Provide Funding and Incentives for Individual and Community-scale Flood Mitigation Programs

The Challenge

The NFIP currently fails to adequately incent investments or the adoption of policies that will help communities reduce their flood risks. And current programs supporting mitigation (e.g., Pre-Disaster Mitigation) are underfunded and do not prioritize community-scale flood risk reduction projects. Cities can significantly reduce flood risks by investing in flood risk reduction projects, or by installing green infrastructure broadly throughout a sewershed to manage stormwater. However, the current structure of the NFIP fails to adequately reward those that make proactive investments or implement policies to better manage development in floodplains. Many cities struggle to secure funds to support proactive investments in mitigation, as most federal funds for these types of projects only flow after a disaster has already occurred.

Additionally, the only program designed to encourage communities to proactively reduce their flood risks is the Community Rating System (CRS), which poses barriers to entry for many cities, and whose benefits (flood insurance premium discounts) do not directly flow to the city that must undertake the work to join and maintain compliance with the program. Flood insurance discounts flow instead to the residents and businesses carrying flood insurance, making it difficult for cities to capture these economic benefits.

For our city, being resilient means more than levees holding back water and wetlands protecting us from storms. It means striking a balance between human needs and theenvironment that surrounds us while also combating the chronic stresses of violence, poverty, and inequality.
Mayor Mitch Landrieu 
New Orleans, LA

Many individual property owners also struggle to pay for and install flood mitigation measures for their homes and businesses in ways that will qualify them for insurance premium discounts. Currently, the primary way an owner can reduce their annual premium is to elevate the insured structure above the floodline. This is problematic for many structures that are difficult if not impossible to elevate, including attached row homes (common in cities in the Northeast and Mid-Atlantic), and multifamily, mixed use and historic structures.

Both individuals and communities need funding, or other incentives, to encourage and empower them to take a range of actions that will proactively reduce their flood risks, while reducing flood insurance claims and flood insurance premiums.

The Opportunity

Community-scale and individual investments in mitigation can significantly reduce flood losses and enhance the security and stability of cities, families and businesses. An oft-cited report commissioned by FEMA showed that for every dollar invested in mitigation $4 were saved in avoided losses. More studies like this should examine the return on investment from block-level and neighborhood-level investments in flood risk reduction projects, and how the return on investment from mitigation projects grows when you adequately account for increasing risks of flood losses due to climate change and future development. Adequate funding, financing and other incentives must be provided to communities to help them construct large-scale projects that reduce flood risks at community levels. FEMA should be given authority and a mandate to investigate and prioritize funding for block- and neighborhood level approaches, rather than mitigating structure by structure, which in many cases may not make economic sense. Where appropriate, priority should be given to natural and nature-based flood-risk-reduction projects that are often less costly and deliver multiple environmental, economic and social benefits (such as investments in green infrastructure or wetlands restoration projects that can help reduce flooding from storm surges or lack of adequate drainage or undersized stormwater management systems).

Community-scale green infrastructure
After Hurricane Katrina, the City of New Orleans has sought to reduce flood risks through a variety of approaches, including community-scale green infrastructure. The New Orleans Redevelopment Authority (NORA) is using FEMA Hazard Mitigation Grant Program funding to implement green infrastructure projects in the Pontchartrain Park and Gentilly Woods neighborhoods (known collectively as “Pontilly”), which had seen a large increase in vacant lots in the wake of Hurricane Katrina. To make the case for funding this effort, NORA designed the project to aggregate flood-risk-reduction benefits from multiple smaller-scale projects over a large area. In order to justify federal investment in the project,11 the city collected extensive data of damages that could be avoided by implementing a neighborhood-scale effort.
Shore Up Connecticut
In 2013, Connecticut launched the Shore Up program, which uses federal disaster recovery dollars to finance flood resilience retrofits for homes and businesses. This low-interest loan program provides financing to retrofit buildings to be more resilient to flooding and extreme weather. Shore Up was designed specifically for flood resilience retrofits for property owners not eligible for federal disaster aid after Sandy. The program was capitalized with bond funding.

Funding, incentives and guidance should also be developed for difficult-tto-retrofit structures (like multifamily, attached rowhomes and historic buildings), which often cannot be elevated. Partial premium reductions should be offered for mitigation measures (other than elevation) that demonstrably reduce flood insurance claims for the property. Even small reductions in premiums will mean a great deal to homeowners on a budget. Funding and financing options should also be offered to help property owners make investments that will reduce their flood losses, flood claims and flood insurance rates.

Action Steps


Congress should provide funding and incentives to help communities make investments in large-scale projects that reduce flood risks, with priority given to natural and nature-based approaches. For example, FEMA should be required to prioritize funding larger-scale infrastructure proposals for Pre-Disaster Mitigation funds that reduce flood risks at the community scale.

The Administration or Congress’s infrastructure package should include funding or financing options to help communities make investments in infrastructure projects (both green and gray) that will reduce risks from natural hazards, including floods. Congress should also give FEMA explicit authority to reduce flood insurance premiums based upon neighborhood-or community-level investments in flood mitigation.

Congress should give FEMA explicit authority to encourage owners of multifamily and mixed-use structures to mitigate flood risks (such as moving mechanical systems to the top floor of buildings), with lowered insurance premiums. Congress should appropriate funding to support mitigation measures for these types of structures, particularly for those providing affordable housing, through vouchers, grants or a low-cost or no-interest loan program that could be paid back through insurance savings.

For example, Congress could authorize creation of and provide funding for a revolving loan program, or other financing mechanism, to provide low-or no-interest loans in support of flood resilience retrofits to homes and businesses. Congress should authorize a pilot program aimed at providing flood insurance at the community level. A community-level insurance option would allow cities to recoup the costs of their investments in flood mitigation measures through reduced flood insurance costs.

Congress should expand the Increased Cost of Compliance (ICC) program and consider allowing ICC funds to be used to mitigate flood risks to properties in advance of a disaster, thus reducing potential flood claims to the NFIP. Congress could also consider creating an ICC program for municipal facilities, which would allow cities to fund community-scale measures to reduce flood risks to municipal facilities and surrounding development.


FEMA should update the Community Rating System (CRS) to provide easier pathways to entry for cities. FEMA could provide specialized training or support to help cities comply with the CRS requirements that are uniquely difficult for cities. FEMA could adjust the points it awards for mitigation activities to account for the enhanced value of resilience efforts in urban areas that often reduce flood risks for larger structures and protect more residents and insured value. To encourage innovation, FEMA could also consider awarding provisional points for large-scale resilience projects, such a green infrastructure projects, where the flood-risk reduction benefits are difficult to quantify before the project is implemented. After the project is implemented, FEMA could reevaluate the number of points awarded based upon the actual performance of the project.

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