Panel: Informing Natural Disaster Policy: The Role of Federal Disaster Programs
(Natural Resource, Energy, and Environmental Policy)

Thursday, November 8, 2018: 10:15 AM-11:45 AM
Johnson - Mezz Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Panel Chairs:  Lily Hsueh, Arizona State University
Discussants:  Esha Zaveri, The World Bank and Brian Gerber, Arizona State University

Do Subsidized Disaster Loans Lead Households to Rebuild More Resilient?
Meri Davlasheridze, Texas A&M University and Qing Miao, Rochester Institute of Technology

The Effect of Federal Assistance on Household Finance and Business Survival after a Natural Disaster
Justin Gallagher, Case Western Reserve University, Daniel A. Hartley, Federal Reserve Bank of Chicago and Shawn Rohlin, Kent State University

Sorting Across Flood Risk: Implications for Insurance Reform and Disaster Exposure
Laura A. Bakkensen, University of Arizona and Lala Ma, University of Kentucky

Weather and climate-related disasters have been growing in both frequency and magnitude across the United States in the past few decades.  In 2017 alone, a total of 16 billion-dollar extreme weather events occurred, causing over $300 billions in cumulative losses (NOAA, 2018). Managing the increasing risk of natural disasters is a challenge for all levels of government. Over the past 60 years, the federal government has been playing a critical role by providing relief assistance to disaster-stricken jurisdictions and assuming a large portion of disaster-related financial responsibilities. Federal disaster assistance can often influence post-disaster welfares and resource distributions, as well as local community and private incentives to undertake risk reduction measures. Despite its importance, there has been a lack of research efforts to empirically examine the implications of federal disaster programs.

The goal of this panel is to provide a better understanding of the effects of federal disaster assistance programs from different perspectives. This panel is comprised of four research papers examining various government disaster programs (e.g. individual disaster cash assistance, hazard mitigation grants for communities, and low-interest disaster loans, provision of flood insurance), and how these programs influence individual and household finances post disasters, regional recovery and economic activities, and long-term disaster risks.

The first paper focuses on the Small Business Administration (SBA) low-interest disaster loans which are provided to individuals to rebuild and retrofit properties after a major disaster. This study examines whether the SBA loans encourage private adaptation and lead them to build more disaster-proof homes in the reconstruction and recovery phase. This paper sheds light on one of the important disaster recovery programs in the United States that grows in popularity as it fully transfers disaster risk to responsible parties. The second paper use credit agency data to investigate the impact of the federal Individual Assistance (IA) grant on individual finances of those who are affected by tornado incidents, and whether these government transfer payments can provide economic stimulus for local businesses. The third paper, explores the effectiveness of the Hazard Mitigation Grants Program, one of the major federal mitigation program in terms of community hazard resiliency. The fourth paper explores the distribution consequences and equity aspects of the distortions brought by subsidized flood insurance policies of the National Flood Insurance Program and provides important insights into how subsidies could exacerbate flood risk exposure in the United States.

All four papers in this panel are linked by the unifying theme related to the welfare impacts of federal disaster programs. They provide important insights into the role of federal government in managing disaster preparedness, mitigation, response, and recovery functions and cost-effectiveness of its disasters programs for assisting in economic recovery and community long-term resilience.