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Institute Testifies About Using Incentives to Reduce Cost of Disaster Response

Thursday, May 12, 2016  
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The way to achieve resilience in U.S. communities is through an approach that incorporates input, consensus, leadership and action from a broad spectrum of stakeholders, ranging from insurance and finance-related companies, lenders and foundations; forward-thinking communities and government agencies; and important decision makers, including homeowners, businesses and utilities. That is the message National Institute of Building Sciences Multihazard Mitigation Council (MMC) Chairman Kevin Mickey gave during his testimony today to the U.S. House of Representatives Committee on Transportation and Infrastructure, Subcommittee on Economic Development, Public Buildings and Emergency Management.

Mickey, who is Director of Professional Development and Geospatial Education at The Polis Center at Indiana University Purdue University Indianapolis, addressed Chairman Lou Barletta (R-Pennsylvania), Ranking Member André Carson (D-Indiana) and other Subcommittee members during the hearing on “Controlling the Rising Cost of Federal Responses to Disaster.”

The Subcommittee hearing focused on exploring both the rising costs and the potential solutions for lowering such costs. In addition to examining the cost data, the trends observed over time and future projects under current federal disaster assistance policies, programs and requirements, the hearing explored the potential solutions for lowering the overall cost of disasters and avoiding devastating losses.

Addressing potential solutions, Mickey talked about a white paper released by the MMC and the Institute’s Council on Finance, Insurance and Real Estate (CFIRE) entitled Developing Pre-Disaster Resilience Based on Public and Private Incentivization. The paper concluded that the most cost-effective manner to achieve resilience is through a holistic and integrated set of public, private and hybrid programs that capture opportunities available through investment in mortgages and equity real estate; insurance; finance; tax incentives and credits; grants; regulations; and enhanced building codes and their application. This focus on leveraging private/public-sector opportunities to induce corrective action is called “incentivization.”

In his written testimony, Mickey described a number of opportunities for Congressional action. In his oral testimony, he offered the following specific recommendations:

  • Every federal dollar associated with construction, community development and infrastructure should include a requirement that the latest building codes be met or exceeded;
  • Congress and federal agencies should examine all programs—particularly grant-making programs—to identify opportunities to support resilience; and
  • Federal funding for mitigation should be at a sufficient level to leverage the benefits and losses avoided that mitigation provides. 

The basic premise of the incentivization strategy is that stakeholders invest in mitigation because they understand the benefits they personally obtain, such as:

  • Homeowners getting lower insurance premiums and higher home values;
  • Communities reducing their risk and becoming more desirable places to live; and
  • Governments lowering spending and minimizing losses in future disasters.

In closing, Mickey offered both the National Institute of Building Sciences and the Polis Center as resources to the Subcommittee moving forward. The testimony was the Institute's final event focused on building safety and resilience this week. The Institute also participated in the White House Conference on Resilient Building Codes, co-released the updated Resilience Building Coalition Statement and issued a Building Safety Month proclamation.

Read Mickey’s written testimony. Watch the hearing.

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