Disaster Assistance:

Information on the Cost-Effectiveness of Hazard Mitigation Projects

T-RCED-99-106: Published: Mar 4, 1999. Publicly Released: Mar 4, 1999.

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Pursuant to a congressional request, GAO discussed how the Federal Emergency Management Agency (FEMA) ensures the cost-effectiveness of projects funded under the Hazard Mitigation Grant Program.

GAO noted that: (1) for disasters that occurred between 1989 and 1993, average annual obligations in FEMA's disaster relief fund totalled $1.6 billion, in 1998 dollars, while average annual obligations over the past five years have increased to $2.5 billion annually in 1998 dollars; (2) to reduce these costs, FEMA is using, among other things, hazard mitigation efforts; (3) FEMA's efforts include providing federal flood insurance, converting flood-prone properties to open space, mitigating damage to public facilities, reducing earthquake risks, and helping mitigate the loss of life and damage from fires; (4) FEMA uses benefit-cost analysis--an approach recommended by the Office of Management and Budget--as its primary approach for ensuring that mitigation measures within the Hazard Mitigation Grant Program are cost-effective; (5) however, FEMA also excludes certain types of Hazard Mitigation Grant Program projects from benefit-cost analysis--including projects that fund the removal of certain structures from floodways, research for new building codes, and planning efforts; (6) FEMA officials stress a need for flexibility in assessing these projects, citing the difficulties of quantifying the benefits of some projects and the time needed to gather data to conduct a benefit-cost analysis; (7) however, these exemptions limit the agency's ability to demonstrate that the funded mitigation measures are cost-effective; (8) additionally, according to GAO's review of selected benefit-cost analyses in two FEMA regions, officials conducting these analyses were generally knowledgeable and had been trained in how to conduct the analyses; and (9) however, they did not always use the best available information in analyzing projects designed to mitigate future damage from flooding events.

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