Disaster Assistance: FEMA Can Improve Its Cost-Effectiveness Determinations for Mitigation Grants Page: 3 of 20
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Madam Chairman and Members of the Subcommittee:
We are here today to discuss how the Federal Emergency Management
Agency (FEMA), in conjunction with the states, ensures the
cost-effectiveness of projects funded under the Hazard Mitigation Grant
Program. We conducted this work at the request of this Subcommittee and
of the Chairman and Ranking Minority Member of the Subcommittee on
VA, HUD, and Independent Agencies, Senate Committee on
FEMA has made disaster mitigation a primary goal in its efforts to reduce
the long-term costs of disasters. Under its Hazard Mitigation Grant
Program, state and local projects to mitigate the impact of future disasters
must be cost-effective, as required by the Robert T. Stafford Disaster
Relief and Emergency Assistance Act. However, the act does not specify
how to determine cost-effectiveness. According to the Office of
Management and Budget's (OMB) guidelines and FEMA's guidance,
benefit-cost analysis is the recommended approach for determining
cost-effectiveness. Benefit-cost analysis is used to determine how the
anticipated dollar savings gained through implementing a project
compares with its cost. To be considered cost-effective under benefit-cost
analysis, a project must return more money over its life than it cost.
Our statement, which is based on the report we are issuing today,1
provides (1) an overview of the approaches FEMA and the states use to
ensure that the program's grants are targeted to cost-effective mitigation
projects and (2) our findings on whether the approaches ensure that the
mitigation measures are cost-effective.
In summary, we found the following:
* The states and FEMA work together, using different approaches, to help
ensure that hazard mitigation grants are awarded for cost-effective
projects. The states in our review2 established procedures and priorities
for identifying and selecting mitigation projects; however, not all of them
conducted formal analyses of their projects' cost-effectiveness before
submitting applications for their projects to FEMA. FEMA uses benefit-cost
'Disaster Assistance: Opportunities to Improve Cost-Effectiveness Determinations for Mitigation
Grants, (GAO/RCED-99-236, Aug. 4, 1999).
2We performed work in Florida and in FEMA's Region 6 (for Arkansas, Louisiana, and Texas). We
selected Florida primarily because of the state's role in analyzing projects for cost-effectiveness. We
selected the states in Region 6 because they have addressed a wide range of disasters and have thus
gained varied experience in hazard mitigation.
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United States. General Accounting Office. Disaster Assistance: FEMA Can Improve Its Cost-Effectiveness Determinations for Mitigation Grants, text, August 4, 1999; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc290271/m1/3/: accessed October 21, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.