Be prepared: Society saves $6 for every $1 spent preparing for natural disasters
include:
— For flood resistance (to address riverine flooding and hurricane surge), building new homes higher than required by the 2015 IBC.
— For resistance to hurricane winds, building new homes to comply with the Insurance Institute for Business & Home Safety (IBHS) FORTIFIED Home Hurricane standards.
— For resistance to earthquakes, building new buildings stronger and stiffer than required by the 2015 IBC.
— For fire resistance in the wildland-urban interface, building new buildings to comply with the 2015 International Wildland-Urban Interface Code (IWUIC).
The original report, Natural Hazard Mitigation Saves: An Independent Study to Assess the Future Savings from Mitigation Activities, which was funded by the Federal Emergency Management Agency (FEMA), determined FEMA mitigation grants to have a benefit-cost ratio (BCR) of 4:1. One of its key findings, “For every $1 spent on mitigation, there is a $4 return of avoided losses in the future,” is often cited by Congress and the media.
The 2017 Interim Reportalso is an independent work, funded with the support of public- and private-organizations interested in expanding the understanding of the benefits of hazard mitigation. In addition to FEMA, sponsors include HUD, EDA, ICC, IBHS, the National Fire Protection Association (NFPA) and the American Institute of Architects (AIA).
Despite the specific guidance that the 2005 study BCR represented only a single, very narrow set of mitigation strategies (precisely those funded through FEMA), the original 4:1 ratio has been used to justify all types of mitigation strategies. The 2017 Interim Reportprovides an updated examination of the benefits of federal agency grant programs (including the addition of EDA and HUD), resulting in a $6 benefit for every $1 invested. Though not a direct replacement, when used to describe federal grant programs, the 6:1 BCR can be used in place of the original 4:1.
The Institute notes that to vet the methodology used and ensure the study’s accuracy, the Institute received input from renowned experts in resilience across all hazard types, including academia, non-profits, government agencies and the private sector. Experts were engaged to conduct the analyses and additional experts were invited to peer-review the results. Over 100 subject matter experts participated in the development and review of the study methodologies and findings.
Funding mitigation efforts through incentivization
While mitigation represents an excellent investment, not everyone is willing or able to bear those construction costs for more resilient buildings, even if the long-term benefits exceed the up-front costs. In a 2015 white paper and 2016 addendum, the Institute’s Multi-hazard Mitigation Council (MMC) and Council on Finance, Insurance and Real Estate (CFIRE) proposed a holistic approach to incentives that can drive financing mitigation investments, aligning the interests of multiple stakeholder groups so that they all benefit from natural hazard mitigation. The BCRs identified in the 2017 Interim Report can facilitate the development of specific strategies that align incentives from finance, insurance, government and other stakeholders.
— Read more in Natural Hazard Mitigation Saves: 2017 Interim Report (National Institute of Building Sciences, January 2018); also see: Developing Pre-Disaster Resilience Based on Public and Private Incentivization (National Institute of Building Sciences, October 2015); and Addendum to the White Paper for Developing Pre-Disaster Resilience Based on Public and Private Incentivization (National Institute of Building Sciences, September 2016)
