agencies--some
     limited to particular hazards.  Finally, the extent to which
     cost-effective mitigation projects will result in federal dollar
     savings is uncertain, depending upon the actual incidence of
     future disaster events and the extent to which the federal
     government would bear the resulting losses. 


--------------------
\1 See Federal Disaster Assistance, Document No.  104-4, U.S.  Senate
(Washington, D.C.:  U.S.  Government Printing Office [GPO], 1995). 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

Mitigation efforts are often characterized as structural--for
example, building codes and flood control projects, such as dams and
levees--and nonstructural--for example, land use planning, zoning, or
other methods of minimizing the development of hazardous areas.  A
well-designed disaster mitigation program is perceived as a good way
to reduce the overall exposure to risk from a disaster.  For example,
building codes that incorporate seismic design provisions can reduce
earthquake damage.  Additionally, floodplain management and building
standards required by the National Flood Insurance Program may reduce
future costs from flooding.  For example, FEMA estimates that the
building standards that apply to floodplain structures annually
prevent more than $500 million in flood losses. 

In addition to FEMA, other federal agencies have a role in natural
hazard mitigation.  The Army Corps of Engineers' major role in
disaster mitigation includes providing assistance in constructing
structural flood control facilities and maintaining them.  According
to its records, the Corps' levees found in areas affected by the
Midwest floods of 1993 prevented $7.4 billion in damage.\2 The
Tennessee Valley Authority provides information, technical data, and
other assistance to promote the wise use of flood-prone areas.  The
Department of the Interior has mitigation responsibilities in a
number of areas, including programs that help to develop scientific
and technical information and procedures for reducing potential
casualties and damage from earthquakes and volcanos, and a
geologic-related hazards warning program that provides states and
local governments with technical assistance to help ensure the timely
warning of various geological disasters.  The Departments of
Agriculture and Commerce have roles in mitigation through their
respective programs designed to conserve and develop soil and water
resources and to assist states in setting up coastal management
programs. 

As we reported in 1995, mitigation is one of three general approaches
that have been proposed for reducing the costs of federal disaster
assistance.\3 For a number of reasons, including a sequence of
unusually large and costly disasters, federal disaster assistance
costs have soared in recent years.  Obligations from the Disaster
Relief Fund totaled some $3.6 billion in fiscal year 1996 and about
$4.3 billion in fiscal year 1997.  FEMA can influence program costs
by establishing and enforcing procedures and criteria for assistance
within the eligibility parameters established in statutes.  We have
recommended that FEMA improve program guidance and eligibility
criteria in part to help control these costs.\4


--------------------
\2 See Midwest Flood:  Information on the Performance, Effects, and
Control of Levees (GAO/RCED-95-125, Aug.  7, 1995). 

\3 Disaster Assistance:  Information on Expenditures and Proposals to
Improve Effectiveness and Reduce Future Costs (GAO/T-RCED-95-140,
Mar.  16, 1995).  The other approaches are (1) establishing more
explicit and/or stringent criteria for providing federal disaster
assistance and (2) relying more on insurance.  The extent to which
any of these approaches would reduce federal disaster assistance
costs is uncertain. 

\4 See Disaster Assistance:  Guidance Needed for FEMA's "Fast Track"
Housing Assistance Process (GAO/RCED-98-1, Oct.  17, 1997); and
Disaster Assistance:  Improvements Needed in Determining Eligibility
for Public Assistance (GAO/RCED-96-113, May 23, 1996). 


   FACTORS THAT DETER MITIGATION
---------------------------------------------------------- Chapter 0:2

Historically, hazard mitigation has been considered primarily a
responsibility of local and state governments as well as private
citizens.  These entities often control the decisions affecting
hazard mitigation.  For example, building code enforcement and
land-use planning are generally under local jurisdictions. 

However, research suggests that, for a number of reasons, state and
local governments may be reluctant to take actions to mitigate
natural hazards.  The reasons include local sensitivity to such
measures as building code enforcement and land-use planning, conflict
between hazard mitigation and development goals, the lack of an
understanding of mitigation and political support, and the perception
that mitigation is costly and involves solutions that are overly
technical and complex.  Also, while increased mitigation can be
justified only to the extent to which averted losses exceed the
increased costs of mitigation, mitigation policies often do not
systematically compare the costs of mitigation with the losses
expected to be averted, and data on which to base cost-effective
mitigation may be incomplete and/or inaccurate. 

Individuals may also lack incentives to take mitigation measures. 
Studies have shown that increasing the awareness of the hazards
associated with living in a certain area or previous experience with
disasters do not necessarily persuade individuals to take preventive
measures against future disasters.  Residents of hazard-prone areas
tend to treat the possibility of a disaster's occurrence as
sufficiently low to permit them to ignore the consequences. 

Finally, some research suggests that the availability of federal
relief inhibits actions that would mitigate losses from disasters. 
For example, we noted in a 1980 report that the greater the degree of
federal subsidization of disaster losses, the less the incentive for
individuals to take action to minimize damage from natural
disasters.\5 The National Performance Review found that the
availability of post-disaster federal funds may reduce incentives for
mitigation.\6 FEMA's 1993 review of the National Earthquake Hazards
Reduction Program (NEHRP) concluded that at the state level there is
"the expectation that federal disaster assistance will address the
problem after the event."\7

There are a number of approaches for addressing state and /or local
governments' reluctance to take actions to mitigate natural hazards. 
Our March 1995 testimony discussed recommendations by FEMA, the
National Research Council, and the National Performance Review
promoting the use of federal incentives to encourage hazard
mitigation.\8 For example, specific initiatives for improving
earthquake mitigation included linking mitigation actions with the
receipt of federal disaster and other assistance and prohibiting
federally insured lenders from issuing conventional mortgages to
households or businesses in an earthquake-prone area unless state or
local governments have adopted or enforced appropriate seismic
building standards. 


--------------------
\5 Federal Disaster Assistance:  What Should The Policy Be? 
(PAD-80-39, June 16, 1980). 

\6 Creating a Government That Works Better and Costs Less:  Federal
Emergency Management Agency, National Performance Review (Washington,
D.C.:  GPO, 1993). 

\7 Improving Earthquake Mitigation, FEMA, report to the Congress as
required under P.L.  101-614 (Jan.  1993), p.  15. 

\8 GAO/T-RCED-95-140. 


   FEMA'S HAZARD MITIGATION
   EFFORTS
---------------------------------------------------------- Chapter 0:3

FEMA provides state and local governments with hazard mitigation
grants and training in support of the agency's endeavors to instill a
community-based approach to implementing disaster mitigation efforts. 
FEMA is allowing more flexibility in targeting the agency's grants to
communities' actual disaster risks through its agreements--called
Performance Partnership Agreements--with the states.  Recently, FEMA
has introduced the concept of "disaster-resistant communities"
through its Project Impact initiative. 


      SEVERAL STATUTORY
      AUTHORITIES PROVIDE FOR
      HAZARD MITIGATION ASSISTANCE
-------------------------------------------------------- Chapter 0:3.1

FEMA funds or otherwise promotes hazard mitigation through a number
of programs.  Under section 404 of the Robert T.  Stafford Disaster
Relief and Emergency Assistance Act, as amended, FEMA administers a
hazard mitigation grant program.  Subject to certain dollar limits,
the act generally allows the President to contribute grants of up to
75 percent of the cost of hazard mitigation measures within
communities that have been affected by a disaster (the states or
local governments pay the remaining portion of the costs).  The
communities' measures must be cost-effective and substantially reduce
the risks of future damage or loss in a community.  Also, under
section 406 of the act, communities recovering from disasters can
utilize federal funds to mitigate damaged public facilities in
accordance with certain standards--such as floodplain management
standards.  Furthermore, section 409 of the act helps establish the
requirements for a comprehensive state hazard mitigation plan. 

As authorized by the National Flood Insurance Act of 1968, as
amended, FEMA attempts to reduce future flood losses by providing
federally backed flood insurance to communities as part of its
National Flood Insurance Program (NFIP).  The NFIP pays for claims
and operating expenses with revenues from policyholder premiums,
augmented when necessary by borrowing from the Department of the
Treasury.  Communities are eligible for the program only if they
adopt and enforce floodplain management ordinances to reduce future
flood losses.  As of August 1997, over 3.7 million home and business
flood insurance policies were in force in more than 18,000
participating communities, representing over $403 billion worth of
coverage. 

NFIP also funds a flood mitigation assistance program which provides
funding to states and communities.  In 1997, FEMA reported that it
distributed $16 million in 1997 to states and communities for
planning and implementing cost-effective measures to reduce future
flood damage to homes and other properties that had experienced
repeated losses from flooding.  Eligible projects under this program
include elevating structures and flood-proofing properties.  FEMA
also attempts to reduce flood losses through buying-out flood-prone
properties throughout the country and converting the properties to
open spaces.  Since 1993, FEMA reports that it has committed more
than $204 million to relocate 19,000 properties out of flood hazard
areas in 300 communities. 

To help mitigate the potential loss of life and property from
earthquakes, the Earthquake Hazards Reduction Act of 1977, as
amended, authorizes FEMA's provision of earthquake hazards reduction
grants to states under NEHRP.  (FEMA shares administration of this
program with the U.S.  Geological Survey, the National Science
Foundation, and the National Institute of Standards and Technology.)
These project grants are available only to states with moderate or
higher seismic hazard and the funds can be used for a number of
purposes, including implementing mitigation measures to prevent or
reduce the risks of earthquakes. 

To conduct training, public education, and research programs in
subjects related to fire protection technologies, FEMA operates the
U.S.  Fire Administration under the Fire Prevention and Control Act
of 1974, as amended.  The agency's efforts support the nation's fire
service and emergency medical service communities through such
services as the national fire incident reporting system, which
collects and analyzes fire incident data.  This information is then
utilized to help mitigate the loss of life and damage from fires--the
United States has historically had one of the highest fire loss rates
(in deaths and dollar loss) of the industrialized world. 


      FEMA HAS TAKEN A STRATEGIC
      APPROACH TO MITIGATION
-------------------------------------------------------- Chapter 0:3.2

In 1995, FEMA published its National Mitigation Strategy, which
stresses two 15-year national goals of substantially increasing
public awareness of natural hazard risk and significantly reducing
the risk of loss of life, injuries, economic costs, and disruption of
families and communities caused by natural hazards.  The strategy
calls for strengthening partnerships among all levels of government
and the private sector and sets forth major initiatives, along with
timelines, in the areas of (1) hazard identification and risk
assessment, (2) applied research and technology transfer, (3) public
awareness, training, and education, (4) incentives and resources, and
(5) leadership and coordination. 

In 1997, FEMA began its Project Impact initiative--an effort to help
protect communities, residents, organizations, businesses,
infrastructure, and the stability and growth of local economies from
the impact of natural disasters before they happen.  The program was
based on the premise that consistently building safer and stronger
buildings, strengthening existing infrastructures, enforcing building
codes, and making proper preparations prior to a disaster would save
lives, reduce property damage, and accelerate economic recovery.  The
initiative intended to build "disaster-resistant communities" through
public-private partnerships, and it included a national awareness
campaign, the designation of pilot communities showcasing the
benefits of disaster mitigation, and an outreach effort to community
and business leaders.  Project Impact received an appropriation of
$30 million in the fiscal year 1998 budget.  FEMA's Director has
stated that his goal for 1998 is to designate at least one Project
Impact disaster-resistant community in each of the 50
states--expanding the list of the initial seven communities selected
during 1997 to serve as pilots for the initiative. 

Under the Government Performance and Results Act of 1993, federal
agencies must set goals, measure performance, and report on their
accomplishments.  FEMA's September 1997 strategic plan, entitled
"Partnership for a Safer Future," states that the agency is
concentrating its activities on reducing disaster costs through
mitigation because "no other approach is as effective over the long
term." One of the strategic plan's three goals is to "protect lives
and prevent the loss of property from all hazards." The strategic
objectives under this goal are to reduce, by fiscal year 2007, (1)
the risk of loss of life and injury from hazards by 10 percent and
(2) the risk of property loss and economic disruption from hazards by
15 percent.\9 To achieve these objectives, FEMA established a number
of 5-year operational objectives (covering fiscal years 1998 through
2003). 

FEMA expects that these strategic goals and objectives will be
reflected in its future performance partnership agreements with the
states.  To encourage the states to help meet these goals, FEMA has
consolidated the mitigation programs' grant funds into two funding
streams--one for programs supported by flood policyholders' fees (the
NFIP) and another for programs supported by FEMA's Emergency
Management Planning and Assistance appropriation.  Prior to fiscal
year 1997, separate funding was provided for earthquake, hurricane,
and state hazard mitigation programs. 


--------------------
\9 According to the strategic plan, FEMA will develop baseline
estimates of probable future losses from earthquakes in fiscal year
1999 and all other natural hazards by fiscal year 2000. 


   ISSUES SURROUNDING
   COST-EFFECTIVENESS
---------------------------------------------------------- Chapter 0:4

We have not comprehensively reviewed the implementation of FEMA's
hazard mitigation programs or analyzed the agency's recent
initiatives.  However, on the basis of our past work, we believe that
a number of issues are pertinent to the Congress' consideration of
the cost-effective use of federal dollars for hazard mitigation. 

As noted above, our work has identified a variety of approaches with
potential for increasing mitigation.  These include regulatory and
financial incentives proposed by FEMA, the National Research Council,
and the National Performance Review.  Furthermore, to the extent that
the availability of federal relief inhibits mitigation, amending
post-disaster federal financial assistance could help prompt
cost-effective mitigation.  The National Performance Review, for
example, recommended providing relatively more disaster assistance to
states that had adopted mitigation measures than to states that had
not.  These or other proposals would require analysis to determine
their relative costs and effectiveness. 

Among existing programs, it is uncertain that, collectively, federal
funds are effectively targeted to projects where the risk of loss is
greatest.  First, it is often difficult to determine the
cost-effectiveness of specific actions because of limited data
concerning risks.  By definition, natural hazard mitigation reduces
the loss of life and property below the levels that could be expected
without mitigation; however, it is impossible to know with certainty
what losses would occur in the absence of mitigation.  Estimating
these losses requires assessments of the risks, or probabilities, of
the incidence and the severity of various natural occurrences--such
as tornadoes, earthquakes, hurricanes--in specific geographic areas. 
Such risk assessments depend on historical data that may not exist or
may be difficult or costly to obtain and analyze.  For example, to
measure its performance in achieving its strategic objective of
reducing risk by 2007, FEMA plans to use a model of the probable
future loss of life and injury; risk will be measured in terms of
direct and indirect dollar costs and also through assessing state and
local capabilities in emergency management.  Due to limited data
availability, however, the model results initially will be confined
to probable loss of life and injury from earthquakes. 

Second, federal hazard mitigation funds are provided through a number
of different programs and agencies--some limited to particular
hazards.  Even if risks, and therefore expected benefits, could be
determined more precisely, ensuring that federal dollars collectively
are directed at the greatest potential benefits would require
comparing alternative investments among different agencies and/or
programs. 

Finally, it is important to note that the extent to which mitigation
projects will result in federal dollar savings is uncertain; savings
depend upon the actual incidence of future disaster events and the
extent to which the federal government would bear the resulting
losses.  Without any policy change, the latter could be affected by,
for example, whether the losses result from events that trigger a
presidential "declaration" under the Stafford Act; if not, then the
federal government may not directly bear the losses.  Furthermore,
policies affecting the federal share of disaster costs could change
in the future. 

RELATED GAO PRODUCTS

Disaster Assistance:  Guidance Needed for FEMA's "Fast Track" Housing
Assistance Process (GAO/RCED-98-1, Oct.  17, 1997). 

Disaster Assistance:  Improvements Needed in Determining Eligibility
for Public Assistance (GAO/T-RCED-96-166, Apr.  30, 1996). 

Disaster Assistance:  Improvements Needed in Determining Eligibility
for Public Assistance (GAO/RCED-96-113, May 23, 1996). 

Natural Disaster Insurance:  Federal Government's Interests
Insufficiently Protected Given Its Potential Financial Exposure
(GAO/T-GGD-96-41, Dec.  5, 1995). 

Disaster Assistance:  Information on Declarations for Urban and Rural
Areas (GAO/RCED-95-242, Sept.  14, 1995). 

Disaster Assistance:  Information on Expenditures and Proposals to
Improve Effectiveness and Reduce Future Costs (GAO/T-RCED-95-140,
Mar.  16, 1995). 

GAO Work on Disaster Assistance (GAO/RCED-94-293R, Aug.  31, 1994). 


*** End of document. ***