Disaster Assistance

One of the Federal Emergency Management Agency's (FEMA) primary approaches for reducing federal disaster assistance costs is to promote mitigation measures that will reduce future damage within communities. FEMA's program for funding state and local measures to mitigate the impact of future disasters--the Hazard Mitigation Grant Program--received more than $2.4 billion. Under the Robert T. Stafford Disaster Relief and Emergency Assistance Act--FEMA's primary authorizing legislation--these measures must be cost-effective. As a condition of receiving a program grant, a state must prepare an administrative plan that establishes its procedures and priorities for identifying and selecting mitigation projects. GAO reviewed how FEMA, together with the states, ensures the cost-effectiveness of projects under the grant program. GAO found that the states and FEMA work together to help ensure that program grants are awarded for cost-effective projects. The states in GAO's review established procedures and priorities for identifying and selecting mitigation projects; however, not all of the states did a formal analysis of a project's cost-effectiveness before submitting an application for the project to FEMA. GAO summarized this report in testimony before Congress; see: Disaster Assistance: FEMA Can Improve Its Cost-Effectiveness Determinations for Mitigation Grants, by Stan Czerwinski, Associate Director for Housing and Community Development Issues, before the Subcommittee on Oversight, Investigations, and Emergency Management, House Committee on Transportation and Infrastructure. GAO/T-RCED-99-274, Aug. 4 (14 pages).

GAO noted that: (1) the states and FEMA work together to help ensure that Hazard Mitigation Grant Program grants are awarded for cost-effective projects; (2) the states in GAO's review establish procedures and priorities for identifying and selecting mitigation projects; however, not all of them conduct a formal analysis of a project's cost-effectiveness before submitting an application for the project to FEMA; (3) FEMA uses benefit-cost analysis as its primary approach for ensuring that mitigation projects submitted by the states are cost-effective; (4) however, FEMA also excludes certain types of hazard mitigation projects from benefit-cost analysis, including projects that fund the removal of certain properties from floodways and floodplains, hazard identification or mapping initiatives, and mitigation planning efforts; (5) FEMA officials stress a need for flexibility in assessing these projects, suggesting that benefit-cost analysis does not always apply to all mitigation projects because of difficulties in quantifying the benefits of some projects and the time needed to gather data for conducting analyses; (6) for these projects, the states are instructed to include a narrative that identifies the benefits of mitigation and establishes a reasonable expectation that the projects will reduce or prevent future property damage, injury, or loss of life; (7) GAO's review of 55 hazard mitigation projects in four states found that 41 projects were judged as cost-effective on the basis of the benefit-cost analyses conducted; (8) these 41 projects account for $11.7 million, or 58 percent of the $20.1 million in project funding GAO reviewed; (9) however, the officials conducting benefit-cost analyses for some of the projects designed to mitigate future damage from flooding did not always use the best available information, such as flood damage information available from past insurance claims and updated information on flood hazards, in conducting their analyses; (10) GAO's review also found that 14 projects, accounting for $8.4 million, or 42 percent, of the funding reviewed, were exempt from benefit-cost analysis; (11) these projects included property acquisitions, emergency alert systems, and a public awareness campaign; and (12) while FEMA has explained its rationale for exempting these types of mitigation projects from benefit-cost analysis, factors such as the lack of an established analytical basis supporting the exemption limit the agency's ability to demonstrate that some of these mitigation measures are cost-effective.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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