Association for Public Policy Analysis & Management

Large scale incidents and disasters, with impacts ranging up to $20 billion have affected U.S critical infrastructures between 1979 and 2018. We use data and information about previous natural disasters, accidents, and malicious incidents that impacted any of the sixteen different Department of Homeland Security-defined critical infrastructure sectors in the United States. Disaster relief funding is provided by the federal and state governments, as well as by private sector insurance. Impact of the events is measured monetarily in terms of human health (fatalities and injuries) and the initial costs associated with the impact. Response is measured in public sector expenditures (FEMA and other federal or state agency expenditures) and private sector expenditures (insured losses).

The relationship of the magnitude of the disaster, in terms of both damage costs and lives lost, and relief funds from governments and private insurance are evaluated. Considering both the damage costs and human costs, the relief funding is commensurate with the loss, showing a nearly linear, nearly one-for-one relationship, across infrastructure events ranging over three orders of magnitude. While the insurance industry has paid less than 1% of the relief funds, their contributions for specific incidents are key to the overall pattern across events. All infrastructure sectors appear equally supported.

The results of the analysis provide valuable information about the public sector response: in terms of expenditures is roughly proportionally to the human health impact of a disaster, as does the private sector. Furthermore, the results suggest that there may be some sectors, such as the Chemical and Food and Agriculture sector, where a privatization of the industries within it result a larger monetary private expenditure than public expenditures after disasters. Public expenditures maybe instead be in the form of policy regulations, rather than monetary funding.

Using interdisciplinary methods of modeling, case study analysis, and policy analysis, we show that there is broad equity in disaster response expenditures across U.S. infrastructures and across the scales of disasters. We also show that some disasters have been somewhat over- or under-compensated. Our work provides a basis for practitioners to consider the balance between insurance and government responsibilities and the conditions and levels of disaster response expenditures.