CLIMATE CHANGE: THE FISCAL RISKS FACING THE FEDERAL GOVERNMENT
OMB has not estimated the likely costs associated with this liability over the coming decades.[1] Replacement cost is an imperfect indicator of the rough scale of fiscal risk. Severe flooding or the promise of recurring inundation could require outright abandonment and/or replacement. In many cases, however, an individual flood event or the presence of flood risk may prompt less costly investments in protective infrastructure and repairs. The Federal Flood Risk Management Standard requires Federal agencies to consider current and future risk when rebuilding structures that have been damaged in a floodplain. Some protective investments may require one-time expenditures; others may occur and even increase over time as flood risk intensifies. Nonetheless, such investments for any given asset could be significantly smaller than the asset’s total replacement cost. For more information on the assessment, see the Technical Supplement accompanying this report.
Key Limitations and Uncertainties
The Federal Government remains in the early stages of identifying the full extent of flood risk facing Federal facilities under current and future conditions largely due to persistent data limitations.
First, the Federal Government lacks projected nationwide floodplain maps that reflect expected changes due to climate change. A 2013 study conducted for FEMA demonstrated the scale of climate impacts on flood risk, finding that by 2100 the typical 1 percent annual chance floodplain area would grow by 40-45 percent largely due to climate change (AECOM, 2013). However, FEMA’s maps are used to implement the National Flood Insurance Program and to provide communities with accurate flood hazard information, and therefore reflect existing flood risk. Without future projections, the full extent of the impact of climate change on flood risk for Federal facilities is not clear.
Second, detailed damage modeling has not been conducted on the Federal inventory to determine actual expected costs due to flooding. This type of assessment is conducted routinely by insurance companies in the private sector and would provide a clearer picture of Federal fiscal risk exposure than replacement cost. An assessment was also conducted for FEMA’s National Flood Insurance Program in 2013, finding that the total number of policies would increase by 80-100 percent by 2100 in part due to climate change, and that the average loss cost per policy would increase by 50-90 percent (AECOM, 2013). In combination with good analytics on current and future flood risk, damage modeling on Federal property would enable better planning for investments and divestments across the Federal inventory.
Third, the Federal Government has not yet created a comprehensive dataset that would enable precise spatial analysis of the entire Federal property inventory. Due to national security concerns, the FRPP does not include geographic coordinates for a broad set of defense and homeland security facilities. Similarly, the FRPP includes several types of non-building assets such as transportation and communications infrastructure for which geographic coordinates are not reported and street addresses are unreliable for the purposes of accurately determining flood risk.
In addition to these data limitations, risk assessments in this area are also affected by scientific uncertainty. In particular, local flood impacts from climate change can be difficult to project due to the challenges of downscaling global change models to the local level. In addition, while there is high confidence that sea levels have already risen and will continue to rise over this century and beyond, the future rate of sea level rise remains difficult to predict.
31
- ↑ Note that a portion of these costs associated with vulnerable Federal coastal assets is implicitly included in the coastal storm disaster relief estimates; however, those results do not capture any costs for facilities on the west coast or in Hawaii, or non-hurricane costs associated with sea level rise for assets on the east and gulf coasts.
