The urgency of flood mitigation: Who is going to pay for all of this?

The tragic flooding of the July 4 storms in Kerr County, Texas, is one of worst experienced in that state and it is yet another reminder of the cruel devastation associated with large scale flooding, but it is also another brick in the wall of the long string of recent flooding catastrophes in the U.S.  The Kerr County event is so striking as it occurred on the heels of President Trump’s suggestion in late June that Federal Emergency Management Association (FEMA) should be eliminated, with the start of this occurring after hurricane season this year.   

Funding moving forward

While the president walked his position on eliminating FEMA back slightly after the July 4 Texas flooding, the writing appears to be on the wall that the costs to address the impacts of natural disasters will be borne less by the federal government and more with the states and municipalities when these events occur in the future. This retreat of the presence of the federal government includes flood preparedness as well, evidenced by the cancellation of the FEMA Building Resilient Infrastructure and Communities (BRIC) program in April 2025. The bottom-line question is — who is going to pay for both the needed resilience planning as well as the impacts of increased flooding in the future?     

One option is for states to bear the costs of flood mitigation planning and impacts.  Examples of these types of programs include the Massachusetts Municipal Vulnerability Preparedness (MVP) program, the Virginia Community Flood Preparedness Fund (CFPF) grants and loans program, and the Rhode Island Municipal Resilience Program (MRP).  These types of programs provide funding independently of, but often complementarily with, FEMA grants and assistance programs, which are going to be playing a small role — if any — in the future. In many other states, however, there are few funding programs available to invest in community resilience preparedness other than those that were previously provided through FEMA. Perhaps we will see more states developing robust state-funded flood preparedness programs to fill the gap left by FEMA. 

Flood preparedness is only one side of the equation as the costs associated with flooding impacts after flooding events occur are also to be considered. The scale of these impacts is staggering. A 2024 study by the Federal Reserve Bank of Philadelphia focusing on flood underinsurance found that the total national annual flood damage to single-family residences is $24.4 billion. With FEMA’s Flood Insurance Program (FIP) playing a smaller role in the future (or none at all), the question of insurance addressing this amount of flood impacts annually looms large. Without an FIP available to provide support to flooded homeowners, there is a growing need for this protection to be provided through private flood insurance companies. However, the viability of these insurances companies to provide the level of protection needed at the local level is in question with evidence being the several insurance providers pulling out of the Florida market due to increased risks associated with coastal storm events and related flood damage as another data point suggesting innovations in this space are needed. The remaining option of last resort for many Florida residents is the state-run program that is now the largest property insurer in the state. If the federal government will no longer play a significant role in providing flood insurance, and the private insurance sector cannot survive this arena as well, then we could see more states develop state-run insurance programs similar to Florida.   

Resilience at work

Some communities who are experiencing significant flooding impacts are exploring new models to improve resilience, with the city of Salem, Massachusetts, being one example.  Salem is currently launching a pilot program that brings together key stakeholders through a unique partnership that includes Salem, QBE North America, a global insurance company, and InnSure, a nonprofit focused on novel insurance solutions to address climate risk challenges. The goal of this program is to explore ways to lower flood risks for homeowners and renters in a manner that can be replicated in other communities. The focus of this pilot will be to address the flood protection gap, which is the difference between the total economic losses caused by flooding and the amount of those losses covered by insurance. The program will work at macro- and micro-levels with elements to include no-cost home flood resilience assessments, group/mass purchasing of flood insurance, neighborhood parametric flood insurance options, and blended public/private capital for community-wide resilience investments. The hope is that investments to increase resilience at the site-level and cityscape context will reduce costs and expenses overall for Salem, its residents, and insurers.    

The National Municipal Stormwater Alliance (NMSA) supports these types of community-based public-private partnerships (CBP3s) to address water quantity challenges, as it has been shown that these programs are effective in the water quality space in the stormwater sector. It is likely that communities across the country will seek to find innovative ways to address coastal and pluvial flooding until and unless structural changes are made in the flood insurance sector to protect homeowners from flooding impacts in a financially sustainable manner.