05 November, 2012

The Problem with FEMA No One Is Talking About - Matthew E. Kahn - Harvard Business Review

The Problem with FEMA No One Is Talking About - Matthew E. Kahn - Harvard Business Review: But we also have to acknowledge one of the unintended consequences of the agency's existence: it squelches our ability to adapt to climate change. That by itself is a good reason to get rid of it (for the most part).

For a minute, imagine that there was no FEMA and each geographic location was on its own, forced to use private insurance and state-level funds to rebuild after disasters. Such constraints would likely encourage less risk taking before a disaster. When coastal states saw that their own resources would be used to repair flood damage, for instance, than political leaders would have stronger incentives to discourage housing development in flood-prone areas and to encourage greater investments in precautions like tree trimming to reduce storm damage. The net effect of such a shift in the rules of the game could be a significant reduction the cost of natural disasters. Without FEMA, states and municipalities would have better incentives to make direct investments in protecting their territory. That seems to be a clear call to do away with the agency.