How Rising Seas and Coastal Storms Drowned the U.S. Flood Insurance Program

Sea level rise and more severe storms are overwhelming U.S. coastal communities, causing billions of dollars in damage and essentially bankrupting the federal flood insurance program.  Yet rebuilding continues, despite warnings that far more properties will soon be underwater.

Recently, the U.S. Army Corps of Engineers pumped more than ten million cubic yards of sand from offshore dredges to widen Long Beach Island’s beaches and dunes – part of a Sisyphean-like effort to protect the island’s $15 billion of high-calorie real estate.  But there is a problem.  The sand keeps washing away.  A series of storms over the last two years gouged the neatly groomed beaches, costing tens of millions in additional repairs.  When all is said and done, the project will cost more than half a billion dollars, most of the money paid by U.S. taxpayers. 

Like other barrier islands up and down the Atlantic and Gulf coasts, Long Beach Island is drowning in slow motion.  Over the last century, researchers estimate that the ocean and bays that flank the island have risen by about a foot.  That doesn’t sound like much, but the added water has made a huge difference in life on the island.  Barnegat Bay now routinely washes over the bulkheads and floods the streets.  Occasionally, school buses have to wait for the water to recede to pick up or drop off children.  Even more worrisome, the rising water makes it easier for storm surge and waves to do more damage in violent storms such as Hurricane Sandy, which wrecked Long Beach Island and the back-bay communities in Ocean County in October of 2012. 

The federal insurance program has subsidized thousands of risky properties along the coast by charging them below-market premiums.

Sea level rise played an important role in Sandy, with historic flooding from Delaware to the Battery in lower Manhattan.  Upward of 100,000 people experienced flooding who otherwise would have been dry, researchers estimate.  Most late season hurricanes veer out to sea by the time they reach the mid-Atlantic.  Sandy took a hard left-hand turn, crashing ashore near Atlantic City and pushing a five-foot plume  up the bays, into places water had never reached before.

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Today the NFIP is effectively bankrupt.  It owes the U.S. Treasury nearly $25 billion – money it borrowed from federal taxpayers to cover its obligations in Sandy, Katrina (2005), and Hurricane Ike (2008).  No one expects that money to be repaid.  Some coastal state lawmakers are even calling for Congress to write off the massive debt, contending it is the only way the troubled insurance program, which is up for reauthorization this year, can regain its financial footing. 

Wiping away the debt will help.  But it is only a matter of time until the next big storm drains the coffers again.  Even relatively weak hurricanes cause hundreds of millions in damage, while monster storms like Katrina and Sandy cause billions.  Complicating matters, the NFIP has improbably subsidized thousands of risky properties along the coast – low-lying houses that flood over and over – by charging them below-market premiums to entice them to join the program.   

Now the federal flood program faces no less than an existential threat.  As seas rise, coastal floodplains are expected to expand, exposing more property to routine flooding, surge, and waves.  By some estimates, hundreds of thousands of U.S. houses could be underwater by century’s end and a trillion dollars worth of property at risk.  Much of Long Beach Island’s heavily insured housing could be covered by several feet of water twice a day at high tide, rendering it inaccessible except by boat.  Meanwhile, the average losses for each flood policy could increase by half, according to a 2013 government study, leading to sharp increases in premiums that price out all but the wealthiest property owners. 

Elevating homes above predicted flood levels and adopting other mitigation strategies will help in the short run, says Robert E. Kopp, an expert on climate change and sea level rise at Rutgers University.  But not enough coastal communities are taking the long-term threat seriously.  “So what we have is a lot of changes on the margins,” Kopp said. 

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