Los Angeles Times

June 18, 1997, Wednesday, Home Edition

SECTION: Metro; Part B; Page 7; Op Ed Desk

LENGTH: 854 words


BYLINE: JAMES BOVARD, James Bovard is a fellow at the Competitive Enterprise
Institute, a, Washington think tank that favors free markets and deals with,
environmental policy

The Federal Emergency Management Agency's heavily subsidized National Flood
Insurance Program is like a siren of Lorelei, luring people to abandon their
common sense, damaging the environment and creating staggering liabilities for
taxpayers. Congress' generosity to this year's flood victims will only confirm
Los Angeles Times June 18, 1997, Wednesday,

this mind-set.

A report in the Idaho Statesman on the spring deluge by the Boise River
concluded that FEMA's National Flood Insurance Program "has backfired--bringing
more people into harm's way" and has made risky development "look not only
possible, but attractive." Doug Hardman, Boise-Ada County Emergency Services
coordinator, observed that subsidized flood insurance "did exactly the opposite
of what it was designed to do. It has encouraged people to move there and
encouraged developers to develop there."

Scott Faber of American Rivers, a conservation organization, observed, "Prior
to the 1960s, you didn't have much development in flood prone areas because you
couldn't find any insurer crazy enough to underwrite it. But the federal
government came along and said it is OK--and we are going to make it financially
possible for you to live in a flood plain." Now when floods occur, far more
property is damaged than might otherwise have been the case if the federal
insurance had not made it possible to build.

FEMA is pretending that merely shifting the cost of flood damage from a
homeowner to taxpayers in general is almost as good as preventing a flood. The
agency is running a national television advertising campaign ("Cover America")
urging Americans to buy into the flood insurance plan. FEMA director James
Los Angeles Times June 18, 1997, Wednesday,

Lee Witt declared last year: "The greater the coverage we can achieve, the
healthier the flood insurance program will be, and there will be less of a
burden on the disaster program." But according to one agency analyst, "The way
they advertise the flood insurance is disgusting. It is a Ponzi scheme--and they
have to be constantly replenishing that sucker because it is running dry. The
flood insurance plan is amazingly generous: You are talking of up to $ 250,000
for property damage coverage for only $ 300 a year for people living in a flood
zone--that is absurd." Private insurance companies in some cases would charge a
$ 10,000 annual premium for an insurance policy that FEMA gives away for a few
hundred dollars a year.

American taxpayers currently face more than $ 250 billion of exposure from
government flood insurance policies. The insurance fund ran out of money last
year and FEMA had to borrow $ 600 million to replenish it. Witt told Congress,
"If flooding incidents drop to a more normal level, we expect that we will pay
the fund back within five years." Despite the red ink, Witt hailed the insurance
plan in congressional testimony last month as "another governmental success
story." However, this year's deluge of floods makes it clear that it is naive to
expect the program to "get healthy" any time soon. Since FEMA is essentially
massively subsidizing most of the people who buy the policies--the more policies
FEMA sells, the greater the financial crash and burn will be when Mother Nature
catches up with the agency.
Los Angeles Times June 18, 1997, Wednesday,

The flood insurance program illustrates the hypocrisy of the Clinton
administration's environmental policy. Coastal wetlands and river flood plains
are among the most sensitive habitats in the nation and are home to large
numbers of endangered species. The Fish and Wildlife Service, in its expansive
interpretation of the Endangered Species Act, has prevented many private
landowners from building on their own lands when there is even a minuscule risk
that some endangered bird or rat species a few miles away might be discomfited.
Yet no private landowner has adversely impacted habitat for endangered species
to the extent that governmental flood insurance has. Far more land has been
paved over, built upon and bulldozed as a result of subsidized flood insurance
than the amount of acreage controlled by any private real estate cartel.

Uncle Sam should get out of the flood insurance business. Individuals who
choose to live in flood plains should no longer have their bad judgment
subsidized by people living on mountain tops. And politicians should find some
less environmentally damaging means of buying votes.

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