Disaster Assistance: FEMA Can Improve Its Cost-Effectiveness Determinations for Mitigation Grants Page: 4 of 20
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analysis as its primary approach for ensuring that mitigation projects
submitted by the states are cost-effective. However, FEMA also exempts
certain types of hazard mitigation projects from benefit-cost analysis,
including projects that fund the removal of certain structures from
flo o dways and flo o dplains and mitigation planning effo rts. FEMA o ffic ials
stress a need for flexibility in assessing these projects, suggesting that
benefit-cost analysis does not always apply to all mitigation projects,
because of difficulties in quantifying the benefits of some projects and the
time needed to gather data for conducting the analyses.
Our review of $20.1 million in funding for hazard mitigation projects in
four states found that projects receiving the majority of this funding
($11.7 million) were considered cost-effective on the basis of the
benefit-cost analyses conducted. However, the best available
information-such as flood damage information available from past
insurance claims and updated information on flood hazards-was not
always used in conducting the analyses. Our review also found that
projects receiving over one-third of the funding ($8.4 million) were exempt
from benefit-cost analysis, even though no established analytical basis
supported the exemption of the majority of these projects. FEMA officials
explained that some projects were difficult to evaluate against traditional
quantitative benefit-cost criteria and the exemptions were meant to speed
the delivery of grants to the states. Establishing the basis for exempting
these acquisition projects and reviewing the cost-effectiveness of other
exempt projects after they have been implemented would help FEMA better
ensure that these mitigation projects are cost-effective.
Background FEMA is working to reduce disaster costs through mitigation activities that
reduce losses from disasters or prevent such losses from occurring. The
activities include providing grants and training for state and lo c al
governments, funding for preventing damage to public facilities and for
purchasing structures in flood-prone areas, and federal flood insurance.
While a number of FEMA programs and initiatives provide funding for
hazard mitigation assistance, our review focused on hazard mitigation
measures funded under the Hazard Mitigation Grant Program.
Up to 15 percent of the total grant funds spent on a disaster may be spent
under the Hazard Mitigation Grant Program for hazard mitigation
measures. Subject to certain dollar limits, the Stafford Act generally allows
federal funding of up to 75 percent of the cost of hazard mitigation
measures within communities that have been affected by a disaster (the
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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/m1/4/: accessed September 25, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.