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Why Adapting to Climate Change Isn’t as
Easy as Leaving the Coasts

Climate change puts millions of Americans at a rising risk of devastating floods, and the question of how best to protect our homes and communities from damage is a complicated one.

A recent Scientific American piece outlines a study that claims removing one million homes from flood zones could save $1 trillion over the long term. The report proposes an expansion of government buyout programs in flood-prone areas to mitigate future losses to homeowners, taxpayers, and the government.

Here, we’ll explore why buyouts haven’t worked the way they’re meant to, which strategies might make them more impactful, and how agents can help their customers even in the absence of common-sense flood policies.

Not All Floods Happen on the Coasts

Even in places where government buyout programs have long operated, flooding happens (and worsens) so frequently that homeowners often don’t have time to safely rebuild or relocate.

Government buyouts typically happen post-flood. As a result, they tend to be slow-moving and don’t significantly reduce damage costs, either for individuals or communities. Plus, many have strict criteria and high priorities that shut out willing participants.

A ProPublica article explains that in the aftermath of Hurricane Harvey in Harris County, Texas, FEMA had insufficient funding for the local government to meaningfully execute a buyout program. As a result, many Harris County residents were left in limbo while they waited for a buyout, unsure whether it would ever happen. Some who didn’t have flood insurance couldn’t afford home repairs, and some claims simply didn’t qualify.

This isn’t unique to Harris County. Many repeatedly flooded properties must wait years (typically at least five) before a buyout enables them to move to higher ground, causing homeowners to face ongoing damage, repair costs, and higher flood insurance rates.

Emotional Attachment and Lack of Risk Education Complicate Homeowners’ Decisions

One major reason why buyouts haven’t worked, though, has nothing to do with financial considerations.

Buyouts are traumatic – they demand that people willingly walk away from their houses, jobs, and communities. It’s difficult for residents of the highest-risk flood areas to weigh their uncertain flood risks alongside the certain (and unattractive) risks associated with leaving home.

FEMA’s current property acquisition program is voluntary, but not all homeowners understand their situation well enough to make an informed decision. Flood risk education is inconsistent. A homeowner who doesn’t want a buyout because they want to stay in their home might not realize the cost of a changing flood pattern and possible future expenses.

Emotional attachment to place also leads many homeowners to choose to rebuild after a flood instead of relocating, which goes against their best safety and financial interests. These homeowners are called “hold-outs.” Hold-outs limit what can be done with government-acquired land, and they contribute to the redevelopment of damage-prone floodplains, which simply isn’t sustainable.

Rethinking Buyouts to Mitigate Risk: More Common-Sense Regulations from the NFIP

Experts recommend that to mitigate the widespread damage of changing flood patterns caused by climate change, NFIP policies should make relocation the most attractive option for homeowners most at risk. Flood insurance can reinforce that.

The NFIP can take the following steps to promote relocation: 

  • Create incentives for homeowners to participate in a buyout and relocate within a community, such as a five percent bonus on the price paid for a buyout home. Local governments can collaborate to enact these incentives.
  • Raise premiums for repeatedly flooded properties to encourage homeowners in high-risk flood areas to move.
  • Offer relocating policyholders a discount on federal flood insurance.

The NFIP can also expand its “ideal buyout criteria” to approve more willing buyout participants who face immediate risks. This would help homeowners who want to move and are currently under financial strain and paying high insurance premiums.

Agents Can Help Customers Adapt to Climate Change

While a robust buyout policy – and commonsense flood policies more generally –  are important and necessary, they’re unlikely to happen quickly. In the meantime, flood insurance agents can play a key role in helping customers adapt to their changing flood risks by becoming advisors in the flood risk landscape.

Agents can walk their home-owning customers through the question of whether to stay or relocate by…

  • Sharing educational materials about climate change and how it’s impacting flood risks in a customer’s community.
  • Providing a personal risk assessment.
  • Helping them understand the relationship between flood insurance and buyout programs.

On a large scale, policymakers are still working to answer the question of how to protect America’s communities from flooding caused by climate change. But on a small scale, agents can start by guiding their customers to take individual action to protect themselves.

At NFS, we know floods. Our decades of experience allows us to design training tools that help flood insurance agents become experts in risk mitigation.

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