Research shows economically vulnerable populations are more likely to not only live in flood-risk zones, but suffer economic hardship and reduced quality of life as a result. This is mostly driven by housing market considerations where housing developed in inland floodplains are less expensive and more attainable for lower-income populations. The exposure risk should be covered by insurance, but between insurers dropping coverage or increasing insurance rates, these families are left uninsured and financially liable after a flood event. The changes in insurance coverage is not simply a way for companies to reduce their economic liability. It is an unfortunate tool that exacerbates social inequalities and leaves many disadvantaged families vulnerable to tragedy.

So what happens when a flood does occur? Does the National Flood Insurance Program (NFIP), a program that is $20.5 billion in debt, come to the rescue? To what extent can FEMA help these families? Where are they to go if they cannot afford to repair flood damages? 

Low-income Communities Pay the Price

A 2023 article by Gourevitch et al. titled “Unpriced climate risk and the potential consequences of overvaluation in US housing markets” addresses the implications of hidden prices caused by flood exposure. To get to the heart of the socioeconomic and econometric impacts of the current housing paradigm in the US, Gourevitch et al. argue clearly:

“The increasing burden of flooding under climate change has led to growing concerns that housing markets are mispricing these risks, thus causing a real estate bubble to develop . . . This unpriced flood risk could perpetuate perverse incentives for continued development in floodplains and underinvestment in hazard mitigation, further inflating the housing bubble.“

It would seem easy to correct for the overvaluation of houses in flood-risk areas by simply reducing housing costs for current structures in high-risk areas and changing zoning policies to restrict building in flood-zones. However, reducing housing prices decreases the long term value of current homeowners - mostly low-income homeowners whose house is their primary investment. Secondly, most counties are not incentivized to lower housing prices and restrict building permits as it constrains property tax income and valuable resources for the county. So while the economic disparities are easy to understand and identify, the solutions are more difficult to rectify.

Reframing How We Look at Housing Risk - Preventative versus Reactionary Planning

Our reliance on insurance and emergency response programs should be a last resort for our standard of living. However, increasing frequency and intensity of environmental events are making these more common place reactive tools. There are steps that we can take to increase resiliency against climate change in more equitable and sustainable ways. In general terms of risk management, the main goal to minimize risk is to reduce exposure to a threat. This begins with understanding current and future environmental forecasts. Future blog posts will get into some machine learning forecasting in the future. Suffice it to say, forecasting is a complex process and one which requires significant consideration for including atmospheric behaviors in an age of climate change. Secondly, adaptive designs can be incorporated to both reduce exposure as well as reduce reliance on robust infrastructure designs. By investing in preventative planning, we will reduce overall reactive spending. 

The issue arises when implementing design changes, especially changes that will greatly impact the structure of our communities. Some options include buy-out programs, sponge city designs, use of alternative building materials, and more. There is not an easy solution to this problem, but change needs to happen sooner rather than later and it will likely need to start at the community and county level. Counties and community leaders need to adjust their frameworks for benefit-cost analysis and find creative solutions to mitigate the immediate and real risk that many low-income households live with annually.

Additional Resources

If you are interested in reading more detailed research on this subject, I have included a couple articles worth reading. 

Cappelli, Federica, Valeria Costantini, and Davide Consoli. “The Trap of Climate Change-Induced ‘Natural’ Disasters and Inequality.” Global Environmental Change 70 (September 2021): 102329. https://doi.org/10.1016/j.gloenvcha.2021.102329.

Crowell, Mark, Kevin Coulton, Cheryl Johnson, Jonathan Westcott, Doug Bellomo, Scott Edelman, and Emily Hirsch. “An Estimate of the U.S. Population Living in 100-Year Coastal Flood Hazard Areas.” Journal of Coastal Research 262 (March 2010): 201–11. https://doi.org/10.2112/JCOASTRES-D-09-00076.1.

Gourevitch, Jesse D., Carolyn Kousky, Yanjun Liao, Christoph Nolte, Adam B. Pollack, Jeremy R. Porter, and Joakim A. Weill. “Unpriced Climate Risk and the Potential Consequences of Overvaluation in US Housing Markets.” Nature Climate Change 13, no. 3 (March 2023): 250–57. https://doi.org/10.1038/s41558-023-01594-8.

Maantay, Juliana, and Andrew Maroko. “Mapping Urban Risk: Flood Hazards, Race, & Environmental Justice in New York.” Applied Geography 29, no. 1 (January 2009): 111–24. https://doi.org/10.1016/j.apgeog.2008.08.002.

Nguyen, Hong Thi Bich, and Hiep Thanh Truong. “Unveiling Housing Preferences amidst Flood Risks: An Empirical Study in an Emerging Market.” International Journal of Housing Markets and Analysis, November 12, 2024. https://doi.org/10.1108/IJHMA-06-2024-0079.

Qiang, Yi. “Disparities of Population Exposed to Flood Hazards in the United States.” Journal of Environmental Management 232 (February 2019): 295–304. https://doi.org/10.1016/j.jenvman.2018.11.039.

Tate, Eric, Md Asif Rahman, Christopher T. Emrich, and Christopher C. Sampson. “Flood Exposure and Social Vulnerability in the United States.” Natural Hazards 106, no. 1 (March 2021): 435–57. https://doi.org/10.1007/s11069-020-04470-2.

Resources and Environment Working Group. “Climate Change, Insurance, and Vulnerable Populations.” International Actuarial Association. October 2019. https://www.actuaries.org/IAA/Documents/Publications/Papers/REWG_Climate_Change_Vulnerable_Populations.pdf.

Celine Guivarch, Nicolas Taconet, Aurelie Mejean. “Linking Climate and Inequality.” International Monetary Fund. September 2021. https://www.imf.org/en/Publications/fandd/issues/2021/09/climate-change-and-inequality-guivarch-mejean-taconet.