The effects of adaptation measures on hurricane induced property losses: Which FEMA investments have the highest returns?

M. Davlasheridze, K. Fisher-Vanden, and H. Allen Klaiber

Journal of Environmental Economics and Management (1 January 2017)

DOI: 10.1016/j.jeem.2016.09.005

This paper evaluates the relative effectiveness of FEMA expenditures on hurricane induced property losses. We find that spending on FEMA ex-ante mitigation and planning projects leads to greater reductions in property losses than spending on ex-post adaptation programs – specifically, a one percent increase in annual spending on ex-ante risk reduction and warning projects reduces damages by 0.21 percent while a one percent increase in ex-post recovery and clean-up spending reduces damages by 0.12. Although both types of program spending are effective, we find the marginal return from spending on programs that target long-term mitigation and risk management to be almost twice that of spending on ex-post recovery programs. With the predicted increases in the frequency and severity of North Atlantic hurricanes in the future, our findings suggest there are important potential gains that could be realized from the further diversification of FEMA spending across project categories.

keywords: Q54; Q58; H84; Natural disasters; Hurricanes; Property losses; FEMA; Adaptation

additional materials: DOE highlight, summary slide

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