flood Mises Institute How the Feds Blocked Effective Flood Insuranc.
By Dale Steinreich Read More Button
As the floodwaters brought by Hurricane Harvey last week recede and new hurricane Irma moves slowly toward the Eastern U.S., it might be edifying to review how millions of Americans, despite federal anti-flood efforts, came to live and work in hazardous to dangerous flood-prone areas.
No doubt, the Flood Control Act of 1928 helped construct what was considered one of the most impressive systems of levees in the world along the Mississippi River. However, the one thing it did not do was control flooding. While the new levee system prevented flooding in some areas, it quickened the natural current of the river which helped produce flooding in other areas. Other unforeseen consequences were the reductions in natural soil deposits and natural flow of water into the river's flood plains.
Less than a decade later, another damaging flood in New England helped drive the passage of the National Flood Control Act of 1936. This Act was a real turning point in terms of centralization. Besides doubling the size of the federal flood-control program, it signaled that Congress would no longer merely provide occasional flood relief and regard floods as principally a local matter. It effectively enlisted the federal government and Army Corps of Engineers in the battle against floods.
Next came the National Flood Insurance Act of 1968, which created the National Flood Insurance Program (NFIP), which covered up to $250,000 in damage to single-family houses and buildings in cities and towns meeting the flawed federal flood-plain criteria. The absolute death knell for any semblance of economic and actuarial soundness in the NFIP came in 1973, when Congress allowed coverage to be extended to property owners who should have enrolled in the program and paid for insurance but did not.
While none of this is to say that had more rigorous private standards prevailed and the Army Corps and TVA never been created, that no one's residence or workplace would ever have flooded. However, there's no doubt that the federal government's perverse subsidization of residential and commercial development in flood-prone areas as well as artificially cheap flood insurance completely detached from risk assessment have contributed to not only the untold loss of billions of dollars of property, but lives as well.